Since the Community Banking section of the American Banker featured a series this week on the future of community banking, the editors asked me to give my projections for what community banks will look like in 15 years.

I always remember a story my father used to tell me about Jan Christian Smuts, the South African leader, who once asked an aide, "How many elephants do we have in our country?"

The response: "It would take 15 years to find out."

The next day, in a major address, Smuts said, " ... and one of our major resources is the 28,000 elephants in our nation."

The amazed aide later asked, "How did you find out so fast?"

"It would take 15 years to get the number," Smuts said, "so it will take 15 years to disprove my number, and on 15 years I'll take my chances."

With this background, let's look at some of the key questions with regard to the future of community baking.

Will there be community banks in 2011?

Absolutely yes. There will not be close to 10,000, but there will be several thousand, each playing a major role in its territory and holding its own against the nation's giants.

Why will they survive?

Because the changes and developments that have affected banking do not eliminate the need for what the community bank does best. And that is:

*To provide quick response in correcting errors and handling loan requests. (A quick no is appreciated more than a slow yes.)

*To make people feel special - that they are known personally by their bankers.

Interest rate swaps, hedging instruments, and the like are not basic needs of the typical American, but the strengths of the community bank fit the needs they do have.

What will the bank look like?

The community bank will have one major office, with its top talent housed there. It may have small satellite branches, and even small branches in supermarkets. It certainly will serve its customers with ATM machines, telephonic transfer of funds, and even Internet transactions, if wanted.

Most of these will be provided by outside servicers, with the bank concentrating on personal support - "hand holding" and being there to help the customer face more complex financial needs, such as financial planning, insurance, and investments.

The bank also will probably have its basic demand deposit transactions handled by a servicer, too.

The railroads were saved when they went from steam locomotives privately engineered for each line to a standard diesel (with the options limited to the three-tone or the five-tone whistle). In the same way, banks will standardize back office operations.

What about credit cards?

Community banks will continue to provide ATM cards and credit cards - again, with giant systems doing the work.

The the trend of superregionals charging holders of foreign ATM cards is sure to grow. So good customers don't have to pay these fees individually, the issuing community banks will absorb them or include them in the account analysis.

As for the smart card, it will also be part of the community bank's arsenal. Smart cards will not only replace cash, they will also be a means of recording customer expenditures - so repeat customers can be rewarded, as casinos do for frequent gamblers through their affinity cards.

How about lending?

The community bank will have to automate the process, as many banks already have done. This may involve having the loan request come in through the Internet or the telephone or the ATM.

This is already happening. But the community bank's advantage will be that it will screen the results of the credit scoring procedure and the credit bureau to make it personal. That way the bank will ensure that customers in unusual circumstances are not robbed of the chance to gain credit, as a less flexible system might do.

People in telecommunications say the key to good phone service is the last two feet - in other words, no matter how good the overall technology, service is bad if the phone itself and local connections are poor.

Banking will work the same way. The system will be standardized through the implementation of new technology on a universal basis. But the last two feet - the way the service is delivered to the customer - will still be the key. And in this, the community bank will continue to shine.

Mr. Nadler is a contributing editor of the American Banker and professor of finance at Rutgers University Graduate School of Management.

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