Banking on Relationships
How small community banks have risen to the occasion in the face of a pandemic with far-reaching financial implications
By Laura Wright
During the pandemic, community banks were able to demonstrate that they are adaptive and resilient. While most bank lobbies were closed or by appointment only, they were able to accomplish just about every banking task either online, over the phone or in the drive-thru. This includes everything from depositing and cashing checks to opening new accounts and closing loans. Bankers have also adapted by using video conference tools like Zoom to connect with clients and even walk them through more complex things like closing loan documents.
Clients have been very understanding and thankful for these adjusted operations. Most banks, ours included, have seen a significant surge in online banking enrollment in recent months. As bankers, we hope that one of the positives of the current situation is that those who have previously avoided using banking technology, like online banking, will now be more apt to using it in the future.
Community banks have been very proactive in their assistance efforts. To community banks, their clients are more than an account number and they understand that their relationship with the local business economy needs to be mutually beneficial to be successful. The many customer assistance efforts we’ve seen have included loan payment relief, emergency lending programs, increased ATM limits, waiving CD penalties and other fees, expedited lending processes and holding off on any new foreclosures. If you are dealing with financial hardship as a result of the pandemic, don’t be afraid to reach out to your community banker. They will try to work with you and may already have a program set up to help.
Another example of how community banks have shined during the pandemic, is how they have made special efforts to help promote and utilize their small business partners during the pandemic. Some have taken to social media channels to spotlight local businesses, some have set up webpages to advertise local restaurants who offer take-out and delivery, some are promoting and supporting local non-profit partners and most have even made a point to choose locally owned restaurants when ordering food for employees.
So many businesses have been by impacted by this unprecedented situation and are relying on funds through the U.S. Small Business Administration’s (SBA) Paycheck Protection Program (PPP) to survive. We’ve heard from across the country that community banks have been much more responsive and helpful with PPP lending—especially to the small and micro businesses.
Local business owners have said that many of the larger banks were late to participate, were not responsive and some chose not to participate in the second round of funding. Our community bank was also one of the few that was willing to assist non-customers with PPP loans. Local businesses appear to have been more successful receiving PPP loans through smaller, local banks.
All of the community bankers that we’ve communicated with worked literally around the clock and through the weekends to help businesses obtain PPP funding. I’ve heard so many “super hero stories” of how thankful and appreciative business owners are for the dedication from the bankers who have helped save their livelihood. Community banks are meeting the needs of their area and are demonstrating the true dedication of community bankers.
In the ever-changing landscape of banking, some have lost sight of the value of having a dedicated banker. Banking behavior has changed due to technology, shifting demographics and emerging fintech competitors. While these factors bring more options, flexibility and access, they also often lead to less personal interaction. Many people don’t think about what could happen to their business when there is an emergency (or pandemic) impacting their finances.
One of the most valuable ways that community banks serve the area and local businesses is through relationship banking. While it’s not unique to the pandemic, the importance of having a banker in your corner is often more evident during tough times. A dedicated banker can help when you need an exception made, to navigate the loan process, to advocate for your loan approval and to connect you to helpful resources.
While most banks claim relationship banking, I’ve found it’s often truer of smaller community banks. If you do not currently have a banker who knows you by name, understands your financial goals and objections, and would spring into action when needed, then you should definitely consider finding the right banker for you.
I hope that these challenging times have proven the true support and dedication of our community banks.