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Community Banks vs. Big Banks: Why You Should Consider Banking Locally

Written by Banks Editorial Team

Updated June 23, 2021​

3 min. read​

There are a plethora of choices when it comes to who to bank with. This article will look at community banks vs. big banks, and discuss why you should probably bank locally.

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What is a Community Bank?

A community bank is owned and operated by members of the community that it serves.

Therefore, community banks tend to have a deeper understanding of their customers’ financial needs and provide a more personalized banking experience than their multinational counterparts.

Community banks are typically found in rural and underserved urban areas where big banking conglomerates don’t have a footprint.

Currently, there are 4,918 community banks with a total of $5 trillion in assets and $4 trillion in deposits across the United States, according to the Independent Community Bankers of America® (ICBA). Around half of community lenders are located in rural areas counties with less than 50,000 residents.

Community banks offer essential banking services, including checking and savings accounts, personal and small business loans, home mortgages, etc.

Community Banks vs. Big Banks: What’s the Difference?

Community banks and large multinational banks offer many of the same financial products and services, including bank accounts, personal and business loans, debit and credit cards, etc. However, there are several distinct differences between the two financial institutions.

So let’s look at the differences between community banks and big banks.

Community BanksBig Banks
Majority owned by members of the community they serveOwned by shareholders – typically institutional investors
Private or PublicPublic
Small to MediumLarge
Their customers are typically members of the local community where the bank is locatedTheir customers are corporations, SMEs, and individuals (often from more affluent backgrounds)
More likely to grant loans to low and moderate-income householdsMore focused on corporate lending
Deep understanding of its community’s financial needs and more willing to fulfill themProvide broad array of financial products and services

The critical difference between the two banking services providers can be found in the name. A community bank is much more tied to the community it serves and provides personalized, relationship-based banking services. Large banks, on the other hand, are generally able to offer a wider range of products and services than smaller lenders.

But before deciding on what type of financial institutions to bank with, let’s have a look at the pros and cons of each.

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Community Banks vs. Big Banks: the Pros and Cons

While community banks and big banks are similar in many ways, there are clear pros and cons of using one over the other. So, let’s look at the pros and cons of each type of lender.

Community Banks: Pros and Cons

Community banks are the financial lifeblood of rural and urban communities that have been neglected by large financial institutions.


  • Offer a personal banking service tailored to the needs of their community
  • More likely to lend to low and moderate-income households
  • Generally charge lower fees than large financial institutions
  • Often run community-focused financial education programs
  • Only lenders with physical branches in some parts of the country
  • Often process loan applications quicker than large banks


  • Typically offer a limited number of products and services

Large Banks: Pros and Cons

Global banking institutions provide a broad array of financial products and services, and typically possess a large network of ATMs and branches across the country.


  • Provide a full-service banking experience with a wide range of products and services
  • Typically possess a large network of ATMs and physical branches


  • Regularly charge higher fees than smaller banking institutions
  • Often offer less competitive rates than small and medium-sized lenders
  • Less likely to lend to low and moderate-income borrowers
  • Generally take longer to process loan applications

Should You Bank With a Community Bank?

There are a large number of reasons to bank locally with a community lender instead of a multinational bank. From the more personalized banking experience and the bank’s positive impact on the local community to the lower fees and higher likelihood of loan approval, community banks beat large banks on most accounts.

If you are looking for very specific financial solutions, however, you may need to opt for a large bank. While community banks offer most of the same services as their larger counterparts – including mobile and online banking – large banks have the resources to offer effectively any type of financial product or service imaginable.

If you are looking to open your first bank account, take out a small business loan, secure a home mortgage, or switch banking provider because you are dissatisfied with your current bank, why not check out your local community banks and see what they have to offer?

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What’s Next?

If you have decided that a community bank is right for you and your financial needs, check out our list of the best community banks in the US.

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