Login to Bundlefi ELS | Are You Looking For An Account?


<< Back to All Articles

7 Benefits that Community Banks Offer

A community bank is a depository institution that is typically owned and operated locally. Community banks provide traditional banking services in local communities, including checking, savings, and even providing many of their loans to local businesses. While many see big banks as the best option, community banks come with several advantages that allow them to service their customers and local communities in ways that consistently exceed expectations. Below are seven key benefits that community banks offer:

1.    More flexible lending guidelines

When you apply for a loan with a traditional bank, your application is usually sent up the ladder to some faceless underwriter who must adhere to strict guidelines, making it difficult for customers with a blemish or two on their credit report to qualify for a low loan rate. Community banks make all lending decisions locally, considering their customers’ unique needs and circumstances. Some community banks go beyond the application to evaluate your character, family history, and relationship with the community.

2.    Lower fees and better rates

Typically, checking accounts from community banks are less expensive than those from national banks. Checking and savings accounts usually come with more features and even some incentives. If you’re looking for an edge with your savings, the interest rates at community banks are generally higher than at the big banks.

3.    Local banks invest in their surrounding community

When you hold your assets in a community bank, you can be confident that your money is being used to strengthen the local economy. This is because when the local community bank prospers, so does the community which is the beneficiary of local investment. Some community banks are also designated as Community Development Financial Institutions, or CDFIs, with a special mission to help provide economic opportunities and create financial self-sufficiency for underserved communities.

4.    Local banks support community organizations

Many local banks are dedicated to supporting community organizations such as local non-profits and other charitable organizations. This support often comes in monetary donations and the accumulation of volunteer hours that significantly benefit the bank’s surrounding community.

5.    Better customer service

Customers can find comfort in the fact that when they do come into a bank, they know the person behind the counter. Service is more personalized and typically much faster at community banks. For example, if you apply for a loan, employees at the bank will often take time to know you as a person rather than just a credit score. These relationships allow community banks to serve customers better.

6.    Provide the same products

In today’s market, almost all banks offer the same services, including mobile check deposit, online bill payment, and debit and credit cards. Customers can be sure they’re not losing out on exceptional products when choosing a community bank for banking needs. Typically, the fees for using these products are lower at community banks than at big banks.

7.    Higher ethical standards

Community banks conduct business at a higher standard of ethics because they are community members. Understanding that their behavior and practices directly affect their community, their assets are invested in small, local businesses rather than national or international industries, which is common among big banks.


Community banks are dedicated to serving the local individuals and businesses of their communities and hold a strong appeal to consumers tired of the impersonal treatment at big banks.  Community banks are generally considered “relationship bankers” who have a close relationship with their customers and exceptional knowledge and expertise of the local community. They may also have less-structured underwriting for credit decisions than big banks, making it possible for consumers and small businesses to get approved for credit that may not meet the requirements of a larger bank.


Key Takeaways

  • More flexible lending guidelines
  • Lower fees and better rates
  • Local banks invest in their surrounding community
  • Local banks support community organizations
  • Better customer service
  • Provide the same products
  • Higher ethical standards