Community Banks & Their Benefits

Community banks are a solution for people who are looking for full banking services in their suburbs or towns. Legally speaking, community banks keep it simple. A majority are stand-alone or is owned by a bank holding company (BHC), which is a corporation designed for the purpose of owning a bank.

 Your deposit in a community bank will be lent out to local borrowers, whereas in a large corporate bank, it will fund loans across the country and may even buy foreign currencies, corporate stock or bonds, among other securities. Community banks make their money from loans. They are able to profit off this simple model because their loyal customer’s money does not leave with multiple competing banks.

 How community banks differ from commercial banks:

  1. Community banks are local. Commercial bank operations must meet federal laws while community banks are chartered under state laws. Community banks promote local banks and frequently focus on lending money for mortgages on community housing.

  2. Community banks focus on the community. Commercial banks focus on income production for owners and shareholders, while community banks lend money for mortgages for community housing.

  3. With community banking, there is lower investment risks. Commercial banks are used by small businesses due to a diverse range of banking products, but this comes with higher investment risks. Community banks work under legal restrictions to protect customer’s investments.

  4. “Relationship banking vs. Traditional banking.” Commercial banks makes money on volume, through large numbers of accounts, automated services, and numerous locations. Community banks specialize in relationship banking, which builds a long-term relationship with customers through multiple accounts and customized service.

How to join:

If you live in the local area you can join your local community bank! Community banks have a history of establishing long-term, successful relationships with individuals and small-business owners.

 Advantages of a community bank: 

  • Local banks understand the historical importance of business to the community, and work on creating lasting relationships with companies that have a history of local operations

  • Operate under legal restrictions to prevent putting your money at risk

  • Offer small-business owners financial products specifically designed for small companies

  • Large chains offer long banking hours, and night-drop services

  • Have larger cash reserves and capacity for larger business loans and increased risk in making the loans

  • Build additional business infrastructure and help economic development by creating local jobs

What technological challenges are they facing in the 21st century?

Currently, community banks face insufficient loan demands and budget constraints. This is due to the outdated loan process that is in place. Technological innovation is needed to encourage customers to make loans. Zikher’s Saas platform provides a consumer-facing technology that allows customers to apply for loans online, and connect with their bankers and loan officers immediately. If there is anything missing in the application, customers can access their application and upload missing data. It is efficient, affordable and cost-effective. Zikher can help community banks compete with corporate banks and take them into the future of digital banking.


Yvonne Kwan



  • Grayson, Lee. “Community Bank Vs. Commercial Bank”. Web. 13 Mar. 2017.

  • Home,. Community. 2017. Web. 13 Mar. 2017.

  • Welter, Katy. “What Is A Community Bank, Anyway?”. The Huffington Post. N.p., 2011. Web. 13 Mar. 2017.


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