Evolve to Endure: How Boards Can Help Banks on Their Transformation Journey

This article was originally published in the July/August 2025 edition of the ABA Banking Journal Directors Briefing.

As competition from fintechs and nonbank lenders intensifies, community banks face accelerating disruption. Transformation is no longer optional; it’s now; it’s essential for survival. As Michael Budinger, a principal at Crowe, explains, “Transformation is about people, processes, and technology – in that order. At the heart of every meaningful transformation lies a shared understanding – a clarity of purpose, priorities, and pathways forward.”

The challenge for many banks is sustainability. While most community banks see personalized service as a core strength, maintaining it requires more than good intentions – it demands the right systems, processes and a culture of continuous improvement. Without these, community banks risk falling behind in an increasingly fast-paced market.

For boards of directors overseeing transformation, the key is strategic guidance. “The path to transformation is often unclear,” Budinger notes, “but boards must help management align and select the right partners for long-term success, not just quick fixes.” Effective transformation requires more than just adopting new tools; it demands that technology be aligned with broader strategic goals and supported by buy-in from all levels of the organization.

One practical starting point is establishing shared direction and priorities. In his work with boards, Budinger urges directors to ask management: What are our aspirations? What obstacles do we face? Understanding these factors helps shape a shared vision and focus the bank’s efforts on what truly matters. Additionally, gaining feedback from customers and employees early in the process is vital. This ensures the bank delivers services that resonate and stand out in a crowded market.

The rise of fintechs underscores why transformation can’t wait, Budinger says. Nonbank lenders offer faster, more convenient services that appeal to both consumers and businesses. To compete, community banks must define their unique value propositions – whether by adding new products like wealth management or expanding into underserved markets. Boards should ask: Where will our growth come from, and how can we differentiate ourselves?

Crucially, transformation is also a collaborative process. Employees at all levels should have a seat at the table helping to shape the changes that affect them. Early engagement not only facilitates smoother transitions but fosters a culture of continuous improvement. For boards, the focus should be on ensuring that everyone – from top leadership to frontline staff – has a voice in the process.

Community banks must view transformation as an ongoing journey – one that synchronizes culture, operations, and innovation, Budinger says. With clear vision and strategic focus, community banks can lead – not lag – in the future of community banking. For boards, the critical questions to ask are:

• What is our long-term vision and what’s standing in the way? Clarity of direction is the foundation of effective transformation.
• Are we solving for short-term fixes or building sustainable value? Quick wins matter, but enduring growth demands deeper change.
• Do we have the right partners and the culture to support “real” transformation? Technology is only as powerful as the people and purpose behind it.