Small and mid-sized businesses (SMBs) are considering a switch from national banks to local financial institutions (FIs) like community banks and credit unions (CUs). While the convenience of national banks has traditionally been a strong draw, factors such as personalized service, lower fees, and better access to local support are prompting SMBs, particularly those in rural areas or with lower revenue, to explore local banking options.
But according to a PYMNTS Intelligence report, “Community Banks Appeal to Small Communities, But …,” in collaboration with i2c, smaller FIs need to improve their digital capabilities to compete with larger banks.
Community banks and CUs have gained favor among SMBs, particularly those with lower revenue or located in rural areas. According to the report, nearly 49% of rural SMBs choose a local bank or CU, compared to just 25% opting for national banks. Similarly, 32% of SMBs with revenue under $150,000 choose smaller banks and CUs, whereas only 44% of them favor national institutions.
Location and personalized customer service are cited as the main factors behind these choices. For example, the close-knit relationships local banks can create are seen as a vital advantage for smaller businesses looking for a more tailored experience. Despite these preferences, larger banks still dominate, with 58% of all SMBs selecting them over community FIs.
As many SMBs, especially those with lower revenue, are considering switching their financial institutions, 16% of them are likely to make a change within the next five years, with 22% of businesses earning under $150,000 indicating a strong desire to switch. This creates an opportunity for local banks and credit unions (CUs) to capture market share by offering services that better meet the needs of these businesses.
SMBs are driven to change by factors like lower fees, more favorable loan terms, and a higher level of personalized customer service. While national banks remain the most popular choice for many SMBs, dissatisfaction is growing, particularly among lower-revenue businesses, due to high fees and impersonal service. In contrast, local banks and CUs can provide more customized solutions and closer community ties, making them an attractive alternative for SMBs seeking better value and customer support.
Despite their appeal in terms of community engagement and personalized service, community banks and CUs face challenges when it comes to digital services. According to the report, SMBs expect advanced digital banking features, an area where national banks have a clear advantage. For example, SMBs using local FIs report satisfaction with 12 banking features, whereas those banking with national institutions are satisfied with 11.
But when it comes to digital services such as mobile banking and online financial management tools, community FIs are often behind. This gap leaves SMBs, which rely on smooth digital experiences, feeling underserved.
Local banks and credit unions, however, can leverage their deep community connections to elevate these digital services. By investing in digital improvements, they can offer SMBs a more competitive and comprehensive banking experience that combines the convenience of modern technology with the personalized service these businesses value.
We get a lot of press releases here at PYMNTS. We consider all of them, and some are more newsworthy than others. But this one really got our attention. This past week, Diebold Nixdorf made headlines with its announcement of successfully installing two new automated teller machines (ATMs) at the U.S. National Science Foundation’s McMurdo Station in Antarctica. This achievement marks a significant milestone in banking accessibility, to be sure. We would like to meet the crew that installed them. We’d also like to know why they needed two. Was there a line at the first one? More to come on that.
According to Diebold, McMurdo Station is Antarctica’s largest research and logistics hub, supporting a fluctuating population that ranges from fewer than 200 residents during the winter months to up to 1,100 individuals during the summer (October through February). The presence of these ATMs is crucial, it says, as the next closest banking facilities are thousands of miles away, making them the only ATMs on the entire continent. How’s that for a value proposition?
The DN Series ATMs are designed for always-on availability. And why do they need two? One ATM is actively in use, while the second serves as a backup for spare parts, ensuring uninterrupted service in this isolated area. These machines are connected to the DN AllConnect Data Engine, which leverages Internet of Things (IoT) connectivity, machine learning, and artificial intelligence (AI) to monitor their performance. A dedicated team continuously aggregates and analyzes technical data to identify potential issues, enabling remote diagnostics and repairs. The ATM can be maintained by trained staff at NSF McMurdo Station, or the Diebold Nixdorf service team can remotely guide them through the repair process.
Anyway, it got us thinking. Are there other surprising ATMs in extreme locations? Well, of course, there are. Here’s a sampling of what we found.
At an altitude of about 5,364 meters (17,600 feet), the Mount Everest Base Camp in Nepal is another unexpected place to find an ATM. Although it’s not a permanent fixture and is often set up seasonally, it caters to climbers and trekkers who need cash for local transactions. This temporary ATM service underscores the adaptability of banking services in extreme environments.
In some parts of the Amazon rainforest, particularly in Brazil and Peru, ATMs can be found in small villages and towns. These machines are vital for local communities, providing access to cash in areas where digital payment options might be limited. The presence of ATMs here demonstrates how banking services can reach even the most remote communities.
Located in the Tibet Autonomous Region, Nagqu is home to one of the highest ATMs in the world. This region is very remote, with limited infrastructure, making the presence of an ATM a notable example of banking accessibility in extreme environments.
In the Thousand Islands (Kepulauan Seribu) off the coast of Jakarta, Indonesia, there’s a floating ATM. This unique ATM serves the local community and tourists on the islands, demonstrating how banking services can adapt to isolated marine environments.
Longyearbyen, the administrative center of the Svalbard archipelago in Norway, boasts the most northerly ATM. This location is one of the most remote inhabited places on Earth, with limited access to mainland Norway, making the ATM a vital service for residents and visitors.
On a more serious note, the installation of ATMs in places like Antarctica and other remote locations highlights the evolving nature of banking technology. With advancements in IoT, AI and remote diagnostics, it’s becoming increasingly feasible to provide banking services in areas previously considered inaccessible. As we look to the future, it will be interesting to see where else ATMs might appear. Whether it’s on a remote island, at the top of a mountain or even in space, the ability to access cash is becoming more universal than ever. And who knows? Maybe one day, we’ll see an ATM on Mars, serving the first interplanetary travelers.
For now, the presence of ATMs in unexpected places reminds us that banking is not just about transactions; it’s about connecting people and communities across the globe, no matter how remote they might be.
