To evaluate the current mindset of community banking leaders going into 2024, we surveyed 100 community bank leaders across the country. The themes we kept encountering as the responses came in were that community bank leaders are looking at leveraging fintech partners, enhancing their program offerings, and improving customer experience.
We’ve published our takeaways in our latest eBook, "2024 Community Banking Outlook," which you can download here. Here is a quick summary of each of the key findings:
Overwhelming Interest in Fintech Partnerships
The dynamic between community banks and fintechs continues to evolve, moving past the era of competition into a new phase of collaboration. Our research indicates a significant interest in fintech partnerships, with 79.5% of respondents interested in payments partnerships and 75% of respondents interested in lending partnerships – both are areas in which community banks can greatly benefit from fintech innovations.
This strategic shift is about more than staying current; it's about harnessing collective strengths to create a robust financial ecosystem. Community banks have an opportunity to tap into fintech's technological prowess while maintaining their unique customer-focused approach. It's a synergy that promises to redefine the banking experience.
Our findings show that customer experience is seen as a critical component of growth and customer retention strategies.
The major focuses for 2024 within the customer experience are digital and mobile banking capabilities. 84.1% of respondents said that digital banking is a major focus, while 68.2% are focused on mobile banking.
The shift to digital isn't just a trend; it's a response to customer expectations. Banks need to offer more than just basic services; they need to provide an experience that's convenient, personal, and above all, digital. It's about meeting customers where they are and delivering services that fit into their lives seamlessly.
Recognition of Customer Retention Challenges
The road ahead for community banks is not without its challenges. Limited resources and competition from larger banks and digital platforms are seen as significant concerns by large shares of respondents. 70.5% cited resource limitations as a concern, while 61.4% saw competition from larger institutions as a significant concern and 40.9% felt the same way about digital banking competitors.
However, these challenges also present opportunities for innovation and strategic growth. It's about finding smart, efficient ways to utilize available resources to stay competitive. Competing with larger institutions and digital-first banks requires a creative approach. Community banks need to leverage their strengths – like local market insights and personal customer relationships – to carve out their niche in the banking landscape. It's not about matching resources with larger banks, but about playing to unique strengths and capabilities.
Legacy Infrastructure is Facing Scrutiny
Modernizing infrastructure is no longer an option but a necessity for community banks and 75% of respondents said that it's a major focus for their institution going into 2024. With the digital transformation of banking, customers expect more than just traditional services. They want security, efficiency, and a seamless digital experience. This makes modernizing legacy systems crucial for community banks to stay relevant and competitive.
Areas like data security and user-friendly digital interfaces are now at the forefront of infrastructure modernization efforts. It's about building a foundation that not only meets current demands but also paves the way for future innovations and services.
To Sum Up
The results of our community banker survey can be summed up with the following high-level takeaways:
- Fintech partnerships are the pathway forward to remain competitive.
- Investing in customer experience is no longer allowed to be an afterthought
- Legacy infrastructure requires evaluation and elevation to deliver the required data security and accuracy for both internal uses and compliance regulations.
