Tech to Boost Community Bank Growth, Research Shows

The size of the global community bank market is expected to grow by more than 5% a year between now and 2027, according to analysis.

Market research company Technavio has forecast that the combined market value of community banks around the world will increase by more than $207 billion over the next five years, driven in part by the growth of digital financial services.

The growth will be dominated by North American community banks, Technavio reported, with banks demonstrating strong online offerings leading the way.

The news comes as US community banks continue to enhance their digital offerings with online banking and the digitization of services such as lending.

Last week, Oklahoma-based First Fidelity Bank announced a partnership with fintech company Unifimoney to grow its digital offering and help other community banks and credit unions to build online services.

The partnership allows customers to access a range of investment options alongside a regular cash account, including a money market fund, listed securities, and precious metals.

John Symcox, chief innovation officer at First Fidelity Bank, said community banks were experiencing outflows as customers turned towards investing through fintech platforms to get more from their money. The Unifimoney project “allows us to attract and grow consumer deposits and enable other community financial institutions to do the same”, he said.

Unifimoney CEO Ben Soppitt added: “Consumers are actively seeking better ways to gain yield on their cash and we give them choices in how to achieve that. This is an example of the power of combining a traditional community bank and a fintech to deliver innovation, growth and value to customers that would be impossible otherwise.”

Separately, Merchants National Bank has established a partnership with Teslar Software to automate areas of its workflow and make its processes more efficient.

The Ohio-based bank, which recently hit $1 billion in total assets, said the automation software would also give it more transparency across its lending portfolio and improve reporting.

“As we’ve continued to grow… it was clear that Excel spreadsheets and largely manual processes would no longer fit our evolving needs,” said Linda Smith, head of credit administration at Merchants National Bank.

Automation would “save time and reduce the risk of human error”, she said, as well as supporting the bank’s efforts to enter new markets.