Think back to the olden days of banking. As early as 30 or 40 years ago, the bank that businesses used was the community bank. Tried and true, community banks helped out the entire community situated around them. There was no online banking, no going to the next town over if you wanted a different option – your bank was chosen strictly by location, and that’s how things were
Now we’re in the era of choice. If you want to use the local credit union, you can, but you also have a hundred other options – namely using regional or national banks (not to mention all the online banks).
With diversity comes options, and that can be overwhelming. Choosing the bank for your business is about understanding what each type of bank offers you and how they can help your business based on your specific needs. Not every bank is right for each business!
Obviously I can’t give you all the info from each and every bank in the world, but this breakdown shows how each main type of bank – community, regional and national – functions via pros, cons and information.
The community bank is a locally owned bank that usually operates based on community needs. This makes them great choices for very small/medium and locally owned businesses that need a direct line to community resources.
Community banks are typically very responsive – compare them and larger banks to small and large businesses. When you call a small business you usually get a person on the phone straight away. Calling a big business leads you to an automated system – the same situation applies to community banks vs national banks.
This sort of personalized service can also mean that you pay a lot in fees. They lack the technology and resources to streamline business, so they’re likely going to make up for it in the fee department. Your loan requests will be more judged on community standing and character, while other services are made in partner with bigger banks.
Regional banks are the mid-sized banking operations that operate within a specific area, though they have a wider reach than community banks. They’re still great for small and medium-sized businesses and offer a middle ground between the pros and cons of community and national banks.
For instance, it’s easier to find a banker at a regional bank that you can have a personal relationship with than it would be at a national bank, and the fees are a little less than they would be at a community bank.
When you think regional banks, think “the best of both worlds” – they offer you a pretty decent midway point if community banks are too small and national banks are too large for you.
National banks are best if you’re a small or medium-sized business that’s aiming for the big leagues. You have the potential grow when you’re working with a national bank, but you also aren’t punished if you stay small, either.
What national banks lack in personality (the high turnover rate makes connecting with a person who isn’t a customer service rep almost impossible), they do make up for in fees and technology. The scale economy makes a national banks fees relatively low and they typically have the newest and best banking technology available.
They’re also great if you’re looking for accessory services, like loan lending or credit card access. National banks are experts in these areas, and loans are strictly based on numbers – which may or may not be in your favor.
What type of bank do you prefer and why? Be sure to comment below.
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