Don’t call it a comeback
2/12/25
Your community bank isn’t as traditional as you might think
When hip hop legend and Rock & Roll Hall of Famer LL Cool J rapped that famous lyric in the early 1990s, he probably wasn’t opining about the future trajectory of banks. Still, it makes for a great mantra for the fact that, despite the rise of FinTech companies in recent years, banks are indeed experiencing a resurgence.
Traditional banks “fading away” was, and in some areas perhaps continues to be, a narrative with real layers of truth to it. The idea of wanting or needing to go into a physical bank branch for one’s financial needs started to feel like an inconvenience to a generation motivated by the efficiencies of technology. Enter digital and fintech companies, which have been disruptive to the financial industry because they were accommodating the ideas of convenience and speed, thus appealing to that younger demographic not as motivated to bank in a physical branch.
A lot of people, bankers included, worried that their time was passing if something didn’t change. It turns out, that change just had to come from within, along with a renewed focus on the message that FDIC-insured institutions truly can keep your money safe. Traditional banks that are paying attention, and have focused a collective eye on the future, are adapting to the evolving landscape. Traditional?! Not for long! They’re leveraging their strengths to get smarter and learn how to best cater to the customers of the future.
What are those strengths? They might not be what you thought:
• A digital transformation
• Reaffirming trust and stability
• Providing hybrid services
• Benefits of regulatory compliance
• Interest rates and credit services
• Strategic partnerships with fintech
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Here’s a deeper look at these strengths:
Continued Digital Transformation: Many of the once-traditional banks are investing heavily in digital technologies so they can compete with fintech and digital startups. They’re improving their mobile apps and beefing up online services, and doing so with a sense of purpose beyond obligation. They’re integrating more advanced technologies like artificial intelligence and machine learning for even better customer service, more personalized offerings, and stronger fraud prevention.
Trust and Stability: “Brick-and-mortar” banks have long had reputations for trust and reliability, especially in uncertain economic times, so leaning in on that makes more sense than ever. Strong, responsive customer service has been and will forever be an integral part of that. And during times of instability, customers large and small tend to be more comfortable sticking with well-known, regulated financial institutions with great reputations and track records.
Hybrid Services: Fintech companies tend to hone in on specialized services, while many traditional banks (soon we get to stop using that term!) are diversifying their offerings and offering the best from both worlds—physical branches for customers who seek in-person interaction, and digital platforms for those who prefer that manner of bank access. This hybrid approach helps banks accommodate a broader range of customers.
Regulatory Compliance: Traditional banks benefit from a well-established regulatory framework, and the value of that cannot be overstated. It provides a real sense of security to customers that is in direct contrast to the uncertainty fintech companies face because of the evolving regulatory environment for things like cryptocurrency, lending, and payment services. This alone gives banks an advantage as far as managing risk goes.
Interest Rates and Credit Services: This is an area where traditional banks continue to, simply put, crush the competition. When it comes to lending products, mortgages, and credit cards, banks can develop deeper relationships with customers and regulatory oversight. With access to central bank facilities and a broader range of funding sources comes the ability to offer more competitive interest rates. That’s a lot of winning!
Fintech partnerships: This isn’t a “keep your friends close and your enemies closer” situation. It’s a smart, responsible alliance in the best interest of the customers both sides want to serve. Banks are tapping into fintech’s agile technology for faster innovations; conversely, fintech companies benefit from the established infrastructures and regulatory compliance strong banks provide. It’s a win-win scenario that presents stronger, integrated digital platforms, allows for shared data, and helps both to expand their customer reach and provide stronger solutions to customers.
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The evolution of traditional banks is happening at a branch near you. By embracing digital innovation, continuing to be an accessible source for sound financial expertise and guidance, and expanding products and service offerings, this trend will continue. Fintech isn’t going away, but it seems there is room for everybody in the pool of relevancy. Just don’t call it a comeback; “traditional” banks have been here for years and aren’t going anywhere.