By Shane Hartzler
Many of today’s community banks understand the fundamental changes taking place all around them, largely centered on pursuing digital transformation while simultaneously re-evaluating their core liquidity management practices.
A recent Wolters Kluwer industry survey of more than 2,500 community bank professionals representing a wide asset spectrum offers a clear snapshot of these critical trends, revealing significant momentum in technology adoption and a future focus on strategic collateral pledging.1
The findings underscore that while the digital shift is well underway, particularly in high-volume lending classes, key hurdles related to system integration and broader digital asset acceptance remain central to the sector’s competitive future.
The digital imperative: adoption and barriers
The shift from paper to digital loan workflows is gaining substantial momentum, driven by the need to streamline operations and enhance the customer experience. The data show a decisive push toward electronic signatures, particularly in historically more complex lending classes.
A notable 58% of community banking institutions are currently using or plan to use electronic signatures for commercial real estate, multi-family, and agricultural real estate loans. This figure signals a significant move toward digital efficiency across a major portion of a community bank’s balance sheet. Within this accelerating market, DocuSign has emerged as the clear platform of choice, preferred by 59% of institutions, with Adobe/OneSpan at 30%.
Despite this forward progress, the survey highlights that the path to full digital adoption is not without friction. For institutions that have yet to implement electronic signatures, the key barriers are not primarily centered on cost, but rather on technological and market-level hesitations.
System integration challenges were cited by 10% of non-adopting institutions, making it the most significant barrier. Cost concerns followed at 7%. However, a more critical and broader issue is the acceptance of eAssets beyond just eSignatures. This is evidenced by 4.8% of respondents citing a lack of secondary market acceptance and 5.2% citing a lack of internal resources, highlighting institutional and market-level hesitations around full digital asset adoption.
A lack of acceptance by major regulatory bodies, specifically the Federal Home Loan Bank and the Federal Reserve, was cited as a hurdle by 7% of respondents. These data points collectively indicate that while the desire for digital workflows is high, a tech infrastructure gap and regulatory alignment issues need to be addressed to realize the full value proposition of digital lending.
Pledging: a strategic shift in liquidity management
Beyond digital transformation, the survey uncovered a strategic shift in how community banks are approaching liquidity management, with collateral pledging set to play an increasingly important role. The data show a clear future focus on leveraging pledging, particularly with loan types that have traditionally been held in portfolio.
Currently, a majority of respondents (60%) report that they are not pledging CRE/MF/Ag RE loans. However, 59% of these plan to begin pledging within the next 24 months, indicating a robust strategic shift in how banks intend to manage their collateral and overall liquidity.
This planned expansion signals an emerging awareness of pledging as a key liquidity strategy. Among the banks that are already current pledgers, the Federal Reserve Bank is the most utilized institution for pledging purposes, cited by 8% of respondents, with the NCUA closely following at 9%. This projected movement suggests that strategic collateral management will become a fundamental component of future bank operations.
Loan trends and operational focus
The survey also provided key data on current lending focus and the operational profile of the community banking professional. Lending activity remains robust across diverse segments, with auto loans (23%), mortgages (20%) and multi-family loans (18%) identified as the most commonly completed loan products annually. This reflects continued demand and a strong focus on consumer and mortgage lending. Loan volume is healthy, with 35% of respondents completing 100–200 loans per year, and a significant 20% exceeding 200 loans annually.
The survey respondents themselves, who shape these strategies, are highly concentrated in senior roles. A combined 66% of respondents hold positions at the director (41%) or manager (25%) level, indicating that mid-to-senior leadership is actively driving both lending and technology adoption strategies. Roles in consumer lending (24%) and mortgage lending (23%) were the most represented, reinforcing the centrality of these functions to community banking operations.
In summary, today’s community banking sector is actively responding to the dual pressures of digital transformation and the need for sophisticated liquidity management. While electronic signatures are becoming mainstream, overcoming infrastructure challenges and securing broader eAsset acceptance remain vital steps for the industry. Concurrently, the strategic pivot toward collateral pledging highlights a proactive move to secure future liquidity, setting the stage for a period of dynamic evolution in the community banking landscape.
Shane Hartzler is director of product management for Wolters Kluwer Financial & Corporate Compliance. He can be reached at [email protected].
1: Wolters Kluwer 2025 Community Banking Digital Transformation online survey. Results reflect input from 215 respondents from more than 2,500 community bank professionals across the country on various banking practices.
