FDIC Quarterly  |  September 24, 2021

New Report Highlights the Importance of Technology Investments for Community Bank Lending and Deposit Taking During the Pandemic

For many community banks and their customers, the pandemic was a crash course in using technology in all facets of banking. Community banks that invested more in technology before the pandemic generally made more loans and took in more deposits during the pandemic than did community banks that invested less in technology, according to a new FDIC report, “The Importance of Technology Investments for Community Bank Lending and Deposit Taking During the Pandemic,” published in the FDIC Quarterly.

The FDIC found that:

• Community banks that invested more in technology generally reported faster loan and deposit growth in 2020 than did banks with less technology investment.
• Differences in loan and deposit growth between community banks with greater and less technology investment grew in 2020 relative to differences before the pandemic.
• Faster loan growth for community banks with greater technology investment largely stemmed from participation in the Paycheck Protection Program (PPP).
• Community banks with greater technology investment, on average, originated a greater share of PPP loans regardless of loan size, origination date, or borrower distance from the nearest bank branch.
• Larger increases in deposit growth for community banks that invested more in technology were due to increases in deposit balances of existing customers rather than from new depositors.

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