Redefining “Community”: How Small Banks and Credit Unions Can Compete and Thrive in Business Banking

Making gains in business banking is a daunting proposition for community banks and credit unions, which despite excellent retention and loyalty struggle to acquire new business customers. The 25 biggest banks in the United States account for the vast majority—84%—of primary banking relationships with small and medium-sized businesses, a share that’s especially growing among the four biggest banking providers.

However, smaller institutions can counter the competitive threat from large banks and fintechs by playing on their core strengths — local and regional market knowledge, industry expertise, product specialization, and personalized service, to name a few. This report details how community FIs can develop online and mobile banking tools that allow them to express those competitive advantages digitally.

Key questions discussed in this report:

• What is the competitive threat that community banks and credit unions face in the business banking market?
• What are the challenges community FIs face in building their client bases and what are their strengths?
• What steps can community FIs take to better express their core strengths -- through digital banking and elsewhere?