Over the last two decades, a trend of mergers and evolving customer preferences have radically altered the community banking sector in the U.S. While regional banks have expanded by 50% over the past two decades, the number of community banks has halved, declining from nearly 7,500 in 2004 to roughly 4,000 in 2023. To achieve long-term growth, community banks need to focus on attracting millennials and Gen Z, the two fastest-growing demographics with significant economic influence. Their combined spending power is estimated at $360 billion and will continue to rise as more Gen Zers enter the workforce. However, community banks face tough competition from digital-first banks that appeal to these younger consumers through convenient mobile access. In 2023, nearly half of all new checking accounts were opened with larger, digital-focused competitors. By leveraging personalization in relationships and INDEPENDENT REPORT | 17
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