Community Bank and Credit Union Trends

3 Big Challenges They’ll Tackle in 2024 and Beyond

Report by Sherry Fairchok  | Jul 1, 2024
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Executive Summary
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Table of Contents
Executive Summary
Community banks and credit unions are on the hook to prove their motto, 'smaller is better'
Government efforts to curb inflation and stabilize the industry have hurt smaller FIs more than they’ve helped
Outdated core banking systems threaten to hobble smaller FIs in the tech arms race
Smaller FIs are struggling to win over younger consumers as their older customer base dwindles
Sources
Media Gallery
About This Report
Community banks and credit unions were marked safe from the recent US regional bank collapses. But they’re still contending with unprecedented interest rates, an aging customer base, and disappointing core banking technology.
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Banking
US
Table of Contents
Executive Summary
Community banks and credit unions are on the hook to prove their motto, 'smaller is better'
Government efforts to curb inflation and stabilize the industry have hurt smaller FIs more than they’ve helped
Outdated core banking systems threaten to hobble smaller FIs in the tech arms race
Smaller FIs are struggling to win over younger consumers as their older customer base dwindles
Sources
Media Gallery

Small banks’ and credit unions’ involvement with local communities has traditionally given them a competitive edge over their larger counterparts. But that advantage alone can’t help them overcome aging IT systems and historically high interest rates. To survive, they must innovate and form new partnerships.

Key Question: What challenges must community banks and credit unions surmount to survive what’s been called an existential crisis for smaller financial institutions (FIs)?

US Community Banks See Managing Balance Sheet and Regulation as Biggest External Challenges (% of US community banks, July 2023)
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Key Stat: High interest rates can hurt growth. About 89% of banks saw the imbalance between their earnings and their payouts as an extremely or very important external risk, according to a July 2023 Conference of State Bank Supervisors (CSBS) survey.

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Table of Contents

  1. Executive Summary
  2. Community banks and credit unions are on the hook to prove their motto, 'smaller is better'
  3. Government efforts to curb inflation and stabilize the industry have hurt smaller FIs more than they’ve helped
  1. Outdated core banking systems threaten to hobble smaller FIs in the tech arms race
  2. Smaller FIs are struggling to win over younger consumers as their older customer base dwindles
  3. Sources
  1. Media Gallery

Charts in This Report

US Community Banks See Managing Balance Sheet and Regulation as Biggest External Challenges (% of US community banks, July 2023)Implementation Costs and Challenges Are Community Banks' No. 1 Reason for Not Adopting New Tech (% of US community banks, July 2023)
Interest Rates and Fraud Are by Far the Top Concerns Among Community Banks (% of US community bank managers, Nov 2023)

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authors

Sherry Fairchok

Contributors

Suzy Davidkhanian
VP, Content
Tiffani Montez
Amy Rotondo