Wall Street Spins Another Tall Tale

By Rebeca Romero Rainey

The megabanks are at it again. While Bank of America and other large financial institutions have been withdrawing from local communities in the wake of the financial crisis they created, a new Wall Street Journal piece wants readers to believe that these areas can’t possibly get by without them. Fortunately, ICBA and community bankers have a more positive story to share.

With so many big banks withdrawing from local communities (more on that below), the good news for customers of the nation’s more than 52,000 community banking locations is that community bank acquisitions of megabank branches are more often an economic boon for local communities.

The latest data back this up. Community banks added more than 700 bank offices between June 2017 and June 2018, whereas noncommunity banks shrunk by 384 over the same time period, according to the Federal Deposit Insurance Corp. Further, community bank loan growth exceeded growth at noncommunity banks for six consecutive years between 2012 and 2017, the agency said.

This builds on the disparate responses to the Wall Street financial crisis, when community banks increased lending to consumers and small businesses while megabanks closed off access to credit. Accounting for more than 60 percent of small-business loans under $1 million, community banks continue to drive local economies and create local jobs.

Our success is due in no small part to community bank technological gains on top of the high-quality customer service for which we are known. Community banks use widely available technology platforms to offer the products and services that customers need, and they also partner with and invest in innovative financial technology companies. These kinds of relationships are exemplified by the ICBA ThinkTECH Accelerator launched last year. Through this fintech accelerator program, community bankers are directly engaging with and mentoring early-stage fintech companies working to bring their community bank-specific offerings to market.

Community banks’ high-tech and high-touch service, combined with their unrivaled commitment to doing right by their customers, expands economic growth in the Main Street communities that other institutions have left behind. Despite the repercussions of Bank of America’s pullout from local communities, community banks remain a thriving sector of the banking industry and at the forefront of banking technology. The results speak for themselves.

We at ICBA know better than to buy into the megabank spin. So community bankers, let’s continue to keep up the good work in serving our customers, innovating, meeting the needs of our communities, and brushing off the negativity from our megabank competitors. Not everyone in the banking industry has a positive story to tell, but thankfully our nation’s community bankers do.

Rebeca Romero Rainey is ICBA president and CEO.