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Rethinking Community
What is a community bank?
As a financial journalist, I always believed the label applied to banks with less than $10 billion in assets. That seemed like a natural ceiling in the wake of the Dodd-Frank Act. Since its passage in 2010, banks with more than $10 billion were required to stress test, gained the Consumer Financial Protection Bureau as a regulator and had lower debit interchange income.
For many of you, that definition won’t hit the mark.
Some may prefer the Federal Deposit Insurance Corp.’s more narrow criteria. According to the regulator, community banks have less than $10 billion in assets, but they also focus on specific geographic communities. However, they can’t be located in more than two metropolitan areas. And no more than half of the institution’s assets can be wrapped up in specialty business lines such as trusts or credit cards.
In the eyes of the FDIC, a lot of bankers may be surprised to find out they don’t work for a community bank.
But a community can be more than just a place; it can encompass different groups, identities and backgrounds. A lot of niche banks and competing fintechs are coming around to that expanded view of community.
“The first bank I used was a community bank, because it had the most ATMs in my city. If you asked me ‘What is my community?’ I would tell you it’s people who lived in New York,” says Adam Hadi, vice president of marketing at Current, a mobile neobank. “Fast forward a bit. If you asked me that today, I would say I have lots of communities — including my local community. But I also have communities around the world, [along with] digital communities.”
The definition of community is changing. Some banks now think of communities as different groups with distinct financial needs, rather than people living and working in a physical place. To that end, some banks have launched programs and products targeted at groups as diverse as doctors and veterinarians, immigrants and young people, gig workers and parents helping their kids learn how to use money.
As banking activities increasingly move out of the branch and onto our phones, bankers and boards may need to challenge their definition of community to ensure they’re meeting the needs of their users — wherever they are.
• Kiah Lau Haslett, managing editor of Bank Director
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