Community banks are making significant strides in digitizing their account opening processes, a critical step in attracting new customers in today’s competitive financial landscape. However, the battle for deposits is increasingly being defined not just by the ease of account creation or initial funding, but by the extent to which these newly opened accounts become integral to customers’ everyday financial lives. This shift underscores a growing challenge for many community institutions: bridging the gap between account activation and sustained customer engagement.
The PYMNTS Intelligence and Ingo Payments Money Mobility Tracker, released in April 2026, highlights that while a substantial majority of community bank decision-makers, 55%, report having fully modernized their technology stacks, this digital transformation does not always translate into robust payments capabilities. The report points to a critical deficiency in the implementation of real-time payments infrastructure, a feature widely acknowledged as essential for modern banking. This disparity between declared technological advancement and actual payment functionality poses a direct threat to deposit growth and the cultivation of long-term banking relationships.
The Utilization Gap: From Funded Accounts to Primary Relationships
The core of the issue lies in the transition from a funded account to a primary banking relationship. Many newly opened accounts, despite being successfully initiated and funded, remain underutilized or fall into dormancy. This underutilization represents a missed opportunity for community banks to solidify their position as the preferred financial institution for their customers. When accounts are not actively used for daily transactions, the potential for retaining deposits and deepening customer engagement is significantly curtailed. The focus, therefore, must evolve from mere account activation to driving consistent and meaningful utilization.
Several factors contribute to this pervasive utilization gap. A significant hurdle is the persistence of legacy infrastructure, particularly the limitations imposed by core banking providers. Many of these systems still operate on batch-based processing and offer fragmented payment capabilities. This architectural constraint makes it exceedingly difficult to support the seamless, real-time experiences that consumers and businesses have come to expect. Use cases such as instant peer-to-peer (P2P) transfers, efficient bill payments, and timely business disbursements become cumbersome to facilitate, driving customers to seek more agile solutions elsewhere.
Furthermore, concerns surrounding fraud continue to act as a drag on the adoption of faster payment capabilities. The PYMNTS report indicates that 26% of community banks cite fraud as a primary barrier to implementing these advanced payment functionalities. While understandable, this caution can inadvertently hinder the development of the very services that could enhance customer experience and, consequently, drive greater account utilization.
Strategic Payments Layering: The Path to Enhanced Engagement
In response to these challenges, community banks are increasingly embracing a "payments-layering" strategy. This approach involves integrating advanced payment capabilities, such as instant payments, P2P transfers, and multi-rail disbursement options, directly into their existing account structures. The underlying principle is that accounts gain primacy only when they are equipped to handle the full spectrum of everyday financial activities. By embedding these functionalities, community banks aim to create a more compelling and convenient banking experience that encourages customers to consolidate their financial lives with them.
This strategic pivot is particularly relevant in the context of serving small to mid-sized businesses (SMBs). The data suggests a significant unmet demand: over 70% of SMBs express a preference for banking with community institutions. However, a considerable disparity exists between this stated preference and the actual number of SMBs that choose community banks as their primary financial partner. This gap represents a substantial growth opportunity, one that can be unlocked by offering robust and modern payment solutions that cater to the specific needs of businesses, such as efficient payroll processing, supplier payments, and receivables management.
The Evolving Landscape of Deposit Growth
The findings of the PYMNTS Intelligence and Ingo Payments Money Mobility Tracker paint a clear picture of the evolving dynamics of deposit growth for community banks. The traditional methods of acquiring and retaining deposits are no longer sufficient. In an era where digital convenience and seamless financial management are paramount, the ability of a bank to facilitate continuous payment activity is directly correlated with its success in securing and growing its deposit base.
The report underscores that the future of deposit growth hinges on enabling everyday money movement. This requires a proactive approach from community banks to modernize their payment infrastructures, address legacy system limitations, and effectively mitigate fraud risks without sacrificing the speed and convenience that customers demand. By aligning their payment capabilities with the daily usage patterns of their account holders, community banks can significantly enhance customer engagement, foster loyalty, and ultimately strengthen their competitive position in the market.
