Leveraging Relationships: How Community Banks Can Win

Some of the most pressing challenges facing community banks and credit unions in the current banking environment include narrow interest rate margins, increasing pressure from regulators, and competition.

One area where small community banks and credit unions have maintained an edge is in relationship lending. The bankers at community institutions tend to know their customers much better than the branch staff at larger institutions or online lenders. Community bankers can leverage these relationships as part of their growth strategy by working closely with their customers and members to advise them on new banking products and services that truly benefit their customer’s experiences. By focusing on the relationships with their customers and members, community banks and credit unions can provide a level of customization to their service that alt lenders can’t compete with.

Another way in which relationship lending can give community banks and credit unions an edge is the flexibility that comes from combining relationship-based lending with credit risk management processes. Combining the information from a borrower’s financial statements with the personal understanding of the borrower as a person, the lender is able to capture a more complete profile of the borrower, allowing the lender to make a better decision on the loan.

To learn other ways community banks and credit unions can optimize to jump-start their portfolio growth, download the whitepaper “Prepare for the Digital Future of Lending”.