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Why Community Banks Will Matter More in 2016

Consultants are great at gauging what's important to a community, not because it's any part of their job but because they travel so often and see so many different places. We recently brought one in and between his drive from the airport to Springfield's south side, he noticed something about us.

"You guys sure have a lot of banks," he said with a smile and a rather thick Texas accent.

Yes we do. There's one on nearly every corner, tucked away in strip centers and lighting up downtown squares. With some 20 banks headquartered in our area, there's a good chance one of their local branches is almost always nearby.

The number of community banks across the country has dropped by more than half in the last 25 years, but that doesn't make community banks any less vital to the overall health of our community. In fact, they might be more vital to businesses and consumers in the coming year than ever. An FDIC report says community banks provide about 45 percent of the banking industry's loans to farms and small businesses despite holding just 14 percent of the industry's overall assets. If small businesses are America's backbone, then community banks are its heart, providing the capital and credit to help these ventures succeed.

In the pages of the Springfield Business Journal this year you'll read more and more about our burgeoning start-up community. While risky, these small businesses are frequently finding success, growing and thriving with local support. These start-ups seek capital from community banks, both conventionally and through Small Business Administration loans, and in newer ways like crowd-funding and shark-tank type investors.

Armed with a business plan and some passion, business owners are finding that community banks are a vital part in making their dreams come true. It's the personal touch, something community banks do perhaps better than anyone else. Sure the banking industry is going digital, but at a community bank the person deciding on your loan is often the person beside you at football games on Friday and church on Sunday. Banking has always been about making connections with people, about forging relationships that often last a lifetime.

The great thing about community banks is that while they're typically not at the forefront of industry innovation, they are often early adopters. The next year will see more digital-only banks enter the marketplace and new technologies in areas like person-to-person lending and financial management. Community banks offer the best of both worlds – soon they'll provide the products and services that consumer confidence supports while retaining the physical presence they trust.

In 2015 we saw mergers, acquisitions, renaming efforts and rebranding campaigns across the local banking landscape. If it taught us anything, it's that change is inevitable. While it's easy to speculate that the industry is headed toward a handful of megabanks, community banks will continue to prosper here and everywhere. The personal attention customers receive is just something that can't be digitized.

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