When it comes to banking, it is common for people to restrict their business to large international banks. Still, local community banking continues to be a pivotal catalyst for the economy as well as for small businesses.
As per Harvard’s Kennedy School, community banks deliver more than half of the total small business loans as well as contribute approximately fifty percent to overall commercial real estate lending.
According to Federal Deposit Insurance Corporation, in 2016 alone, community banks offered an additional 2.2 percent small loans to businesses.
When it comes to the economy as well as the business, compared to large banks, local banking offers various benefits. Here is how banking locally can be advantageous for any person, business as well as the overall economy.
- Local banking allows you to give back to the community
Local banking is often referred to as community banking. Just like you might run a business that is yet to convert into a big enterprise, the same is the case with local banks. Local banks are a form of small business, whose profits are reaped by your community and economy.
The more support you give to such institutes, the bigger they will become, and hence, the more strong, your country’s economy will grow. As a business owner, you can expect local banking to create a domino effect.
After checking business bank account requirements, once you invest in community banks, they will slowly become better assets. As trust in local banking builds, more individuals will bank locally, further keeping revenue within the country.
- Local banks reinvest in the economy
If your country’s economic growth is accelerated, as a business, you have a lot to win. You need secure banking for a successful business. And a growing economy is just that.
Local banks don’t just allow you to give back to the economy because of the way they function. Instead, the banks themselves are more likely to go out of their way to reinvest in the local economy.
Local banks rely on accounts that they service to grow their portfolios. The more they grow, the more they have to be able to invest back in the community that built them. For instance, it is common for quality local banks to finance local construction projects or sponsor a local league team.
This means that while the banks are quite small, they help make significant contributions to the community and hence, the economy.
- You enjoy a personalized experience
One thing that has remained consistent in customers over the years is the desire for a customized experience. Most of us wish to use services that can mold their offerings and experiences as per our needs.
Compared to mega international banks who have strict policies and a rapid pace of business, local banks feature a much more relaxed, friendly, and helpful atmosphere. You won’t feel that you are being served with the same generic solution as all other clients.
Instead, local banks tend to truly listen to your concerns and needs and then offer a solution that is best likely to help you. However, to ensure such an experience, it is equally important to select the right local bank. Rather than making this decision yourself, let your accountant and finance department make this decision for you.
- More flexibility in operations
2018 was quite a revolutionary year for community banking. The current Dodd-Frank Act was altered to include points about Economic Growth, Consumer Protection, and Regulatory Relief. This has allowed local banks to enjoy greater flexibility in their services and offerings.
The alterations in this act have been a blessing for customers. Whether it be the fact that community banks now have lesser pressure or that they have more services, at the end of the day, it is customers like you who benefit.
For instance, let’s take business loans as an example. It is much harder to get your loans approved by big banks. This is because they have quite stringent standards. However, compared to this, local banks can review each loan application with better objectivity.
Hence, if you apply for a loan for your business in a local bank, there is a higher chance of it getting approved.
- More jobs equal a healthier economy
Local banking helps create a healthier economy because they serve as a source of employment for the masses. Financial institutions tend to employ a workforce with a wide variety of skillset. After all, a bank needs a functioning operation, marketing, sales, and finance department.
The more you bank locally, and the bigger community banks get, the more human resource they will need. Hence, opportunities will be created for the working sector of the country.
Moreover, since local banking is considering to be a lifeline for small businesses, a rise in local banking can lead to an increase in the number of small businesses in your country. This domino effect is likely to boost the transportation, telecommunications, and delivery sector too, which they will employ more people to satisfy demand.
- You get better rates
There is no such guarantee that banking locally will always be synonymous with better rates and lower fees. However, if you choose the right local bank, you can significantly reduce your transaction cost.
There is a higher probability that local banks will offer you better rates than big banks. This is true for the various services banks offer, ranging from loans to credit cards. As a small business owner, even the slightest variation in prices can make all the difference. You need all the relief you can get.
Save up by banking locally and reinvest all your savings back into your business.
Ending Thoughts: Local Banking is the way to go!
Yes, there are various merits of choosing big banks. No one can deny the perks and quality of service they offer. But, compared to the benefits local banking delivers to you, your business and the overall economy, the advantages of big banks just cannot match.
Choose the right local bank and play your part in sustaining your business and the economy!
Evie Harrison is a blogger by choice. She loves to discover the world around her. She likes to share her discoveries, experiences and express herself through her blogs. Find her on Twitter:@iamevieharrison