The news: The Hartford Business Journal recently covered how Connecticut has lost half of its credit unions over the past two decades—a trend that’s happening nationally as smaller financial institutions (FIs) aim to differentiate themselves from bigger, more digital competitors.

How we got here: Credit unions and community banks are merging to stay competitive—with merger volume growing 3.5 times since 2020, according to The Independent Community Bankers of America.

One potential reason for this increase is that customer expectations have shifted in the wake of the COVID-19 pandemic. Institutions must adapt to provide both localized service and high-quality digital experiences. And merging with another organization can give smaller FIs the resources they need to expand and improve their digital offerings.