Community banks can benefit when data centers come to town

• Key insights: Large banks are committing billions of dollars to fund the construction of data centers. There's opportunities for smaller community banks and credit unions when a data center comes to town, as long as risks can be balanced. 
• What's at stake: For community-minded financial institutions, the mere association with data centers has the potential to turn into a public relations nightmare.  
• Expert quote: "There are other services, besides banking, that institutions can provide," Jerry Silva, vice president of financial insights at IDC, told American Banker. 

There's little question that, for banks and financial institutions, data centers present inherent risk, whether financial or in the public eye. But for community banks and credit unions that lack the resources or interest to finance such projects, data center construction can also present new opportunities.

Data center construction is spreading like wildfire in the U.S., largely in regions that have large rural areas that can house the massive structures – the same areas that community banks call home. States like Virginia, Texas, California and Illinois, have the largest number of data centers, according to Data Center Map, a website that tracks data centers.  

Large banks are already reaping the benefits of data center construction, and have committed billions of dollars to fund the construction of data centers. In 2025 alone, lenders financed more than $121 billion for data center properties, according to S&P Global. 

"Big banks are benefiting from the boom in data center construction, as they can accommodate the capital needs of hyperscalers and have investment banking arms that can run securitization offerings," S&P analyst Thomas Mason said. 

But for community-minded financial institutions, the mere association with the construction of a data center has the potential to turn into a public relations nightmare. Earlier this year, The Bank of Washington in Missouri faced a boycott after the family that owned the bank agreed to sell a portion of their own land – land that CEO L.B. Eckelkamp Jr. said is not associated with the bank's operations — for data center construction. 

Community concerns are real. Data centers are noisy, can require millions of gallons of water on a daily basis and consume enormous amounts of energy, according to the World Resources Institute. 

But data centers can also benefit the economy, particularly in job creation, according to the Brookings Institute. Counties that receive their first large data center can see a 4% to 5% rise in private employment over a five or six-year time horizon. Construction employment is a large beneficiary of new data centers, rising 11%, and information sector-related jobs, including IT services, telecommunications and software, increases 22%. Wages also increase by 3% or 4% over the same time period, Brookings said. 

Data centers, however, are not factories, according to Aaron Press, a research director at IDC. 

"They don't add similarly large numbers of jobs, drive a broad supplier ecosystem, or stimulate substantial migration in the long term," Press told American Banker. "My sense is that the impact will be nice, but not especially large." 

So where does that leave community banks? Jerry Silva, vice president of financial insights at IDC, said that community banks should continue doing what they do best: focusing on their communities. 

"There are other services, besides banking, that institutions can provide while still retaining that primary contact with the customer and the brand," Silva told American Banker. "Anytime you have a major development like a data center come up, you've got small businesses that pop up." 

Community banks can offer budgeting tools, specialized lending, or tax, payment or payroll services to the small businesses looking to plant a flag in those regions. 

"You've got the entire financial ecosystem of that town that you can supply by expanding what you would normally supply in a regular community bank," Silva said. 

There is a risk that some of the larger banks involved with the data centers could move to take some of community banks' market share, though. 

"The big banks will go after that market and will try to erode that community banking market," Silva said. "How well can they execute on something like that— the big banks aren't known for that warm and fuzzy kind of relationship."