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July 19, 2016
And according to Michael Shuman, prolific author and local economy expert, non-local banks are three times more likely to send your money outside your city.
Let’s look at why the experts agree that banking locally creates the most benefit for our communities.
First, local credit unions and financial institutions tend to offer cheaper services than bigger, non-local banks. They have lower average fees, or in some cases no fees at all, and tend to have higher interest rates on savings.
Second, more than half of the money loaned to small businesses is by local banks. This is because at local banks, those making loan approvals and other important decisions are often a part of the community and thus have more personal interactions with their clients. This makes it easier for them to understand the needs of local businesses and give relevant support.
On the other hand, large banks tend to give very little of their overall resources to small businesses. The image below (AMIBA, 2016) portrays the various percentages at which small businesses receive loans from small (I.E. local) banks.
When your money is deposited in a big bank it is most often invested in other regions or in the stock market in order to generate large profits for the bank. It doesn’t remain in the community and so it does not benefit the local economy or provide social value.
Conversely, when your money is deposited in a local bank or credit union it stays put. It is loaned out to local businesses in your city, granted to local charities, invested in community building initiatives and, in the case of cooperatives, dividends are paid back to members based on the bank’s profits. When your money is entrusted to a local bank, everybody benefits.
Looking for a ding free bank account? Click here to learn more about First Calgary Financial’s No Fees For Me.
ATB Financial is offering Alberta entrepreneurs free banking for their start up for a year. Click here to learn more.
Need more convincing? Check out these top five reasons to bank locally from Banker’s Toolbox.
Did you know?
Sustainability for Breakfast: The Calgary Food Centre
4920 17 Ave SE