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How community and regional banks can win consumer trust

Authors

  • Edward Sander

    EY Global and Americas Nexus Financial Services Leader

  • Nikhil Lele

    EY Americas Consulting Banking and Capital Markets Leader

03 minute read 31 Oct 2025
Related topics
Banking transformation

NextWave research results create a roadmap for banks to secure the most trusted relationship with consumers.

In brief
  • Trust has become the most valuable currency in banking, with consumers increasingly seeking hyper-personalized and digitally enabled interactions.
  • NextWave research indicates that a substantial 70% of consumers now feel at ease with artificial intelligence (AI) handling their customer service concerns.
  • Community and regional banks can build trust by concentrating on four core competencies that enhance their ability to provide personalized financial services.

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In a time when traditional competitive advantages are diminishing, relationship trust has emerged as the most valuable currency in banking. Technological advancements have led to an unprecedented level of consumer access to information and self-service options, shifting customer expectations toward hyper-personalized and digitally enabled interactions. To stay competitive in this new paradigm, banks must adapt to these evolving customer expectations or risk losing them to other financial institutions. Insights from Ernst & Young LLP’s proprietary NextWave research supports a strategic vision that can help differentiate these institutions in a crowded marketplace.

Known for their strong focus on customer relationships, community and regional banks have a distinct advantage in the race to establish themselves as the most trusted providers in the financial sector. However, they must not take customer loyalty for granted. Digital platforms have made it easier for consumers to change banks and use multiple financial providers, increasing competition for share of wallet. Our NextWave research reveals:

of consumers are open to changing their deposit accounts for better-suited options.
of Gen Z consumers are considering a change in their primary banking relationship.

Artificial intelligence (AI) is also gaining acceptance among consumers. A significant 70% are comfortable with AI resolving customer service issues based on their personal preferences, while 68% are open to AI-driven financial planning guidance. This trend underscores the need for banks to engage with consumers on their terms — whether in person or through digital channels — by providing the guidance, tools and services they need in an integrated, human-centered and digitally enabled manner.

How EY can help

  • Banking and Capital Markets

    The EY Banking & Capital Markets team of industry-focused professionals, integrates sector knowledge and technical experience to help strategically build a better banking ecosystem.

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Four core competencies to build consumer trust 

To capitalize on these consumer trends, banks should focus on four core competencies:

 

1. Digital payments: offering embedded capabilities that facilitate and accept payments for both personal and professional needs.

 

2. Liquidity access: providing guidance on financial planning and access to products that enhance liquidity so consumers can manage planned and unexpected financial situations.

 

3. Digital identity: securely housing and attaching digital identity to the customer’s profile within the bank for portability to enhance customer convenience.

 

4. Personalized financial ecosystem: providing digital experiences and tools tailored to individual customer profiles and presented at critical moments in their financial lives within a unified platform.

 

These competencies work together to create a personalized, digitally enabled relationship framework that adds value for customers as they navigate their financial journeys. Community banks and credit unions, recognized for their personalized service, are well-positioned to take advantage of this opportunity. However, legacy systems could pose a challenge. A recent EY technology benchmarking survey found that 86% of banks identified legacy systems as the main reason for IT project failures. Community financial institutions, however, can now look to a growing number of FinTechs that specialize in these competencies to accelerate their efforts.

 

With the demand for personalization, speed and relevance reshaping the banking landscape, institutions that hesitate to commit to digital transformation may find themselves outpaced by more agile FinTechs and digital-first providers. By addressing these challenges, community financial institutions can build trust, foster deeper relationships with their customers and leapfrog the competition as they pave the way for future growth.

Thanks to David Kaiser, Senior and Matthew Per, Senior Manager for contributing to this article.

Summary 

Relationship trust has become a cornerstone in banking as traditional competitive advantages fade. Community and regional banks are well positioned to establish themselves as trusted providers. Insights from our NextWave research reveal consumer expectations for always-on availability and intelligent financial services, emphasizing the need for banks to adapt or risk losing customers. Key competencies for building financial trust include digital payments, liquidity access, digital identity and personalized financial ecosystems. To earn this most trusted relationship status, community and regional banks must embrace digital transformation.

About this article

Authors

  • Edward Sander
    EY Global and Americas Nexus Financial Services Leader
  • Nikhil Lele
    EY Americas Consulting Banking and Capital Markets Leader
Related topics
Banking transformation

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