3 Ways Smaller Banks Are Leveling the Playing Field BY CETIN DURANSOY, Chief Executive Officer, Raisin US In 2023, failures of large financial institutions shook consumer confidence in banking. In fact, a May 2023 poll from The Associated Press-NORC Center for Public Affairs Research found that only 10% of adults in the U.S. had “high confidence in the nation’s banks and other financial institutions” — less than half the amount that reported high confidence in 2020. Despite this, big banks manage more than 70% of consolidated assets among FDIC-insured banks, up from 42% in 2003. Meanwhile, the number of community banks in the U.S. shrank by nearly 50% in the same time period. From supporting small businesses to reaching communities that may have more limited access to banking services, small banks play a vital role in the communities they serve. So how do these smaller institutions effectively reach consumers and level-up for sustainable growth on a playing field built for a handful of behemoths? And, with increased scrutiny by federal regulators on smaller banks that have financial technology partnerships, how will they be able to stay ahead in an industry that’s becoming more and more digital? Here are three ways that community banks are differentiating themselves and finding fintech solutions to solve their unique challenges: 1. Highlight Their Impact to Build Consumer Confidence With more focused footprints, it can be easier for community banks to have outsized impacts on their local areas. One such institution is Ponce Bank, a certified Community Development Financial Institution founded in The Bronx, New York. Its founders countered the attitude that theirs was a community in decline and, in the decades since, Ponce Bank has remained focused on bringing banking services to areas where that help is in highest demand. “A rising tide lifts all boats,” says Carlos Naudon, CEO of Ponce Bank. Indeed, 75% of Ponce Bank’s loans go to people in low- to moderate-income neighborhoods and over 80% of their loans go to communities they serve. In addition to community development, mission-led banking in the form of financial donations, employee volunteer hours or other programs also gives smaller institutions an ability to set themselves apart. Utah Banker 10
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