How Small Banks Can Outperform Industry Giants

In the competitive banking sector, brand awareness is just the beginning. True success lies in converting awareness into consideration — the moment when a potential customer actively thinks about choosing a specific financial institution. Rivel’s recent research shows that, with focused messaging, smaller, regional financial institutions can outperform larger ones.

A study by Rivel Banking Research highlights that smaller banks and credit unions are being considered by new consumers at a higher rate, despite having smaller marketing budgets. Small institutions with limited branch networks can compete with their larger counterparts by leveraging their local presence and cultivating the right reputation. There is an opportunity for community banks to establish themselves as leaders in trust and superior customer service — key factors that influence consumer consideration. Many consumers consistently prioritize personal connection, community involvement and perceived authenticity over size and scale. Smaller banks are better positioned to offer a personalized experience, build stronger community ties and cultivate trust — one of the most important factors for customers who are looking to switch banks.

When consumers are considering a new financial home, a bank’s reputation for trust is very important to 92% of potential customers. Rivel’s nationwide research shows that trust in financial institutions is built on three pillars: transparent communication about fees and services, consistently high-quality customer service, and a demonstrated commitment to financial stability. To differentiate themselves from larger competitors, who often emphasize convenience, community banks must take control of their marketing narrative by highlighting their commitment to visibility.

Leverage Local Presence
Smaller banks should focus on building strong relationships within their communities through local events, sponsorships and personalized interactions, building the reputation of trust and customer service. This approach resonates more deeply with potential customers than generic advertising and, more importantly, distinguishes them from national competitors and from rivals that may simply offer more branches.

Building strong customer relationships through personalized service and community engagement drives customer loyalty and positive word-of-mouth referrals. This type of organic marketing is particularly effective for midsize and community banks, allowing them to compete with larger institutions without needing comparable marketing budgets. Fifty-seven percent of Gen Z consumers rely on recommendations from friends and family when choosing a new banking institution, higher than any other generation — embrace the good work already be done with current customers.

In contrast, national banks, despite massive marketing investments and wider brand recognition, don’t always top consumers’ lists when they are considering a new bank. Many large banks have a good reputation for technology and offer a wide network of physical locations, but some prospects may find that these institutions lack a human element. Consumers may seek more than just familiarity — they seek value, trust and relevance.

Do you offer this personal touch to those who don’t already bank with you? Brand and product marketing is essential to growth, so give them equal footing. All else being equal, some consumers would give up a few basis points to an institution they resonate with.

Cultivate Trust and Personal Connection
Prioritize personal connection, community involvement and perceived authenticity across marketing and customer experience. Smaller banks are better positioned to offer a personalized experience and build stronger community ties.

This targeted approach is a key advantage for smaller banks. Instead of spreading resources thin across national campaigns, they can focus on building relationships within their local communities as a form of organic marketing that will resonate more deeply with potential customers than generic advertising.

Community banks need to be wary of failing to develop a strong identify or true standout reputation. You don’t want your institution to be interchangeable with other banks in the minds of consumers.

Rivel’s latest consumer research reveals that, on average, only 60% of U.S. banking institutions are perceived as trustworthy, 57% are seen as delivering good customer service, and just 56% enjoy a strong overall reputation. In a market where perception drives loyalty, banks must ask themselves: What defining attributes set us apart? And more importantly, are we communicating them clearly and consistently? Now is the time to sharpen your brand narrative and lead with what truly builds trust.

Align Reputation with Identity
Banks and credit unions must align their reputation with their current and future identity for new consumers. Clear internal and external messaging about the brand and specific benefits is essential for growth among potential new business.

Differentiation is crucial for growth among potential new business. Understanding an institution’s reputation in the local marketplace against competitors helps identify ways to improve consideration over time.