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What is a Regional Bank?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 16 November 2016
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Regional banks are banking institutions that are structured to operate within a defined geographical area or region within a particular nation. A bank of this type may be limited to a specific state or province, or be licensed to operate in a number of provinces or states within a defined section of a country. In most instances, a regional bank is a full-service banking operation that is capable of providing the same range of services to their customers as any of the large banking institutions.

The regional bank is an alternative to what is known as a money center bank. Money center banks are full-service banking institutions that are licensed to operate on at least a countrywide scale. It is not unusual for a bank of this type to operate branches and other facilities in two or more nations. While money center banks do offer some advantages over a regional bank in terms of the expanse of the operational network, the two types of banks offer essentially the same types of services.

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One of the benefits that many people associate with a regional bank is the more conservative approach the institution takes to investing the money of depositors. In times past, there have been situations where multi-national banks experienced severe losses due to investments that exhibited potential for a higher return, but ultimately decreased in value due to various circumstances. By contrast, the regional bank is more likely to balance speculative investments with options that are considered sound over the long term, and are less susceptible to changes in the economy, acts of nature, or the outcome of political elections.

It is not unusual for a regional bank to also be viewed as a more personable type of bank. In promotional campaigns for various regional banks, the aspect of personal interaction with bank customers is often highlighted as a means of differentiating the smaller bank from its larger and presumably more distant competitors. While the reality may be that the bank offers no more of a personal touch than a money center bank, the presentation does tend to attract the attention of consumers who feel that big banks do not take an interest in them or the communities where they reside. When the bank chooses to sponsor or otherwise support activities in the local community, this helps to reinforce that perception.

In terms of services, a regional bank is often able to provide anything that a larger bank can offer. In some situations, this is accomplished through alliances with other regional banks through a network or association. More often, the bank provides the services within their own infrastructure, an aspect that allows customers to feel more of an affinity with the bank, since it is perceived as part of the local community. Before choosing to do business with any bank, consumers should look closely at the range of services provided, and obtain information about the reputation of the bank within the financial community. This will increase the chances of working with a bank that is financially stable, and capable of meeting the customer’s needs.

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