Everyone in your community deserves equal access to credit and other financial products. While most banks and credit unions want to provide this access, too many institutions are relying on assumptions or outdated data to determine what their community needs.
The truth is, your community is constantly evolving, and so are the needs of its members. The bank products and community efforts that made a difference last year might not be as effective today. It’s your job to build a clearer picture of what your community truly needs, where your institution may be falling short, and how you can better support low- and moderate-income populations.
While this may sound difficult, there’s actually a pretty simple process for building this picture: conducting a community needs assessment (CNA).
Whether you're preparing for a CRA exam, working to build trust in underserved neighborhoods, examining your redlining/fair lending risk, or simply want to better understand the people you serve, a CNA is the place to start.
But first, what is a community needs assessment and why should you conduct one?
What is a community needs assessment?
While it might sound a bit fancy, conducting a community needs assessment (CNA) simply means analyzing the needs of your community. This might include credit needs, product needs, service gaps, financial education levels, and other factors that affect your community’s access to banking.
This process helps identify financial needs, barriers, and perceptions within the communities you serve—especially in low-to-moderate-income (LMI) and other underserved areas. And once these needs are identified, your institution can take steps to better serve those who need you most.
A proper CNA will help you understand:
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What credit products your underserved communities actually need
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How your institution is perceived by community members
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What might be creating barriers to trust or engagement
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What local nonprofits and CDFIs are already doing and how you can support them
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Where financial education gaps exist
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What services or access points are missing
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How well your products align with the realities of LMI households
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What the community considers “impactful”
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Where your institution can build or deepen community partnerships
As you can see, a community needs assessment is a way to connect more deeply with your community members and give them the products and services they actually need, not just what you think they need.
Why you should conduct a community needs assessment
There are many reasons you might conduct a community needs assessment. From boosting your CRA documentation to reducing fair lending/redlining risk to making smarter community decisions, CNAs are a wonderful way to explore, connect, and react to the actual needs of your community.
A community needs assessment:
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Helps you move from identifying where gaps exist to understanding why they exist
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Shows regulators that you're taking proactive steps to address problems
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Creates a direct connection between your institution and underserved populations
If your institution does have fair lending concerns, then a community needs assessment is a great way to stay ahead of regulatory expectations.
Who should be involved?
Conducting a proper community needs assessment is a team effort, not a one-person show. While CRA teams typically lead this assessment, other teams should also be involved, specifically the Marketing and Corporate Social Responsibility (CSR) teams.
Here’s how the different aspects of your CNA might be divided among these teams:
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CRA (often leads the assessment)
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Set goals and scope of the CNA (geographies, populations, and topics to assess)
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Identify key stakeholders like nonprofits, CDFIs, housing coalitions, and local leaders
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Conduct interviews or focus groups with community stakeholders
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Analyze performance context
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Document findings for the CRA exam
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Collaborate with the compliance team to identify redlining and fair lending risks
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Marketing/Communications
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Create and distribute surveys to community members or consumers
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Promote listening sessions or town halls via social media, email, or direct mail
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Analyze brand perception in LMI communities
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Create visual reports or infographics to share CNA results internally or publicly
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Ensure messaging is inclusive and accessible, especially in multilingual or underserved communities
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Corporate Social Responsibility/Community Engagement
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Host or attend community meetings and listening sessions
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Engage local nonprofits and schools to gather input
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Provide feedback on emerging community needs (housing, internet, child care, etc.)
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Identify opportunities for new partnerships based on CNA findings
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Help implement follow-up actions, like launching financial education or volunteer programs
Yes, there’s a lot to do while conducting a CNA. But when teams throughout your institution work together, the assessment becomes much easier and more impactful.
How to conduct a community needs assessment
Now that you know the who, what, and why of conducting a community needs assessment, let’s get to the how.
Make a plan
You can’t go into your CNA blind. Having a written, well-organized plan is the best way to ensure you get what you need out of all this effort.
During the planning stage, come up with a list of everything that needs to be done. You can use the list of responsibilities above as a starting point. Assign responsibilities to departments and make sure everyone knows exactly what is expected of them.
This is also a great time to set some goals. What do you hope to accomplish with this CNA? Who do you hope to better understand? How do you want your institution to change or adapt? You won’t have all the answers now (those come during the assessment), but knowing what your goals are will help you organize data later and find takeaways.
Bonus points if your goals are SMART, or Specific, Measurable, Achievable, Relevant, and Time-bound.
Review existing data and trends
Before jumping into your assessment, it’s a good idea to pull some data and look for trends that may affect your path forward.
Pay attention to relevant data such as:
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Local homeownership rates by demographic
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Mortgage denial rates in specific census tracts
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Average credit scores or income levels in target areas
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Existing banking or financial service options nearby
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Public health, education, and housing data that may signal financial vulnerability
Once the assessment is done, you’ll work this data into your report as supporting material. But knowing this data upfront will give you a basic understanding of where your community is at and what to expect during your assessment. It might even help you set those SMART goals we talked about earlier.
And don’t only pay attention to outside data. You should also take time to map your institution’s loans, investments, services, advertisements, ATMs, and branches. This will make it easier to visualize where you’ve made an impact and where some more work needs to be done.
