Some of the biggest players in the financial management game are the “big banks”. These large financial institutions began acquiring smaller banks and have since grown exponentially. However, there can be downfalls to banking with a massive corporation. In fact, many of these big-name banks have been involved in scam accusations, scandals, and have even repeatedly appeared on “most disliked companies in America” lists. Read on to learn the benefits of smaller local banks versus major financial institutions.
Of course, one of the major reasons many people bank with large institutions is for the convenience — online banking and deposits, easy money transfer, widespread locations and ATMs, etc. — and, frankly, brand recognition from advertising is a big draw as well. But it’s important to keep in mind that smaller local banks don’t fall behind in tech advancements like online/mobile banking — that type of banking is standard today. What sets smaller banks apart is a host of personal and community benefits that you can’t find with the big guys.
Keeping more money in your pocket.
High fees and strict corporate policies within big banks are lending to an increasing number of unhappy customers. Typically, large banks have a fee for just about anything, such as withdrawal fees, deposit fees, transaction fees, insufficient funds fees, annual fees, and more. And while smaller banks may have fees for monthly checking or insufficient funds, many of them offer significantly lower fees and often waive them under certain (easily obtainable) conditions. On average, they also offer better interest rates on savings accounts and better credit card terms.
In addition, smaller banks are less likely to continually increase fees year-over-year for things like overdrafts and ATMs, unlike most of the big banks. Many big-name banks have reported making nearly $2 billion per year in overdraft charges. The benefits of smaller local banks go on . . .
Personalization and flexibility.
At your community bank, you’re not just another number. Local banks provide customers with a much more personal, one-to-one experience. Most big banks simply don’t have the time or capacity to know you on an individual level. Community banks place a greater emphasis on serving their neighbors and treating them as family. You can build relationships with your bankers and financial advisors. This opens the door for your banking experience to be completely tailored to you. It also lends a hand to less employee turnover and higher quality service.
A personalized experience with your bank also allows for greater flexibility. Big banks claim to dominate the market when it comes to the variety of their “menu options”, but most small banks offer all the same services as large banks and are also able to provide unique programs and options designed for the needs of their local customers. There is also significantly less bureaucracy and red tape to navigate for smaller banks, which heightens responsiveness and their ability to meet your needs when you need them.
Local decision-making and connections for small business.
Local banks are small businesses just like you. They understand what it takes for a small business to succeed in their communities. They will often use their understanding of the area and insights into local market conditions to help make the right loan decisions for small businesses. And while big banks may sometimes have greater lending power than that of small banks, the largest 20 banks in the U.S. only commit 18% of commercial loans to small businesses.
Community business bankers also provide opportunities for small businesses to network with a wide range of other community members. They can help you connect with suppliers, service providers, and potential clients, which fuels the local economy and helps grow your business. That’s a win-win!
Investing in your own community.
Big banks often send your money to branches all over the country in the form of loans and investments. When you bank locally, the money you invest in your personal finances, small business, and loans feeds directly back into your community to power the local economy.
Additional benefits of smaller local banks are the investments in their own communities in the form of charitable donations and funding for non-profit programs. The more that your local economy succeeds, the more your community banks succeed, and the more your and your neighbors’ business thrives.
The financial decision that’s right for you.
Ultimately, choosing a local bank is a smart financial decision for you and your family, your business, and your community. You simply won’t experience the same personalized banking and community investment with major financial institutions who see you as another number. At Republic Bank of Chicago, we hold the same values as our fellow small banks — we live and work where you live and work, and we help navigate the specific challenges you face in your businesses and other financial decisions in a way that’s right for you. If you’d like to learn more about local banking, reach out to our team at 800-526-9127 or read our other posts!