The "Money Mobility Tracker" and Its Implications
The "From Opening to Ongoing: How Modern Payments Unlock Community Banks’ Deposit Growth" report, a collaboration between PYMNTS and Ingo Payments, delves deeper into these critical issues. It meticulously examines why funded accounts at community banks often struggle to evolve into primary banking relationships. The research highlights the specific gaps in payments functionality that impede account utilization and details why enabling effortless everyday money movement is not merely a desirable feature but an essential requirement for sustainable deposit growth.
The report’s analysis is particularly pertinent for community banks seeking to navigate the increasingly complex financial ecosystem. It provides actionable insights into how to leverage modern payment technologies to create stickier customer relationships and build a more resilient deposit base. The emphasis on "money mobility" signifies a recognition that in the digital age, the ability to move funds seamlessly and securely is a cornerstone of customer satisfaction and loyalty.
Broader Economic Context and Future Outlook
The trends identified in the PYMNTS report are occurring against a backdrop of significant economic shifts. As inflation rates have fluctuated and interest rate policies have evolved, the competition for stable, low-cost funding sources like deposits has intensified. Community banks, often operating with leaner margins than their larger national counterparts, are particularly sensitive to these pressures. Their ability to attract and retain deposits directly impacts their lending capacity and overall financial health.
Moreover, the rise of FinTech disruptors has fundamentally altered customer expectations. These agile companies have set new benchmarks for digital experience, speed, and personalization. Community banks, while possessing inherent advantages such as strong local ties and personalized service, must adapt to these evolving demands. Failing to do so risks ceding market share to more technologically adept competitors, both traditional and non-traditional.
The timeline for this transformation is critical. The rapid pace of technological innovation means that the digital capabilities that are considered cutting-edge today may become standard tomorrow. Community banks that delay investment in their payment infrastructure risk falling further behind, making it increasingly difficult to catch up. The report’s publication in April 2026 suggests that these challenges are not theoretical future concerns but present-day realities demanding immediate attention.
Analyzing the Impact: A Competitive Imperative
The implications of a persistent payments gap for community banks are far-reaching. Beyond the direct impact on deposit growth, it can affect their ability to attract new customer segments, particularly younger demographics and digitally native businesses that prioritize seamless digital experiences. It can also hinder their capacity to offer value-added services that rely on real-time data and payment flows, such as enhanced fraud detection, personalized financial advice, and integrated treasury management solutions.
For businesses, particularly SMBs, the inability of their banking partners to facilitate efficient payments can lead to operational inefficiencies, delayed cash flow, and increased administrative burden. This can negatively impact their competitiveness and growth prospects. As the report notes, if community banks cannot meet these essential payment needs, SMBs will inevitably seek alternatives, potentially leading to a gradual erosion of the community bank’s market share in this vital sector.
The Way Forward: Strategic Investments and Customer-Centricity
The path forward for community banks is clear: a strategic focus on modernizing their payments capabilities is no longer optional but a fundamental requirement for survival and growth. This involves not only investing in new technologies but also rethinking their operational processes and core banking systems. Collaboration with FinTech partners, as exemplified by the PYMNTS and Ingo Payments collaboration, can be instrumental in accelerating this digital transformation.
The emphasis on "payments layering" suggests a pragmatic approach that can be implemented incrementally. By prioritizing the integration of key payment functionalities that address the most pressing customer needs, community banks can demonstrate tangible progress and build momentum. This customer-centric approach, focused on enabling everyday financial activity, is the most effective strategy for turning funded accounts into loyal, long-term banking relationships.
Ultimately, the success of community banks in the coming years will be largely determined by their ability to adapt to the digital imperative and provide payment solutions that are as efficient, seamless, and integrated as those offered by their more agile competitors. The insights from the PYMNTS Intelligence and Ingo Payments Money Mobility Tracker provide a vital roadmap for this essential evolution.
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