There are many mapping tools available, including Kadince. Kadince software makes it easy to track, manage, report, geocode, and map all your institution’s activities, including loans, investments, services, and advertisements. You can even map branches and ATMs, so you’ll always have a full picture of your institution’s reach and impact.
Schedule a demo to learn more about visualizing your impact with Kadince.
Talk to community members
Now we’re getting to the main part of your community needs assessment. The whole point of your CNA is to stop guessing what community members want. It’s time to talk to them!
There are countless ways you might connect with community members. Here are just a few:
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Host focus groups or listening sessions: Bring together residents from the area to hear their experiences with access to credit, homeownership, financial services, and more. Gather your community, offer a free lunch, and see what you can learn!
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Conduct surveys and polls: Use surveys and polls to capture broader feedback. Consider ways to broaden your audience and get the data you need.
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Attend town halls and other group meetings: Meeting your community members where they are is a great way to uncover problems you’ve never even considered.
And here are some questions to help you get the info you need:
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What financial services do you wish were more available?
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Have you had trouble getting a loan or opening an account?
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What would make your experience with a bank or credit union more comfortable or inclusive?
Talk to community organizations
Don’t stop at just talking to the members of your community. Also talk to the organizations in your community. These groups are already on the ground doing the work, and you can learn a lot about your community’s needs by turning to those already working to address them.
You might try talking to:
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Housing nonprofits
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Churches
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Advocacy groups
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Affordable housing providers
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Food banks and community centers
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Local branches of national organizations (e.g., United Way)
Obviously, you aren’t here to replace what these organizations are doing. You’re here to support and expand on the good work they’ve already done. These organizations are especially helpful because they:
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Understand the root causes of financial challenges in their communities
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Have already built trust with populations that may not currently trust banks
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Can offer key insights into what products or outreach strategies will work (or won’t)
The more community organizations you talk to, the more your community needs assessment (and your community) will benefit.
Assess sentiment and reputation
As you ask questions, pay close attention to how community members and organizations feel about your institution. While this may be difficult to quantify, some questions that may help include:
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Would you recommend (Institution Name) to a friend or family member?
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How would you rate (Institution Name) between 1 and 5? Why?
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Have we met your expectations? Or fallen short?
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Are our products accessible and functional?
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Do you feel welcome in our branches?
Having a solid reputation is important. This is your chance to see how community members actually feel about your institution, not how you hope they feel. This part of the CNA can sometimes be the hardest, but it’s often the most valuable.
Analyze data
Now that you have the building blocks of your community needs assessment, it’s time to put it all together and analyze the data.
There are no rules for how you put all this data together. Word docs, spreadsheets, powerpoints, whatever floats your boat. (Well, maybe not paper binders. Let’s steer clear of those.) Just make sure you can easily view and analyze everything you’ve collected.
Here’s what to look for as you start analyzing this data:
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Community Priorities
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What top needs emerged from surveys and community feedback?
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Do themes repeat across different populations or geographies?
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Are there urgent needs (like housing shortages or broadband gaps) that require immediate attention?
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Service Gaps
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Are there neighborhoods without nearby branches, ATMs, or online banking access?
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Are certain loan products missing where they’re needed most?
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Where are financial education programs sparse or missing?
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Perception Trends
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How does the community see your institution?
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Are there trust issues, reputational gaps, or confusion about your offerings?
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Did any red flags emerge in how your brand is perceived in LMI or minority neighborhoods?
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Demographic and Lending Alignment
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Compare your HMDA or CRA loan data against the demographics in your footprint.
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Are you underserving particular racial, ethnic, or income groups?
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Are branches or services clustered in wealthier areas, while LMI zones lack access?
Determine action items
Chances are you now have a list of action items or areas that need to be addressed. This is when you turn those insights into action.
Before you began collecting data, you built a plan for how to proceed. Now it’s time to build another plan outlining what you’re going to do with the data you’ve collected.
One thing to pay special attention to is whether your current product offerings align with the credit needs of your community and how you might adjust to better provide equal access. You may not need entirely new products—but small changes to eligibility criteria, marketing language, or delivery methods can make a big difference.
Stay in the loop
Whoa! That was a lot! You should now have a finished community needs assessment and an action plan for going forward.
But in reality, your community needs assessment is never really complete. You should continue to reach out to community members and organizations, monitor their perception of your institution, and make adjustments as needed.
This community needs assessment is an important step in rebuilding trust and providing equal access to credit among all ethnicities. Your institution will never be perfect, and you’ll never have a 100% satisfaction rate among all community members. But conducting a community needs assessment and following through on those action items will greatly improve your institution’s offering and contribute to a better, more financially responsible community.
To learn more about creating a community needs assessment, check out our webinar, How Inclusive Marketing Can Protect Your Institution From Redlining Risk.
*This article has been reviewed by Charles LeFevre, compliance expert and Kadince’s Director of Compliance Operations.
None of Kadince, Inc., its affiliates, or its respective employees, directors, officers, and agents (collectively, “Kadince”) are responsible or liable for any content or information incorporated herein. Read full disclosure.
