Conversations around technology in community banking often start the same way: implementation is expensive, maintenance is capital intensive and digital transformation feels like a moving target. But what if the real question is not how much technology costs, but how much opportunity is left on the table?
A 2024 survey by The Bank of New York Corp. paints a clear picture. Nearly 90% of community banks say they are prepared to initiate digital transformations. Yet many question whether they have the expertise or resources to execute effectively. At the same time, 97% of U.S. banks are community institutions, serving small businesses, agricultural clients and households that increasingly expect modern financial services.
Strong local relationships are no longer enough to prevent customers from exploring alternatives. Digital banks and fintechs are expanding aggressively. Some are targeting niche segments. Others are entering the U.S. market with fully regulated models and significant capital backing. Younger customers are less anchored to physical branches and more willing to move deposits for better digital experiences.
This shift creates both risk and opportunity. Consider remittances. The Niskanen Center recently reported 2024 data showing formal remittances sent from the United States alone totaled $93 billion, while estimates that include money sent through informal channels place the figure as high as $230 billion. According to a recent study by The InterAmerican Dialogue, 80% of migrants in 2025 had a bank account, yet close to half still remitted in cash.
What does that indicate? The money sits there, and the transaction revenue flows elsewhere. Many community banks still rely on manual processes for international wires, such as making phone calls, filling out paper forms and making branch visits. Meanwhile, customers turn to digital-first competitors for speed and convenience.
The InterAmerican Dialogue study points out that a new 1% tax on cash remittances makes it reasonable to assume at least one-fourth of current cash senders could shift to digital channels if the experience were embedded directly into their existing banking relationship. Even modest adoption could translate into meaningful transaction volume without requiring the bank to acquire new customers.
The strategic question for leadership teams becomes: should cross-border payments be viewed purely as a service enhancement or as a deposit retention and revenue protection strategy?
A growing partnership model reframes the equation. Instead of large upfront licensing fees, some fintech providers are willing to structure revenue-sharing arrangements tied directly to transaction activity. In these models, implementation costs can be significantly reduced because both parties participate in the upside.
A similar opportunity exists in wealth management. The BNY survey indicates that 100% of community banks are interested in expanding wealth management offerings. Historically, many relied on in-branch advisory relationships or third-party broker partnerships that require physical interaction.
Meanwhile, digital trading platforms have normalized self-directed investing with low fees and seamless mobile interfaces. If customers can trade in seconds elsewhere, why would they wait for an appointment?
Community banks do not need to become broker-dealers overnight. Embedded brokerage infrastructure— where a regulated third-party handles compliance and settlement— enables institutions to integrate self-directed investing into their digital channels.
Again, the economics can shift. Instead of absorbing heavy technology investment, banks can explore transaction-based revenue models. Even small per-trade fees, when combined with increased account activity and higher average balances, can generate incremental revenue.
More importantly, wealth functionality deepens the relationship. When deposits, payments and investments coexist within the same digital environment, the institution becomes harder to displace. Integration remains complex. But it may be time to rethink the default assumption that innovation requires heavy capital outlay before value appears.
For community financial institutions, the path forward may involve asking different questions: Where is transaction revenue leaking to competitors? Which services drive both engagement and deposit growth? Can partnership structures distribute financial risk rather than concentrate it?
Community banking has always been relationship driven. The opportunity now is to extend that philosophy to technology strategy itself. In a market defined by embedded finance, digital challenges and evolving customer expectations, the strongest partnerships may be those where success is mutual and measurable.
Previous