ABA Banking Journal - May/June 2015 - (Page 46)
> INVESTOR PERSPECTIVE
Here and Now:
The Best of Times for
Community
Banking
BY JOSHUA SIEGEL
I
'M more optimistic about
community banking than I've
ever been before. Community
banks are the life's blood of many
small towns. They foster deep
community roots and fund an
astonishing 58 percent of all small
business loans made by banks. Yet,
because their lack of publicity, there's
a perception that they are insignificant
and on track toward obsolescence.
In fact, community banks remain a
true reflection of their communities.
They provide the job-creating, incomeproducing capital that allows local
communities and, frankly, the spirit of
America to thrive.
Banks today face an uphill battle:
heavy-handed regulations, reduced
loan demand and chronically low
interest rates. When your main
business is "risk," nothing comes easy.
So with all these headwinds, why
do I consider it the "best of times"
for banking?
46
ABA BANKING JOURNAL | MAY/JUNE 2015
We're at a unique moment, with shifts
in technology, growth opportunities
and cultural changes that are coming
together to create a golden opportunity
for all but the largest banks-if we're
willing to seize the opportunity.
Leveraging technology
Fortunately for community banks,
when it comes to technology, the tide
is turning. Technology is getting better,
faster and, most important, cheaper.
For the first time in 50 years, small
banks can lead in technology adoption.
In the past, large banks led the way
by being first with the ATM, first with
phone banking, first with Internet
banking and first with mobile banking.
Now smaller banks are launching new
technology far faster than large banks.
As technology costs plummet,
local banks are finding they have
the resources to go toe-to-toe with
the big guys. Today, nearly every
neighborhood bank can afford to offer
the same technologies as their national
counterparts. To be sure, large banks
made the initial investments to develop,
test and validate the demand for new
technology. Community banks are now
adding the same technologies at a
fraction of the earlier cost and updating
them faster than the large banks, which
have enormous costs sunk in legacy
systems. Technology is a proven way to
increase customer loyalty and reduce
overhead, not to mention enhance
business development.
It wasn't long ago that big banks
averaged 6.5 products per customer,
while community banks averaged 1.75.
Today, that spread is thinning, with
technology serving as a primary driver.
Now community banks can offer the
same services and cross-sell deeper into
the product spectrum just like their larger
peers.
Capital raising and
growth opportunities
The ability to raise capital is becoming
even more crucial for banks to survive
Table of Contents for the Digital Edition of ABA Banking Journal - May/June 2015
CHAIRMAN’S VIEW
UPFRONT
ECONOMIC OUTLOOK
LEGAL BRIEFS
PICTURE THIS
CELEBRATING A TRADITION OF INNOVATION
SOUND RISK CULTURE
AN INTERVIEW WITH FDIC’s MARTIN GRUENBERG
NEW RESPA/TILA MORTGAGE DISCLOSURES
BANK DOMAIN ROLLOUT
INVESTOR PERSPECTIVE
MARKETING/RETAIL
PAYMENTS
ADVOCACY
ABA COMPLIANCE CENTER INBOX
CYBERSECURITY
MORTGAGES
OPERATIONS
BOARD MATTERS
FROM THE STATES
BANKER RECOMMENDED READING
INNOVATIONS IN SOCIAL RESPONSIBILITY
INDEX OF ADVERTISERS
ABA Banking Journal - May/June 2015
https://www.nxtbook.com/naylor/BAKS/BAKS0318
https://www.nxtbook.com/naylor/BAKS/BAKS0218
https://www.nxtbook.com/naylor/BAKS/BAKS0118
https://www.nxtbook.com/naylor/BAKS/BAKS0617
https://www.nxtbook.com/naylor/BAKS/BAKS0517
https://www.nxtbook.com/naylor/BAKS/BAKS0417
https://www.nxtbook.com/naylor/BAKS/BAKS0317
https://www.nxtbook.com/naylor/BAKS/BAKS0217
https://www.nxtbook.com/naylor/BAKS/BAKS0117
https://www.nxtbook.com/naylor/BAKS/BAKS0616
https://www.nxtbook.com/naylor/BAKS/BAKS0516
https://www.nxtbook.com/naylor/BAKS/BAKS0416
https://www.nxtbook.com/naylor/BAKS/BAKS0316
https://www.nxtbook.com/naylor/BAKS/BAKS0216
https://www.nxtbook.com/naylor/BAKS/BAKS0116
https://www.nxtbook.com/naylor/BAKS/BAKS0615
https://www.nxtbook.com/naylor/BAKS/BAKS0515
https://www.nxtbook.com/naylor/BAKS/BAKS0415
https://www.nxtbook.com/naylor/BAKS/BAKS0315
https://www.nxtbookmedia.com