The biggest lesson in community banking from 2022 is how fast things are changing. Two years into the pandemic, so many ideas the industry took for granted have changed, from long-held assumptions about customer demographics to the perceived value of brick-and-mortar locations in relation to overall growth. It’s a new world out there for banking, and many of the old rules just don’t apply.
Even in confusing times, the reality remains that banking customers have to be confident that their money is safe, their bank is stable and well-run and that bank leadership is keeping up with evolving industry standards without chasing every shiny object. That’s particularly important for customers who choose community or regional financial institutions.
Between record inflation, a looming recession and the ongoing threat of COVID, America’s economic future might seem rather murky right now. But there are a few trends for community banking in Arkansas that my team at Citizens Bank sees as notable for the industry, both locally and nationally.
THE SHIFT TO DIGITAL BANKING IS HERE TO STAY
Our customers were already moving steadily toward digital banking before COVID hit, but closed lobbies and social distancing put that shift into overdrive. An Ipsos-Forbes Advisor poll released in March found that a whopping 78% of Americans with bank accounts now prefer digital banking, with slightly more preferring to bank through apps than websites. This means community banks must continue to invest in their digital offerings, going beyond the traditional online banking model of balance reporting, transaction listing and transfers. Digital adoption across all demographics has opened the door for innovation and a stack of services to meet all customers’ banking needs digitally.
BUT THE BRANCH EXPERIENCE IS STILL IMPORTANT
Americans love digital banking, but they are still visiting branches. Arkansans tend to adapt slowly to national trends. In many more rural communities, the in-person visit is still very much how people bank, so brick-and-mortar does have a place. Post-COVID, inflation and the economy are on nearly every customer’s mind. Many of those who still come to the bank might welcome a little financial guidance in nervous economic times. In Arkansas, the community bank can still be that trusted source.
OLDER CUSTOMERS TRIED DIGITAL BANKING, AND LOVED IT
While older Americans have historically resisted banking online or through an app, COVID restrictions forced many in the senior demographic to overcome their technology jitters. Once they did, they took to digital banking in a big way, demolishing the idea of tech-phobic Baby Boomers. A Harris poll released last year found that 72% of U.S. banking customers aged 70+ say they use digital banking.
SMART GROWTH – “IF YOU BUILD IT, THEY WILL COME.”
Because of the likely permanent shift to digital, banks that enter a market with a furious branch-building flex might be dumping capital into spaces few people will use. Branches are needed to serve the still-significant percentage of customers who prefer a more personal touch. But at Citizens Bank, we believe smart growth and sound stewardship in today’s world means building brick-and-mortar locations in step with growth milestones and our local customers’ needs. Finding the right balance between digital and brick and mortar is the new table stakes for community banks nationwide. By leveraging the best technology, providing excellent customer service and making strategic moves in brick-and-mortar, community banks can create long-lasting success to reach their business goals and meet the needs of their customers.
A native of Little Rock, Sarah Lane serves as EVP and Chief Retail Officer for Citizens Bank, headquartered in Batesville. A 24-year veteran of the banking industry, Lane has been with Citizens Bank for four years.
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