Consumer Perceptions of Community Banks: An Exploratory Study

This study examines consumer attitudes toward community banks during an era characterized by great economic turmoil and instability within the banking industry. It examines preferences among five types of financial institution (national banks, regional banks, community banks, investment houses, and brokerage firms). It analyzes the relationship between switching intentions and factors such as perceptions of bank instability, economic projections, and presence of online banking technologies. Findings indicate that those consumers who feel less confident about the economy have less confidence in the stability of banks. Additionally, findings indicate that consumers are significantly more comfortable with community banks than the other forms of banking. Finally, in terms of consumers’ bank switching intentions, the intention to switch banks was impacted by the perception of bank instability and an interest in online banking is often associated with an intent to switch banks; but an intention to switch banks is not associated with the level of economic confidence. The managerial implications and suggestions for needed future research in this area are also presented