4 ways innovative leadership can transform community banking

Community banking has always been about stability. Familiar faces, conservative lending and deep roots in the community have defined our industry for generations. But in today’s world, stability alone doesn’t ensure resilience. Technology is changing customer expectations at a rapid pace, and community banks face a unique challenge: honoring legacy while preparing for what’s next..The good news is that customers still want what community banks do best — relationships and trusted guidance — especially when the stakes are high. They also expect efficiency, personalization, and digital tools that match their lifestyle. Our job as leaders is to strike the right balance: preserving values while taking smart, strategic risks. Innovation should strengthen those values, not replace them.Here are four ways I believe innovative leadership can help community banks thrive in this new era.1. Strategic partnerships and acquisitionsInnovation doesn’t always mean reinventing the wheel. More banks are partnering with fintechs because it’s faster and more flexible than building everything in-house. Whether it’s digital onboarding, real-time payments or AI-powered underwriting, partnerships give banks access to capabilities that would otherwise take years to develop.Instead of viewing fintechs as competitors, community banks should see them as teammates — bringing speed, tools and new ideas that extend what we already do well. Some banks have even gone further and acquired fintechs. At First International Bank & Trust, we experienced this firsthand when we acquired Kotapay, an electronic payments provider. It was a move that expanded our capabilities and positioned us for growth.The one thing I’ve learned is that acquisitions only work when cultures align. The best technology in the world won’t matter if the underlying philosophies around service and growth don’t match. That’s why many banks start with smaller partnerships or pilot projects first — a chance to build trust, confirm alignment and lay the foundation for something bigger. The key is making sure the partnership or acquisition strengthens your core and creates real value for customers.2. Investing in technology with purposeSpending on technology keeps climbing across the industry, but progress isn’t about dollars spent, it’s about intent. Strong leaders make investments with purpose, ensuring that every dollar enhances security, efficiency or the customer experience.That same principle applies to emerging tools like AI, automation and data analytics. When used thoughtfully, they can help banks understand customers better, sharpen productivity and improve compliance. KPMG recently found that applying generative AI to quality control and risk processes could boost productivity by up to 75 percent. That’s the power of purposeful adoption.For community banks, technology also plays a crucial role in maintaining trust. Systems that strengthen cybersecurity, simplify reporting and streamline compliance are essential. They protect both the customer and the bank’s reputation.3. Leading with curiosityAt the end of the day, innovation in community banking comes down to leadership. Technology is only a tool — what matters is how leaders use it and how teams adapt to it.The best leaders balance experience with openness. They guide their teams through change without abandoning the values that have always made them strong: relationships, trust and service. And they lead with curiosity — asking questions, being willing to test ideas and encouraging others to bring forward new solutions.That might look like launching a small pilot program or giving younger employees the space to champion digital tools. It also means recognizing the different strengths across a team. Veteran bankers bring decades of wisdom and client insight. Younger staff often bring natural fluency in technology and data. When both are valued, innovation flows naturally.4. Redefining trust for a digital eraTrust has always been the foundation of community banking, but how that trust is earned has changed. Today, customers expect reliability not only in personal relationships, but also in data protection, speed and transparency. Research shows trust is now the leading driver of loyalty, with 61 percent of consumers ranking trustworthy information as the most important factor in their interactions.That doesn’t mean the branch is going away. It means the role is evolving. Branches are becoming places for advice and relationship-building, while digital platforms handle transactions. Employees are trained not just to process, but to listen, guide and empathize, complementing technology rather than competing with it.Success comes when digital efficiency and personal service work together. Technology strengthens the human connection instead of replacing it.The path forwardFor community banks, innovation doesn’t mean losing identity. It means building on the values that have always defined us, while taking smart risks that open doors to growth.By investing with purpose, partnering wisely and leading with curiosity, we can ensure that community banking not only survives but thrives in a more connected, competitive future.Peter Stenehjem, a fourth-generation community banker, was born and raised in the heart of North Dakota’s badlands, where he grew up during the height of the region’s oil boom. His journey in banking began in 2000 when he joined First International Bank & Trust (FIBT) as a teller, and quickly demonstrated his expertise in both business and personal banking. Peter quickly advanced in his career from lender to market president and ultimately was promoted to president of the entire organization. Throughout his career, he has become well-versed in the unique challenges and opportunities facing the communities FIBT serves. Peter graduated from the University of North Dakota in 2007 with a degree in banking & financial economics. Peter furthered his education in 2014 by completing his graduate studies in banking at the University of Wisconsin-Madison. He has also attained certification as a Commercial Lender with the Independent Community Bankers of America (ICBA) and completed the Fargo-Moorhead Chamber Leadership Program. Peter serves as a director of Watford City Bancshares, Inc., and is a member of the FIBT Board of Directors and the Strategic Planning Committee. Beyond banking, Peter has pursued several entrepreneurial ventures. He is involved with businesses such as Alati Energy, Stenehjem Holdings, Stonehome Brew Pub and Stonehome Brewing Company, Outlaws Bar & Grill, and JL Beers, and he is the managing partner of Stenehjem Development. While Peter currently resides in Minnesota, he remains connected to his North Dakota roots, staying actively involved in both the Fargo-Moorhead and Watford City communities.