CP Editorial: Bigger is not always better in banking

Online bill pay, account transfers from your mobile device and 24/7 access to ATMs anywhere in the country are just a few of the amenities that big banks offer to their customers.

We live in a fast-paced society where most believe bigger is better. Having access to your bank account at your fingertips seems like a necessity, but is it really? Does banking bigger always mean better?

Believe it or not many times smaller, more closely held banks can — and do — out perform the big banks, which in the long run means better service for the consumer.

According to research published in the FDIC Quarterly, closely held community banks have significantly outperformed widely held community banks in financial performance and operational efficiency.

Even though small banks may seem old school or too traditional, these more closely held banks believe in having more large equity and capital because of their limited area of business. They also make decisions based on you and not solely based on data. Most importantly, smaller banks tend to focus on what the baking world calls “relationship lending” versus the impersonal per transaction model.

As a consumer, I have witnessed this firsthand. When I left for college I had the option to switch to a larger chain bank, so it would be easier to access my finances. Instead, I stayed with my local bank and I am so glad I did.

Anytime I call or walk into my local bank, I am greeted with a warm welcome and always leave there feeling like a valued customer. I feel that they know me and want to give me the best customer service.

Another way smaller banks sometimes are more efficient and perform better than the big banks is due to the way ownership is structured.

For example according FDIC Quarterly, “Closely held banks may be less beholden to short-term earning pressures.”

This means less pressure on the consumers, more consumer protection and better customer service.

About an hour and a half outside of Columbia you can find one small, closely held bank that is a prime example of out performing the big banks.

That bank is Silex Banking Co. in Silex Missouri. According to an article in the St. Louis Business Journal, Silex Banking Co., with $71 million in assets, was the most financially sound bank among 86 in the St. Louis region.

Silex, like my bank and most small closely held banks, is located in a rural farming community. According to the St. Louis Business Journal, “Closely held banks tend to be older, more rural and more likely to raise capital through retained earnings.”

Sticking with my small community bank was a smart choice for me. Consider the advantages of your local bank before moving your assets to a large, faceless regional or national institution.

Erin Boedeker

About the Author Erin Boedeker

My name is Erin Boedeker, I am a Agricultural Education – Leadership major at the University of Missouri. My emphasis within my major is Communications and Science and Agricultural Journalism. I am originally from Elsberry, Mo. After receiving my degree, my hopes are to take my passion and knowledge for agriculture into the city. I hope to work with a public relations or marketing firm, and work with clients to help the public understand the positive aspects of production agriculture. I am excited to continue writing for Corner Post, to help build my portfolio, network and get a more hands-on experience with writing in general.