Small banks’ and credit unions’ involvement with local communities has traditionally given them a competitive edge over their larger counterparts. But that advantage alone can’t help them overcome aging IT systems and historically high interest rates. To survive, they must innovate and form new partnerships.

Key Question: What challenges must community banks and credit unions surmount to survive what’s been called an existential crisis for smaller financial institutions (FIs)?

Key Stat: High interest rates can hurt growth. About 89% of banks saw the imbalance between their earnings and their payouts as an extremely or very important external risk, according to a July 2023 Conference of State Bank Supervisors (CSBS) survey.