The Fate of Community Banking is In Your Hands

 While “community banks,” defined as those under $10 Billion, were not the cause of the financial crisis, the new market environment and regulation have weighed heavy on them.  As Marshall Lux and Robert Greene of Harvard’s Kennedy School point out in their 2015 Whitepaper, The State and Fate of Community Banking, since 2008 “…community banks have lost market share in consumer, real estate, and commercial and industrial (C&I) lending markets.”

                   “What’s the reason for the decline in the

Community bank?  Technology is obviously a factor.”

The State and Fate of Community Banking

The authors point out that regulation also is playing a role, and the trend in loss of market share has a long history, as show in the graphic below from their study.

The latest challenges are coming CFPB changes to overdraft rules, and the growth of digital lenders who can serve customers through online and mobile channels with new automated and alternative underwriting.

But the good news is technology platforms are being provided to regional and community banks to compete effectively with both large banks and non-banks.  Rather than giving consumers and small businesses to competitors like Lending Club and On Deck, you can leverage your own technology platform to serve the booming digital lending markets, like PaySound and PaySound Business.  It is time to begin leveraging these strategies at your financial institution.