The Community Banking Landscape at a Glance
Community banks, often defined as locally operated institutions with under $10 billion in assets, make up 97% of overall institutions throughout the United States. Priding themselves on relationship-based banking and giving back to their communities, these institutions are often an integral part of Main Street and their local economies. The following pages unpack their strategies and priorities to maintain and expand that influence.
The Impact of Community Banks in the U.S.
Source: ICBA1
of total agricultural loans
of all small business loans
in loans for local consumers
locations nationwide
people employed
The Community Banking Outlook Following 2023
Throughout 2023, industry consolidation continued due to mergers, acquisitions and closures. Still, community banks maintained their lead in smaller markets across the United States.2 So, despite slightly shrinking numbers in institutions nationwide and an increase of fintech accounts, new account openings remained stable on average.3
By contrast, the public collapse of larger banks Silicon Valley Bank (SVB) and Signature Bank led to an estimated 16% of consumers nationwide moving money elsewhere.4 Despite concerns, community banks’ deposit bases held steady, and some institutions saw inflows of deposits in the immediate aftermath of the news.5
These trends, paired with their overall impact on the American economy, indicate a lingering resilience in community banking. Meanwhile, survey data shows bankers’ resolve and faith that the locally based business model they deploy will stand the test of time.
Confidence in Community Banking
Despite challenges on the horizon, a resilient spirit prevails among community financial professionals, fueled by growth, technological expertise and a dedication to their communities. An overwhelming majority expressed optimism about community banking, while only 9% held a pessimistic view.
I’m optimistic about the future of community banking.
Strongly Agree
Somewhat Agree
Somewhat Disagree
The Enduring Relevance of the Branch
For on-the-ground bankers, brick-and-mortar banking is far from dead. 92% believe the branch will remain relevant for at least the next 10 years. This prediction suggests plans to blend digital innovation, traditional customer engagement and potentially innovative in-branch experiences.
Resurgent branch foot traffic contributes to this belief, a trend stemming from factors like Gen Z banking preferences, post-pandemic adjustments and a continued subset of consumers’ (particularly older generations) inclination toward more traditional banking. According to one study cited by the Financial Brand, 31% of customers who switched banks also did so when a branch closed, signaling that branch improvements instill confidence, and closures the opposite.6 For more affluent customers, it’s 35%.
The branch will remain relevant for the next 10 years.
Strongly Agree
Somewhat Agree
Somewhat Disagree
Growth Amid Challenges
As for growth, respondents almost universally feel their banks are expanding their existing customer base. Nearly two-thirds of respondents strongly agree, highlighting that in the face of uncertainty, financial institutions are seizing opportunities for growth and engagement.
My bank is growing its existing customer base.
Strongly Agree
Somewhat Agree
Somewhat Disagree
My bank’s customers are engaged.
Strongly Agree
Somewhat Agree
Somewhat Disagree
Embracing Technology
That growth and engagement depends partly on efficient processes and the right tools. Bankers remain focused on technological innovation, with 94% emphasizing the need for the latest technologies to satisfy customers. 93% of respondents expressed satisfaction with their bank’s efficiency, a positive sign for their future viability.
My bank needs the latest technologies to satisfy our customers.
Strongly Agree
Somewhat Agree
Somewhat Disagree
My bank’s processes are efficient.
Strongly Agree
Somewhat Agree
Somewhat Disagree