Since the financial crisis, smaller banks have been wrestling with a fundamental question: Can we define community banking so that the profession has any meaning for clients and stakeholders? Or put it another way: When the reputational damage done to all banking by the actions of the large global banks still remains, what can we say and do about the character and role of small, independent banks across the country that could improve the discussion about their value and necessity for the healthy functioning of our communities?

Bankers have conversations daily with clients, public officials and friends who don’t necessarily see the benefits that banking locally provides. In this, we are a bit to blame for permitting the perception that the primary function of the bank is to serve as a dehumanized mechanism for the flow of money: a mechanism for which banks charge fees.

To combat this stereotype, community banks should strategically work on cultivating the premise that we are uniquely positioned to rehumanize the banking experience — and backing up that premise with our actions.

Paper doll community
Community banks should work on cultivating the premise that we are uniquely positioned to re-humanize the banking experience — and backing up that premise with our actions. Adobe Stock

To achieve that outcome, small banks should focus on their core attributes: small staffs, the close proximity (literally and figuratively) of the bank’s decision-makers to its clients, the highly personal branch experience, and the personal involvement of bankers and banks in the communities they serve.

We must tout the fact that community banks bring the best of two different worlds. As participants in the banking system, we can offer technologies such as remote deposits and electronic payments options. But we can also assert superior value arising from the direct, human involvement of lenders, tellers and relationship bankers in helping clients’ financial lives improve. This combination is simply not available at the “too big to fail” banks.

But there’s another powerful argument too. Small, independent, geographically limited banks lie at the heart of the great American experiment in democratic self-governance and enterprise. No country does banking like the United States, with thousands of independently chartered financial institutions, many of which chartered in small, agricultural towns. Banks like these, and countless more, were born of a proud belief that neighborhoods and towns needed to gather their resources to provide for their own economic well-being. It is this hyperlocal culture and mission — not the hyperglobal — that provide the lifeline to small businesses upon which American community and progress fundamentally depends.

An aspirational appeal to the virtue of local small deposits as investments in the success of the community, determined from within that community, and subject to no whims and demands of the global stock market, are the qualities that make us different from big banks. Community banking is local money invested through local decisions by local people for the success of the “local” community. We not only invest in clients, but in the physical well-being and economic growth of the community where our banks reside.

Let’s reclaim our heritage of connecting people to the progress and development of neighbors through banking expertise, technology, care and, above all, hard work.

Then maybe people will understand what it truly means to be a community bank.

Joshua Rowland

Joshua Rowland

Josh Rowland is the chief executive officer and vice chairman of Lead Bank, a Missouri-chartered commercial bank.

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