The most basic definition of ‘community’ per my good friend Merriam-Webster is “a group of people who live in the same area.” This lines up pretty neatly with the FDIC definition of ‘community bank’ simplified for blogging purposes to a small-ish bank (<$10B in assets) serving a limited geographic area with traditional banking products. Other than the fact that many community banks make local, relationship-based lending decisions, these geographic-based definitions leave community banks lacking in much of a competitive point of difference.
If community banks are just little ‘big banks’ then why are they outperforming big ‘big banks’?
According to the WSJ, “Their [community banks] earnings rose 9.7% last year, better than the industrywide growth of 7.5%, according to Federal Deposit Insurance Corp. data.” The article goes on to detail how the acquisition of branches and assets from struggling banks and advancements in technology have supported the growth of community banks. Only at the very end of the article is there a brief reference to one of the most interesting reasons for me as a brand strategist and marketer for the growth. The WSJ calls it “the personal touch” and cites an example of a Midwestern bank that won the respect and business of the Amish people in their area when one of their loan officers showed that he could drive a team of mules.
Obviously not every community bank can employ the ‘team of mules’ strategy but they can all employ a strategy that redefines ‘community’ from a geography to an experience. By focusing not just on serving the people in their community but on creating a sense of community among the people they serve, community banks can create a sustainable competitive advantage. According to the seminal psychological research first published by McMillan & Chavis in 1986, a sense of community is “a feeling that members have of belonging, a feeling that members matter to one another and to the group, and a shared faith that members’ needs will be met through their commitment to be together.” While this particular piece of research is 30 years old, it was new when I was studying psychology at Dartmouth and it remains the most influential piece of research on the psychological sense of community.
How does a community bank build a psychological sense of community?
Creating a sense of community isn’t necessarily about doing different things, it is about doing things differently. By considering the four elements that create a sense of community outlined by McMillan & Chavis, community banks can help ensure that everything they do does just a little bit more to keep their business growing. Here are a few thoughts to get you started:
- Membership – Create a feeling of belonging and sense of personal relatedness with your customers by hiring multicultural and multilingual staff or offering bundled solutions for new college grads and first time home buyers.
- Influence – Make sure your customers know that what matters to them also matters to you by actively engaging in a two-way conversation when they visit your branch, your website or your social media channels.
- Fulfillment – Don’t stop at meeting openly expressed customer needs with rates and other offers competitors can beat but go the extra step to address their unspoken wants with little extras and a friendly smile.
- Connection – Get out of your branches and into the places and spaces where you customers live and work by participating in local events or invite customers into your branches for fun or informational events.
If you’d like a few more thoughts, hitch up your team of mules and come see us or just call/email.