Do You Need a Local Bank in 2025?
Key Takeaways
- Local banks excel at handling complex or urgent banking needs.
- Many community banks offer competitive digital tools, including mobile apps.
- Working with a local banker whom you have an established history with can help you reach your financial goals.
Online banks have changed the way consumers manage money. With the ability to instantly open an account and to manage your money at your fingertips, banking has never been more convenient.
But when tech isn't enough and you need tailored advice, a flexible loan or a real person to help you solve a problem, a local bank can offer invaluable relationship-based banking. Here's what to know if you're wondering whether there's any benefit to banking local today.
What Makes Local Banks Different
Local banks, also known as community banks, are financial institutions that serve a specific geographical area. Locally focused, independently owned and smaller in scale than their national and regional competitors, community banks prioritize relationship-based banking. They make decisions locally, and have a deep understanding of the economic conditions in the areas they serve.
Local bankers often know customers by name and can offer tailored advice and flexibility unmatched by larger institutions.
"Community banks can provide all the bells and whistles, features, functions and capabilities of an online-only bank, with the massive advantage of having that personalized local relationship-driven service," says Charles Potts, executive vice president and chief innovation officer at the Independent Community Bankers of America.
Community Bank Digital Tools
Many community banks offer robust digital access with online banking and mobile apps. Account holders can use digital banking tools for mobile check deposit, bill payment, Zelle transfer and account alert features that are on par with national and regional banks.
"Customers want the best of both worlds: great online access combined with local branches and bankers who can give them in-person service when a screen won't do the trick,” says Gates Little, president of The Southern Bank Company, a community bank with five branches in Alabama.
Combining technology with human relationships allows community banks to offer personal service with online convenience. That can be handy if you need help navigating an online loan application or have a problem that can't be resolved with a chatbot.
Services and Support You Won't Find Online
Online banks offer streamlined checking and savings accounts, often with competitive APYs. However, they lack specialized lending, personal service, and local expertise compared to community banks.
Local banks are deeply rooted in the needs of their communities and typically offer specialized products and services such as agricultural loans, construction financing and customized small-business lending. Community banks make roughly 60% of small-business loans under $1 million in the U.S., and 80% of agriculture loans.
When personalized and flexible banking decisions matter, a local bank could be just what you need. Jim Popp, CEO of Johnson Financial Group, a community bank based in Wisconsin, says "sometimes, our clients just want to come in to bounce an idea off someone they know and trust."
Community banks reinvest in the local economy with small-business loans, event sponsorships, scholarships and other civic support. They can be a lifeline in rural or underserved areas.
"One in three counties would have no physical bank presence if not for a community bank," says Potts.
Who Should Use a Community Bank?
Local banks are a practical choice for anyone who values personalized support and has financial needs that go beyond simple checking or savings.
A community bank could be a good fit for:
- First-time homebuyers who need guidance navigating mortgage options or the loan application process.
- Rural residents and older adults who may appreciate having a nearby branch with someone to speak with face-to-face.
- Small-business owners and real estate investors who may benefit from the local insight and flexibility available with a local bank, especially for lending products.
- Nonprofits and community organizations relying on personalized service and mission-aligned support.
- Anyone dealing with a financial emergency who may find relief in speaking with a local banker who understands their situation.
Whether you're seeking a loan on short notice or need help escalating a problem, a local banking relationship can translate into faster service, more tailored solutions and better financial peace of mind.
"A phone call to a banker who knows you can get the job done," says Little.