The Relationship Advantage: How Community Banks Can Compete with the Megabanks
Community banks can’t outspend megabanks — but they can outmaneuver them. Here’s why pairing deep local relationships with actionable, risk-informed data creates a powerful competitive advantage.
At AOBA 2026, Tom Michaud shared a stark reality: community banks with under $10B in assets once held 61% of U.S. deposits. Today, that share has fallen to 16%. Meanwhile, JPMorgan Chase invests $8B of its $18B tech budget in innovation. The message is clear — the largest banks are playing offense. Community banks must evolve.
Community banks already hold two assets that can level the playing field: deep local relationships and the data surrounding them. The challenge is turning that data into actionable insight. Siloed systems, limited resources, and tight budgets often prevent institutions from fully leveraging this advantage.
During the FinXTech session “Leveraging Data for Growth,” panelists emphasized that actionable intelligence matters more than raw data. For example, early warning indicators in customer behavior can signal attrition risk — allowing banks to act before relationships are lost.
Furthermore, speakers during the FinXTech session “Let’s Be Practical: Envisioning Your Bank’s Future” emphasized that banks need a data foundation in place before enacting AI.
The winning strategy for CFIs is precision: pairing relationship capital with risk-informed, AI-enabled insight to engage clients smarter and faster than the big banks.
Want more perspectives like this?
Lumio Forward is our monthly briefing for community banking leaders navigating data, risk and growth.
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