How can small community banks add value to neighbourhood development?

Small things have their own peculiar charm.”

The present US banking environment is structured in a very complex manner. Not only does it have one of the largest pool of banks, the manner of basic functioning and hierarchy is also different. On one hand we have mega banks which have profound presence across the globe and on the other hand we can find small community banks in every nook and corner of a street. Though every institute has its own importance, small community banks, over time immemorial, have carved a separate niche for themselves. Not only have they played a vital role in catalyzing the economy but also served as a safe and secure banking option to the common man.

However, we cannot deny that large banks have eaten up a considerable business of small banks over the last three decades. In such a scenario the role of small community banks has become even more crucial. In the modern day world, community banks can add a lot of value to neighbourhood development.

We know that these small community banks play a crucial role in providing small loans to customers. These loans may vary from real-estate purpose to business expansion or set-up. More often than not, these loans stretch out to double digit years and it is of paramount importance that the bank builds a strong relation with its customers to ensure a healthy symbiotic relation. By acting as role models for other financial institutes, community banks can add a lot of value towards neighbourhood development.

In the current financial times, when there is dearth of security and trust, community banks act as a beacon of hope and stability. Unlike other institutes, small community banks follow really simple practices and have a very sound functioning and management. People can count on small community banks to help them in the now. The basic structure of community banks in America has been such that they find an indomitable place in the life of people. When people see huge organisation's falling like a pack of cards and small community banks carrying out their daily routine even in the time crisis, neighbourhood feels safer and secure that their money is in safe hands.

We have got tremendous amount of gap in financial system, which small banks can fill in the void. Overall the future of business is always organization's ability to learn, and translate that learning into action rapidly, which is the ultimate competitive advantage.

Robin Trehan can be reached at