Though the popularity of online shopping was growing long before COVID-19 spread its way across the globe, numerous surveys have shown that the pandemic pushed more consumers to make online purchases. In fact, according to one analysis by the RAND Corporation, a nonprofit research organization, 62 percent of people below the age of 35 shopped online at least once a week in 2020. Among people between the ages of 35 and 54, 44 percent made shopping online a weekly habit, and 34 percent of people 55 years of age and older made weekly online purchases.
However, despite this shift in shopping habits, Americans continued to pump hard-earned dollars into their neighborhood economies with local purchases. In one survey of 1,500 consumers, 70 percent of respondents said they were only shopping online at local businesses or making a mix of online and in-store purchases whenever possible. Nearly 60 percent said their main reason for doing so was to keep money local, and 38 percent said they wanted to support their community and local creators.
In another study of consumer sentiment, more than 71 percent said that they regularly go out of their way to support the businesses in their neighborhoods. Even more impressive, a whopping 82 percent noted that they’d be willing to spend more to support local businesses when the pandemic finally ends.
Given this fervor then, why have small- and medium-sized local banks lost significant market share to their large- and giant-sized national competitors over the past few decades? According to ILSR, a nonprofit organization and advocacy group, banks of all sizes held a roughly even share of the market back in 1994. But by 2018, the market share of the largest banks had expanded to 59 percent, with the top four financial institutions alone controlling 36 percent.
Given that larger banks may offer less competitive rates on loans, charge higher fees than smaller community banks and credit unions, and be less willing to lend money to lower-credit borrowers with lower incomes, the answer may be found in their advertising budgets and access to financial technology (fintech). In 2019, for example, national commercial banks spent a total of $12.05 billion on advertising compared to the $1.48 billion total advertising spend by state commercial banks.
As a result, consumers—who as we learned earlier are increasingly shopping online, and are increasingly interested in emerging technology—find these banks first and end up overlooking the local banks, credit unions, and smaller lenders in their area who may actually offer better deals and be a better fit for their financial needs.
Konduit was designed to change this unfair dynamic and make it easier for online shopping-savvy consumers to connect with the financial institutions in their own backyards. Konduit helps community banks modernize by providing access to the fintechs that consumers want to use. It’s not uncommon for small and mid sized banks to find fintechs difficult and expensive to integrate, but Konduit streamlines that process. Konduit uses a novel no-code approach to enable business users to easily select and configure fintechs. In short, Konduit gives non-experts, expert capabilities.
Nisha Krishna of Konduit says, “Community banks are the backbone of local economies and our platform helps them to modernize and digitize.”
Consumers have long understood the importance of shopping local, and it’s high time for that sentiment to be extended to community banks and credit unions as well.
Interesting Related Article: “The Technical Obstacles Every Financial Institution Must Be Aware Of In 2023“