Three ways community banks sustain stability when there's market disruption

Uncertainty is a feeling with which many of us have become well-acquainted in recent years, particularly from an economic standpoint. But despite being familiar with uncertainty, the discomfort it causes remains. It doesn’t help that the economy’s instability is compounded by macro-factors like geopolitical unrest, ongoing recovery from the Covid19 pandemic and global inflation woes. In our small communities, these challenges can feel entirely out of our control and often are. Our individual lives are impacted, sometimes acutely.

Times of economic uncertainty call for resilience and forward-thinking. This is especially true for smaller banks and community banks, as the current economic headwinds present an opportunity to step up and fill the role of the trusted advisors our clients rely on us to be. Despite the global outlook pointing toward inflation and disruption, there are certain significant ways community banks are leading the charge in sustaining stability for clients and customers while seizing opportunities for continued growth.

1. Maintaining a continuity of services. Simply defined, market disruption is a change in how a market typically functions, a departure from the norm that has multifarious impacts on the overall economy. In the face of change, it’s human nature to crave familiarity — and that’s exactly what community banks can provide to clients and customers during these times. While some banks tend to abandon entire offerings during economic downturns, community banks can help you feel secure by continuing to provide the same range of services and products throughout the disruption.

2. Being responsive to client needs and industry changes.

As providers of professional services, it’s imperative that banks evolve their programs and offerings to cater to clients’ needs. Often these needs shift with global events. For example, the pandemic forced an industry-wide pivot to digital banking. In our case at Tompkins, we responded by refining our existing self-service offerings and developing new ones. We also continued to promote financial literacy throughout the pandemic by hosting free, virtual webinars on current market trends like first-time homebuying and fraud protection, to ensure we were still reaching our customers, even if they were no longer coming by in person. Given their local roots, community banks can pay closer attention to customer sentiment during times of unprecedented change, whether a pandemic or a market disruption, and are uniquely equipped to diagnose client needs and develop the right tools to address them.

3. Filling the opportunity gaps that big banks can’t.

One hallmark of a changing economic climate is an uptick in mergers and acquisitions. As larger competitors see an increase in merger and acquisition action, a window of opportunity opens for community banks. It’s likely that customers at a bank that’s being acquired won’t be familiar with the bank coming in, and more often than not, there is a noticeable difference in service, culture, and banking products. This is where the qualities that set community banks apart really shine. By offering time-tested policies and a lasting culture, community banks can feel like a safe harbor for newly acquired customers. And while other banks deal with experience gaps in handing over portfolios to new employees, a community banker’s reputation for being a trusted advisor is often what prospective clients are craving. In an ever-shifting economy, our communities look to us to guide them through troubled waters and unpredictable tides. Wherever the economic headwinds may blow, taking the time to make sure clients and customers feel stable amidst the storm is a core tenant of the community banking mission, and a crucial step in ensuring everyone comes out stronger and more financially secure on the other side.

Carol Schmitz is a senior vice president and community banking manager at Tompkins Community Bank. Bill Dunkel, also of Tompkins, is head of commercial lending for the bank’s Hudson Valley footprint.