The definition of community is shifting, and with it, the role of financial institutions in fostering trust, engagement, and long-term loyalty. Traditionally, community banks thrived on their physical presence, local involvement, and personalized services. However, changing consumer behaviors, the rise of digital banking, and the increasing importance of social media have blurred the boundaries of what constitutes a “community bank.” Our latest research reveals that while consumers still value local connections, their expectations now extend beyond physical locations to digital engagement and personalized interactions.
STRATEGIC RECOMENDATIONS
1. The Blurred Definition of Community Banking
When asked to identify their primary financial institution, many respondents struggled to categorize their bank as a “community bank,” even when provided with a list of top institutions. This confusion suggests that community messaging has become diluted across the industry, with even national banks adopting community-centric language without necessarily demonstrating deep local involvement.
At the same time, the definition of “community” itself is evolving. It’s no longer just about a branch’s proximity to consumers—it includes digital accessibility, customer service quality, and the institution’s broader social impact. The rise of loneliness as a societal issue has also influenced how people perceive community, shifting expectations toward human-centered customer service and deeper emotional connections.
2. The Rise of Digital and Social Media Communities
Today’s consumers are forming communities online as much as they are in person. 35% of respondents reported that their primary community engagement takes place in local Facebook groups or Discord servers, while another 31% cited fitness and wellness apps. Other popular community spaces include religious groups, volunteer organizations, and social clubs.
Despite this shift, financial institutions remain largely absent from these digital spaces. Community banks and credit unions have the highest level of local Facebook group participation, but national banks lag behind. Social mentions and online engagement are now key drivers of customer loyalty, meaning that banks must rethink how they interact with their audiences beyond traditional branch visits.
3. The Branch as an Under-Leveraged Community Hub
While the rise of digital banking has reduced in-branch transactions, our study finds that branches still hold significant potential as community engagement centers. Customers who visit their bank in person are also more likely to engage in digital community spaces, suggesting an opportunity for financial institutions to seamlessly connect online and offline experiences.
However, financial institutions ranked low when it came to providing a strong sense of community. Religious institutions, educational centers, and wellness facilities were perceived as key community anchors, while banks remained largely transactional in consumers’ eyes. To change this perception, branches must evolve from service centers into spaces that foster networking, learning, and local engagement.
Respondents highlighted several initiatives that would make branches more community-centric, including:
Access to experts beyond banking (e.g., financial advisors, accountants, business consultants)
Local networking events for small businesses and entrepreneurs
Volunteering networks to facilitate local outreach efforts
Co-working spaces and educational seminars on financial literacy, wellness, and career development
Partnerships with local businesses to promote community commerce
4. Consumers Want More Community Engagement from Their Banks
While consumers want their banks to be more involved in their communities, there is a clear gap between expectation and reality. 42% of respondents expressed a desire to spend more time engaged in community activities, but only 7% reported doing so on a daily basis. This suggests a significant opportunity for financial institutions to facilitate local engagement through events, volunteer opportunities, and social initiatives.
Moreover, while financial institutions have traditionally focused on sponsorships and charitable donations, our research suggests that active participation is far more effective than passive support. Rather than simply funding local initiatives, banks should host events, create dedicated community spaces, and encourage employees to volunteer in local programs.
5. The Strategic Actions Banks Must Take to Drive Loyalty and Growth
For financial institutions looking to strengthen customer relationships, enhance loyalty, and differentiate themselves in a competitive market, several key strategies emerge from our research:
Transforming branches into vibrant community hubs by integrating networking spaces, educational programs, and personalized advisory services
Leveraging digital and social media platforms to engage with customers where they are already active, particularly in local online groups and forums
Investing in personalized experiences and AI-driven customer insights to tailor services and messaging to individual community needs
Fostering authentic community connections by facilitating volunteer networks, supporting local businesses, and actively participating in local event
CONCLUSION: Redefining Community Banking for the Future
The future of community banking will be shaped by institutions that understand and adapt to the evolving definition of community. While digital transformation continues to accelerate, the need for meaningful, human-centered engagement remains strong. Financial institutions that successfully integrate physical, digital, and social experiences will be best positioned to foster loyalty, drive growth, and establish themselves as true community leaders.
By prioritizing inclusivity, engagement, and innovation, banks and credit unions can move beyond transactional relationships and build deeper, lasting connections with the communities they serve.
About the authors
Jean-Pierre Lacroix
President of Shikatani Lacroix Design
