The role of a local bank is to function as a commercial bank within the community environment that it represents. A local bank accepts deposits, makes loans and offers other products and services such as trust accounts, credit cards, payment transactions and the issuance of lines of credit. However, the primary objective of the local bank is to enhance the community that it resides within.
The word local bank actually refers to the more commonly used term of community bank. These types of local banks deal with smaller merchants and local residents who are looking to have a more personal relationship with their bank. As concerns lending, the local bank concentrates upon a diverse base of mortgage loans, heloc loans, auto loans, home improvement loans, small business type loans and construction loans. Community or local banks must also engage in CRA loans which are mandated by the Community Reinvestment Act for purposes of improving the community with loans related to such issues as low cost housing and health facilities.
Local banks offer a wide array of checking accounts including non interest bearing and interest bearing accounts such as NOW accounts and Money Market Demand Deposit Accounts. Since local banks must compete with large money center banks for deposits, these types of banks attempt to offer better service and accommodations.
Local banks must also compete with large banks in order to attract time deposit money in the form of certificates of deposit and savings accounts. In many cases, the local bank must pay higher interest rates in order to establish new relationships.
All local, regional and large banks attempt to offer a full range of products and services that tend to attract and retain customers. Local banks have the added pressure of trying to keep up with the technological changes that are constantly taking place within their industry in order to remain competitive. Therefore, local banks often outsource their back office functions to service companies for the handling of such issues as payroll and check processing. In other cases, they piggy back their products and services with larger banks or they pool their resources. In any event, local banks offer many of the same products as large banks such as letters of credit, foreign exchange, trust services, money management and investments. The advantage that local banks have over larger banks is their involvement within the community. Furthermore, local banks attempt to provide superior and personalized service to each and every client.
Local banks must build relationships with their customers as opposed to large transactional volumes. Since local banks tend to be small in size, large accounts that process volumes of checks or cash are not profitable to a small bank operation. However, the consistent building of deposits, lending and banking services with individuals and community entrepreneurs basically defines the role of the local bank. The quality over volume scenario serves the local bank and the smaller bank customer.
- Photo Credit bank image by Pefkos from Fotolia.com check book image by Rob Hill from Fotolia.com auto documents image by Aleksandr Lobanov from Fotolia.com investment image by Kit Wai Chan from Fotolia.com community image by Kai Rollmann from Fotolia.com
What Are the Functions of a Microfinance Bank?
Microfinance institutions provide many functions for some of the poorest people on the planet. At the most basic level, they provide access...
The Role of Commercial Banks in Consumer Banking
Banks provide individuals the opportunity to save money, make remittances, exchange foreign currency, access credit facilities and make personal investments.
What Is the Objective of a Commercial Bank?
Commercial banks play an essential role in healthy economies by providing liquidity and the efficient transfer of capital.
The Role of a Credit Manager in a Bank
A credit manager is a common job position found at a bank. Banks make a great deal of money offering credit to...
How to Improve a Company's Image
How the public views your business can determine whether you succeed or fail. According to Carol Kinsey Goman, an author and international...
How to Find Local Bank Repo Cars
Local banks sell repossessed cars both directly to interested buyers and at auction. Usually, these auctions are listed in local newspapers and...
Community Bank Vs. Commercial Bank
According to the Community Bankers of Wisconsin, a community bank has a board of directors made up of local citizens. This makes...
The Role of the World Bank
The World Bank is an international institution that lends money to developing nations with the goal of reducing poverty and improving standards...
Role of Commercial Banks in Small Businesses
Commercial banks specialize in serving small businesses, and they compete with each other for relationships with the best small businesses in their...
Services Provided by Commercial Banks
The largest commercial banks are household names -- Wells Fargo, Bank of America -- but thousands of smaller institutions exist throughout the...
What Are The Different Types of Bank Accounts?
In an attempt to manage all of a client's cash assets, banks provide a wide arrange of accounts to accommodate differing needs....