How Community Banking Works

By Margie Perry, SVP Chief Experience Officer, Community Bank of the Bay

Big banks, community banks, and credit unions are different ways consumers utilize the real and financial economy. The “Big Banks’’ are the nationwide or international brand-name banks you might be familiar with or have seen in advertising. Community banks, on the other hand, build relationships with and directly support their local community. Unfortunately, there is often a disconnect between consumers’ understanding of the banking world and its impact on our economy.

While Big Banks and community banks both work as financial institutions to safeguard their clients’ money—community banks, such as Community Bank of the Bay, work quite differently than big banks. Community banks operate in the real economy—or Mainstreet—meaning they work to support the local community members, businesses, non-profit organizations, and many more.

Many Big Banks take their customers’ deposits and, in turn, use that money in the financial economy (such as the stock market, investments on Wall Street, and potentially in environmentally harmful projects). Bottom line: their customers have no control over how or where their deposits are spent. On the opposite end, community banks use deposits to fund the needs of the entire community, benefiting everyone.

The lifecycle of a community bank is simple. The more businesses and community members participate in community banking by making deposits, the more loans can be distributed to grow the community—and the local economy.

As community banks grow, they provide more stability to the community because of their strong relationships with individuals and community organizations. In addition, community banks are better able to understand the needs of their local communities because they are made up of people from that same community. This allows quicker and more efficient decisions for borrowers instead of relying on a biased and inaccurate algorithm for loan approvals.

The relationship between the community and their community bank is genuine and mutually beneficial. Both entities are empowered by the other’s success. If you are part of a community bank, you know this as a fact. Community banks working in the real economy—for neighbors and neighborhood businesses— keep our local community and economy thriving. Community Bank of the Bay strives to build a strong Mainstreet economy throughout our Bay Area communities. Our relationship managers are skilled in finding the right way to support your organization’s needs because they understand our community’s local needs. Learn more about the Community Bank of the Bay difference at https://www.bankcbb.com/individuals/ accounts/.