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Community banks are woven into the fabric of every town, from big cities like New York to the smallest rural community. Sometimes they exist as architectural ghosts, grand buildings with hyper-local names such as The Bowery Savings Bank in NYC, named after the thoroughfare and neighborhood it sits in. These landmarks, regardless of their present occupants, invite us to imagine a time when “Small Business Saturday” wasn’t an annual rallying cry to support local merchants with holiday shopping, but a way of life. People shopped locally, banked locally, socialized locally. There was no other way. Community banks opened to serve local residents and businesses, providing essential financial services that couldn’t be found anywhere else.
Today, there are more banking options than ever before, but local financial institutions are just as–perhaps even more so–crucial to the success and vibrancy of the communities they serve. We should know: BankBound partners with community financial institutions all over the country, providing measurable digital marketing solutions that allow local FIs to remain competitive online. If you’re not already a “bank local” devotee, read our comprehensive guide to the benefits of community banks and credit unions. We feel confident you’ll be ready to move your money by the time you finish this article. If you’ve been a proud local bank customer for years, share your experiences and reasons for banking locally with us. We may publish some of them at the bottom of this post.
The megabank model first began to take shape in 1998 when Citicorp and Travelers Group merged to create the world’s largest financial services company. Chase Manhattan followed suit two years later by acquiring J.P. Morgan. The idea took off and one by one the larger financial institutions scooped up smaller banking names. By 2009, four megabanks had emerged to dominate the financial services industry: Citigroup, JPMorgan Chase, Bank of America, and Wells Fargo. These new megabanks leveraged their size and full menu of financial services to take advantage of rising home prices and demand for mortgage bonds. When the housing bubble burst in 2008, the resulting financial crisis revealed all of the unsavory details of how these megabanks were run and regulated. Since then, megabank scandals have continued to appear in the news. Over the last two years, Wells Fargo has been accused of numerous wrong-doings including creating fake accounts in their customers’ names, charging customers for auto insurance they did not need, and modifying existing mortgages without their customers’ consent.
Now banks are figuring out that bigger isn’t necessarily better. Larger banks have new rules to follow and face more scrutiny from regulators. Many megabanks are still paying off billions of dollars in fines for breaking regulations. Some, like Citigroup, are slowly dismantling as they adapt to heightened regulations. It’s no secret that megabanks are out of favor with the American public. All four of the top megabanks–Wells Fargo, Citibank, Chase, and Bank of America–routinely make the list of worst companies in America. Why wouldn’t they? Constant scandal, higher fees, and fewer free accounts make megabanks pretty unlikable. Shouldn’t your money go to a trustworthy institution with more accountability to its customers and community?
