National Banks vs. Community Banks: Why it Pays to Bank Local

Pop quiz:

When you invest money in a bank, where do the majority of the profits go?

  1. To out-of-state businesses

  2. To local businesses and the community

If you work with a national bank, the answer is likely A, but If you work with a community bank, the answer is probably B. 

Although community banks make up 99% of all banks, over 90% of Arizonans use a national bank. Many people choose a big bank based on convenience. But what they don’t realize is that a local bank can offer even more convenience, a better experience, and more benefits for the community. Here’s why it pays to bank local. 

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1. Less fees, more savings

While big banks appear to offer more convenience than locally owned financial institutions, if you look a little closer, you might be surprised. 

For example, consider ATMs. A lot of national banks hit you with a hefty fee for not using their ATMs. Meanwhile, more community banks and credit unions are offering fee-free ATM networks, which can provide you with even broader nationwide coverage at no cost.

Many local banks also offer added conveniences and perks for people who serve their community, like teachers, policemen, firemen, and other service professionals. For example, at Gateway Bank, we have a special account made just for folks like this: our Service First Checking Account. It’s our way of saying “thank you” to people who make Arizona such a great place to live.

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2. More investment in the community

As Local First Arizona shared during April’s Community Banking Month, the 20 largest banks control 60% of the nation’s money. Yet those same 20 banks only lend 18% of their money to small businesses. 

On the other hand, small businesses are the heart of local banks. When you keep your money with a community bank or credit union, it’s directly invested back into local businesses. Community banks lend money to small businesses in the area, building a robust, stable economy for our towns, creating more jobs for you and your neighbors, and spurring growth for other locally owned companies.

What’s more, the staff and owners of local banks and credit unions actually live in the communities they serve. Local banks don’t gamble with your money or focus on looking for high-stakes rewards. Instead, they invest in something safe and close to home: local businesses and entrepreneurs they know by name. This difference of priorities means a different way of doing business altogether.

3. Personal service

Remember when you had a banker, not just a bank? You could meet with them or call them directly to get answers and fast service. At national banks, you rarely get this experience because they’re more focused on getting tons of customers than spending time with each one. In contrast, local banks focus on things that are important to you, such as treating staff and clients like family, building meaningful relationships with you, and making sure each person has the best experience possible.

4. Invest in Main Street, not Wall Street

They say everyone is motivated by money, but as the President of a local bank, I can tell you that’s not the case. My company (Gateway Bank) does well, but if money were my only focus, we would have been in trouble a long time ago. After 10+ years, one great recession, and many industry changes, we’re proud to still serve Mesa as the city’s only hometown bank.

That’s because what motivates my team and many other local banks is helping our clients put more people to work and make our community stronger. While most big banks put their profits and shareholders first, we do the complete opposite. Our main focus is our team and customers. We hire the best people and take care of them so they take care of our customers. It’s that simple. 

I invite you to experience the difference of hometown banking and to move your money where it matters most. Explore the community banks supported by Local First Arizona, and reach out to learn more about working with Gateway Bank. We’d love to meet you!

About the Author

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James Christensen is the President of Gateway Bank, (the only community bank in Mesa, AZ), a current board member and past chair of Local First Arizona, and a passionate supporter of small business. He is a proud Mesa resident and father of two with his wife of over 30 years. 

James has worked in the banking industry for over 30 years, mostly in business lending and management.

Prior to joining Gateway Bank in 2007, James served as President of a community bank in Kansas for a decade. Under his leadership, Gateway has grown to consistently be one of the strongest performing financial institutions in its peer group.