Community banking is experiencing something of a renaissance as the industry settles into the digital age and technology is doing much of the heavy lifting. With competition from bigger banks continuing to ramp up, community institutions are working harder than ever to build strong customer relationships that inspire long-term loyalty. However, in the quest to woo customers, many community banks underestimate the impact of their core banking partnership as a determinant of long-term satisfaction in customer relationships.
Why Community Banking is Thriving
While megabanks are a force to be reckoned with, many individual and business customers are attracted to the appeal of a face-to-face relationship that offers consideration for unique circumstances. Who wouldn’t rather seek a loan from an institution that’s willing to get to know you and factor in elements beyond numerical data in their decisions? There’s a reason that during the onset of the pandemic in 2020, 80 percent of independent businesses dealing with community banks were satisfied with their experience–compared to 68 percent for big banks and a paltry 43 percent with online lending.
It all comes down to delivering a level of consistent, personalized service meant to support customers in achieving their goals while also giving back to the community ecosystem. That said, community banks still face significant challenges in customer cultivation.
What Customers Demand
One of the central obstacles standing in the way of flourishing customer relationships is that community banks must be more strategic about resource allocation. This often means their technology is one or more steps behind what the big banks have to offer. Today’s customers gravitate toward tech, yet also want the personal community banking feel–and they don’t want to sacrifice either.
In order to reel customers in, community banks often look to fintech startups that provide high-visibility features. In the long run many find that these features don’t live up to expectations in terms of day-to-day functionality, but the right core banking partner can make all the difference.
The Foundation of the 360° Relationship Standard
There’s no question that a dedication to the customer as an individual and not just a data point is a cornerstone of community banking success. However, banks would do well to expand their view of relationships from a two-way street between bank and customer to a bird’s eye, ecosystem-based view that considers the impact of core banking technology providers.
Think about building your banking technology infrastructure like you’re constructing a home. The parts your customers may be more outwardly excited about–custom windows, heated floors, smart thermostats and the like–are rendered completely useless if the foundation of the home is laid incorrectly or made from poor quality materials. Few people notice or think about foundations, until cracks in it start a ripple effect throughout the rest of the structure.
Your core banking technology is the foundation of your service and your key to long-term customer satisfaction, so it’s time to ask: How dependable is your core banking provider, and does it satisfy your bank’s needs while giving customers what they want? Does your core provider have your back in helping to steer your technology decisions? Do they have a track record in consistent leadership, team retention and growth? Today’s banking tech stack is the most complex it’s ever been, and many newcomers and legacy core providers alike offer lean support options or bail altogether when issues arise. It’s more important than ever to be selective about what technology providers you work with and do the research to confirm their dependability.
Above all else, customers just want a banking product that works reliably, day in and day out. On the other side of the coin, community banks realize what’s needed is provider support that reduces potential friction in their ecosystem and resolves issues quickly, allowing for a seamless pass-through of benefits to the customer.
Get What You Give with Community-focused Core Banking
Establishing a love language with your core helps ensure that your bank is not only the right match in the moment, but actively sustains your customer ties. Don’t waste time and resources trying to untangle complex technology stacks. It’s not the complexity of the technology stack that will keep customers but it’s what is inside that counts.