How Better Technology Can Serve Rural Communities

Between 2017 and 2025, the United States lost 15% of its bank branches. During that time, rural counties were hit the hardest. In fact, of the 44 counties nationwide that lost more than half of their bank branches during that span, 39 were in rural areas. Rural consumers face a growing gap, becoming increasingly underserved as financial institutions go more digital. Community banks and credit unions have the unique opportunity to serve them through technology that brings the branch to them.

How accessible are rural areas?

According to the Consumer Financial Protection Bureau, bank consolidation and the declining number of branches make it “hard for rural customers to maintain in-person banking relationships.” This is the result of rural customers living in areas known as “banking deserts” with no banks or credit unions within 10 miles of a populated area. Rural customers are 10 times more likely to live in a banking desert than urban customers.

However, the accessibility problem goes beyond physical accessibility. While internet coverage is much better today than it was even five years ago, more than 9 million rural Americans lack qualifying service, and fewer than half of rural households have two or more provider options, compared to 85% in urban areas. The rural population has been uniquely harmed by lacking accessibility.

How technology can bridge the gap

The biggest burden on rural banking customers is physical accessibility, and that comes on two fronts. First, people still prefer face-to-face banking for major financial transactions,which is more difficult and inconvenient for rural Americans without branches nearby. But even further, their options aren’t as wide as they used to be.

As branches have closed, rural Americans have been left without a viable branch. They can, and most often do, keep commuting to their community bank or credit union because their only other option is moving to a big-box online bank. This is made worse as financial institutions leave their area or if they already live in a banking desert. Just as rural Americans have fewer choices for internet access, they also banking options.

That’s a problem for the rural consumer, but it’s also a challenge for community banks and credit unions. Rural Americans are a widely underserved segment, and community financial institutions have an opportunity to reach them.

One solution is video banking. With video, rural customers don’t have to drive to a physical branch to still get a face-to-face interaction. They can apply for a credit card, open a new account, or even take out a loan on a video call with an expert without having to leave their home.

Bringing the branch to rural customers

Rural Americans, like most people, haven’t stopped wanting a face-to-face relationship with their bank. But they are far less likely to have access to that than average citizens. As branches continue to close, community banks and credit unions have an opportunity to serve their communities better through technology.

Video banking gives community financial institutions a vehicle, bringing the branch to rural customers without building a new one. A loan officer in one location can meet with customers across several counties, and a customer who used to make a long drive to open an account can do it from their kitchen table. Most importantly, rural customers keep the personal relationship that made them choose a community bank or credit union in the first place.

Rural customers are an underserved segment, but they don’t have to stay that way.