Consider it the battle between David & Goliath when you talk about community banks and megabanks. Most people would think that these small banks have no match between the megabanks like Chase, Citibank, Bank of America, and Wells Fargo. Well, think again.
It was in the 1990’s when the industry began changing gradually. Megabanks shared 10% of all their bank assets and took control of the rest. So what’s left for these small banks? Most, large banks have new accounts regularly. Most of them being are opened by Milennials, so what’s left belongs to the smaller community banks. The question is, how can community banks compete against megabanks?
Why are Megabanks beating the community banks?
Megabanks have been innovating for the past years and have been introducing various features for their clients. ATM’s with multiple languages and peer to peer banking are just some of the banking features that megabanks have been using in order to gain more clients. There are also a lot of brokerage firms that offer a wide variety of financial services. A lot of them are partnering with megabanks in order to gain clients as well. Big banks always get the bulk share of the market.
Meanwhile, the community banks have been stuck to their local roots but despite that, they have endured the challenge of the larger megabanks, and offer similar loans and services.
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Pros of Community Banks
Better lending flexibility
Banks are always offering loans and you can get loans from any bank regardless of whether it's a megabank or a community bank. The main advantage of getting your loans from a community bank is that rates are usually cheaper, especially car loans. So if you are just a small business owner who is looking to start your business or if you want to expand your current business, then applying for loans with a community bank might be a good choice for you.
When dealing with banks, what you might be looking for is good customer service as well as the service that you are planning on applying for on a bank. Community banks are known to be more relationship based, and may even know your whole family as well. Also, branches of community banks tend to be much smaller than bigger banks and can be more intimate. When you first visit a community bank and open up an account, you can get special prices and promotions. Because of these actions, smaller banks usually get better satisfaction scores than megabanks.
Picking banks is always up to you as a client. Whether you choose a megabank because you are looking for all of the neat features that these large banks offer or if you want a more customer service oriented bank like community banks, in the end, the choice is still up to you.
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