A new report from Aite Group, LLC examines the impact of the current financial crisis on U.S. community banks. Based on information gathered from a February 2009 survey of 743 community bank respondents, conducted by Aite Group with the assistance of the Independent Community Bankers of America (ICBA), the report analyzes the current challenges faced by community banks, as well as new opportunities that have arisen from the crisis. It also analyzes bank IT priorities and recommends areas for community banks to focus on in the coming months to maintain positive momentum beyond the crisis.
While the financial crisis has adversely affected U.S. banks of all sizes, community banks are typically faring much better than their larger counterparts. In fact, the crisis has created opportunities for community banks to reclaim ground lost to large national banks in recent years. More than half of the community banks surveyed have experienced growth in deposits as a result of new customer acquisition, and existing customers maintaining higher balances than in the past. In order to capitalize on these opportunities and come out of the crisis stronger, community banks must establish themselves to compete with larger banks in the long term.
They should leverage the online channel for sales and marketing, pursue small-business relationships, and broaden their product portfolios.
Technology will also play a crucial role in their future success; 41% of banks surveyed plan to invest more in IT during 2009 than they did in 2008.
“By striving to serve their customers’ best interests without straying from traditional practices, most community banks have been able to grow deposits, acquire new customers, better position themselves in the eyes of customers, and maintain stable financial statements,” says Christine Barry, research director with Aite Group and author of this report. “Some community banks feel they are seeing more opportunities today than they have in the last several decades. But in order to remain competitive with larger banks, community banks must continue to strengthen their operations and leverage technology throughout the crisis.”
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