A Path Forward for Community Financial Institutions

Bank isn’t just a noun anymore — it’s a verb. It’s not just a place your customers go. It’s something they can do anytime, anywhere and often without ever stepping into a branch. This change goes beyond mere words; it signifies a profound transformation in how individuals anticipate engaging with their finances and, ultimately, with your institution. 

For community financial institutions, this presents both a challenge and an opportunity. They’re now competing with the bank down the street as well as fintech companies and digital-native nonbanks that provide seamless, highly personalized experiences. The institutions that truly understand the changing landscape are moving quickly, reimagining how they deliver services and leveraging data and technology to stay relevant and resilient.

Adapting doesn’t mean abandoning what distinguishes community financial institutions — your relationships, local experience and trust. The key is to balance these traditional strengths with practical, secure innovation. 

From Core Reports to Customer Insights
Too often, financial institutions lean heavily on core system reports and transaction data to understand their customers. But those only scratch the surface. Customer behavior and preferences span multiple touchpoints, encompassing not only transactions but also digital engagement patterns, channel usage and service needs. 

Additional tools outside your core platform can help connect these dots. When used thoughtfully, they can drive:

• Better decision-making.
• Greater efficiency.
• Improved employee experience.
• More meaningful customer engagement.

It’s not about indiscriminately applying technology and hoping for success; rather, it’s about identifying areas where small, strategic investments in data, automation and experience can generate substantial value. 

Start With the Problem Not the Platform
The fintech marketplace is inundated with tools ranging from artificial intelligence-driven chatbots to predictive analytics engines. However, many community financial institutions fall into the trap of adopting a solution before clearly defining the problem. Before adopting a new solution, banks should ask:

• What are we trying to solve?
• What’s holding us back operationally or strategically?
• What would make a tangible difference for our customers or employees?

Diving into artificial intelligence or automation without a well-defined strategy can lead to wasted resources, poor adoption and heightened risk. 

Secure Growth Means Smart Partnerships
Another significant pitfall is selecting vendors who don’t understand the regulatory and cybersecurity environment exclusive to financial institutions. This can result in many issues. Whether you’re exploring new digital capabilities or expanding existing ones, your vendors must:

• Understand financial services compliance.
• Prioritize risk and cyber maturity.
• Align with your business goals and risk appetite.

Define a clear risk and compliance technology strategy to manage continuous control monitoring. This is particularly crucial when data is involved. Cyber-first thinking is not optional — it’s fundamental to trust, resilience and growth.

Change Management Is a Business Risk
Digital transformation is an organizational change initiative, which necessitates considering:

• How teams work differently.
• What training and support they’ll need.
• How new tools impact your customers’ experience.

Every step forward on the digital maturity curve should be matched with thoughtful planning around communication, implementation and ongoing optimization.

Progress, Not Perfection
Community financial institutions don’t need to transform into tech companies overnight. However, to remain relevant and competitive, it’s essential to make steady progress toward data fluency, operational efficiency and cyber maturity. 

Thinking of banking as a verb reminds us that customers are actively engaged in their financial lives, and banks must also actively engage in transforming how they serve them. By combining deep community roots with smart, secure innovation, community banks won’t just survive the shift — they will thrive in it.

The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting, investment, or tax advice or opinion provided by CliftonLarsonAllen LLP (CLA) to the reader. For more information, visit CLAconnect.com.

CLA exists to create opportunities for our clients, our people, and our communities through our industry-focused wealth advisory, digital, audit, tax, consulting, and outsourcing services. CLA (CliftonLarsonAllen LLP) is an independent network member of CLA Global. See CLAglobal.com/disclaimer. Investment advisory services are offered through CliftonLarsonAllen Wealth Advisors, LLC, an SEC-registered investment advisor.