Small Bank Preferences
Reasons why a customer may prefer the services of a small bank rather than a large bank include face-to-face service, low costs, easy banking, community relations, local knowledge, varied offerings, and access to deposits.
Face To Face Service
According to the Find A Better Bank website, face-to-face service is one reason why some banking customers prefer a small bank rather than a large bank. Customers "value banking with a real person" because of better communication and the opportunity to create relationships. The Find A Better Bank website also reveals that building a face-to-face relationship with a banker is especially helpful "if your needs are more complex or immediate."
Larger banks often include hidden fees in their service, whereas "fees are often lower at small institutions", according to The Simple Dollar. This may not be the case with every small bank, however, and The Simple Dollar also recommends that customers "identify your banking needs and compare fees for the services you need." According to a 2019 article written by financial planner Justin Pritchard for The Balance website, small local banks often offer free checking accounts and "waive fees if you just agree to receive electronic statements." The article also notes that small banks "compete with attractive rates on savings accounts and loans."
Ease Of Services
According to US News, small banks are generally "quicker to pass higher rates onto savers." Small banks also offer increased ease of services because staff at small banks often work with the same customers, allowing them to develop relationships and to better tailor bank services to customers.
Small local banks are a part of their local economy and often give back to the community, according to The Balance website. Local banks often "contribute money or other resources to help make local events a reality." According to The Financial Brand, money deposited into community banks "will be reinvested in ways that drive local economy", which can encourage customers to choose local bank services over large national banks.
Small banks may be easier to work with because of their knowledge about local areas, according to The Balance. Loans are an example of this because "megabanks might be unwilling to fund your local business", while local banks may be more understanding.
According to The Balance, some large banks only offer basic service options, while small banks "can offer everything from checking accounts to merchant accounts to wealth management." The Find A Better Bank website reveals that this disparity in services offered between large and small banks may be because large banks try to keep costs down by limiting service options.
Access To Deposits
Small banks often have an advantage when it comes to the accessibility of money, according to the Find A Better Bank website. Small banks tend to offer same-day access to funds, and have "a more readily available network of no-fee ATMs." Large banks, however, may require multiple days to pass before funds can be accessed.