According to the latest FDIC Quarterly Banking Profile, community banks continue to thrive. As more banks turn profitable — 90.3% achieved that threshold in the fourth quarter of 2014 — community banks aren’t just competing with large, national institutions. They are competing with each other, particularly for commercial loans and other business lending.
While a low interest rate for small- or medium-sized businesses will always play a critical role in the decision matrix, which institution would win if rates were equal? Competing on price alone is not likely to get bankers where they want to be in today’s environment.
As more financial institutions plans for an omnichannel banking future, many are taking a long look at ways to build and improve relationships beyond traditional retail banking. Often, these discussions include such areas as small business and wealth management banking. This type of outreach has helped boost profitability for many FIs, with continued growth expected in the near-to-intermediate term. For more information on these topics, refer to the Mercator Advisory Group website, which references reports on such topics as expanding channels to small business and wealth management lines of business, market segmentation, and the movement toward omnichannel banking.
Overview by Edward O’Brien, Director, Banking Channels Advisory Service at Mercator Advisory Group
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