Can community banks be innovative? Digital technology says yes

If banks cannot provide their customers with the financial services they want or the experiences they expect, those customers will look elsewhere.

In an increasingly digital economy, community banks and credit unions, often overshadowed by their larger counterparts, are increasingly turning to digital platforms to modernize their operations and meet the growing needs of valuable customer segments such as small and medium-sized businesses (SMBs).

“Today’s platforms give financial institutions the ability to develop new products and services in days rather than months, allowing them to quickly adapt and pivot to meet the ever-changing needs of financial services,” said Al Taylor, senior vice president for Financial institutions at i2c, PYMNTS said.

“These platforms are being created not only for national banks, but also for community banks and credit unions,” Taylor said, underscoring the broad applicability of the technology. By leveraging these tools, community banks, credit unions and regional players are finding ways to compete more effectively in a rapidly evolving financial landscape.

At the heart of this transformation is the ability of digital platforms to enable rapid innovation.

Read more: Community banks are attractive to small businesses, but…

Transform operations through speed and flexibility

The appeal of personalized service and convenient locations is an area where community banks and credit unions excel. However, they tend to lag behind when it comes to digital offerings, meaning they are unable to compete effectively with national banks. At the same time, many SMEs feel that national banks lack personalized products and solutions tailored to their needs. Larger banks also appear to charge high fees, which is a deterrent for cash-strapped local businesses.

While community banks and credit unions have a great opportunity to attract SMBs by focusing on personalized service, community engagement and competitive pricing, digital capabilities are proving critical to meeting the new needs of SMBs.

The agility offered by digital platforms like i2c’s allows financial institutions to respond quickly to the ever-changing financial landscape and adapt offerings to customer needs at unprecedented speed. By leveraging these digital platforms, community banks and credit unions can offer a wide range of products – from customized lending solutions to expanded credit and debit offerings – that are on par with the services of larger competitors.

“The platform enables financial institutions to offer mainstream debit, prepaid, credit and lending solutions in addition to core banking and payment hub capabilities,” Taylor said.

This technological shift is particularly important for smaller financial institutions, which have historically struggled with long product development cycles.

A New Horizon for Community Banks and Credit Unions

As competition intensifies, SMB satisfaction and loyalty become critical priorities for community banks and credit unions. Taylor explained how i2c’s proprietary global, unified platform meets these needs by providing a comprehensive suite of tools and services, including customizable apps for seamless and user-friendly experiences, loyalty and rewards programs that incentivize customer retention, and fraud – and dispute resolution systems that improve trust and security.

“The platform goes beyond traditional banking,” said Taylor, “and provides solutions that fit seamlessly into modern business operations.”

Community engagement has long been a cornerstone of community banks and credit unions, and technology is enhancing their ability to connect with local markets. Advanced platforms equipped with artificial intelligence (AI)-based communication tools enable these institutions to engage with customers more effectively. For example, as Taylor noted, FIs can inform customers about local business events or special offers, fostering deeper ties within the community.

“From start to finish, these platforms help financial institutions participate in their customers’ journey,” he said. By integrating community-focused features into their digital offerings, community banks and credit unions can strengthen their role as trusted local partners.

As SMBs continue to demand more personalized, flexible and digital banking solutions, community banks and credit unions have a unique opportunity to redefine their role in the financial services ecosystem. With the right tools, they can not only survive but also thrive in a time characterized by rapid technological change.

For community banks and credit unions, the message is clear, Taylor said: digital transformation is no longer optional – it is essential. And for SMBs, the future promises more tailored, efficient and community-focused banking solutions than ever before.