New community bank survey claims credit unions are not the competition

Community banks and credit unions are often seen as two sides of the same coin. While they still have their differences (with community banks being for-profit and credit unions non-profit), they find common ground in their customer service and commitment to the community. Both tend to be smaller and more local than the large commercial banks such as Chase, Capital One, etc.

In this case, it might be easy to picture the two seemingly underdogs as allies against big banks, but the reality is this often means they compete for the same pool of members. After all, they offer similar services and similar rates, and both boast a personal touch. Any consumer looking for a local financial institution will ultimately need to choose between the two.

However, according to the 2023 Community Bank Survey conducted by the Conference of State Bank Supervisors and released earlier this month, most community banks don’t view credit unions as their main competition. The majority found other community banks to be their main competition. In fact, many noted that the credit unions in their area were too big to compete with.

Andrew West, CEO of Eagle Bank in Polson, Montana, argued this exact position, lumping credit unions into the “big bank” category. He noted, “It’s really hard for me to compete with the two biggest banks and the biggest credit union in our state in terms of consumer deposits. And we’re certainly not going to do it on price. If we’re going to do it, it’s going to be on service, because we’re smaller, we’re flexible and we’re nimble, and we have what I believe to be really exceptional customer service.”


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