Banking with larger banks has its advantages: more ATMs worldwide, better security, more offerings. What many people don't know though is that smaller banks offer pretty much the same as larger banks, and they do it without the risk of creating banks too big to fail. America is built on capitalism, the idea that competition is good, but as soon as we consolidate industries (especially those responsible for wealth generation), we run the risk of allowing them to become complacent and eventually cause problems.
Many people may love corporate America, you don't even have to get out of your car to withdraw money from an ATM, but there are more people who like the personal service offered by a familiar face. It reminds you of the local store round the corner from you as a child, and promotes a feeling of trust. It is easier to trust the person who knows your name, and banks need that trust right now.
It is my belief that small banks are indeed better than big banks. In my town we hae a couple of small banks. They are more personal and know each customer individually. With less customers they can keep up with each one as an individual and they are less apt to lose files.
If the government artificially separates the big banks (that only got that big because the Fed printed their reserved dollars, and out regulated competition) instead of letting people vote with their money, the rich will still be able to afford houses, cars, and small business loans. The poor suffer and bear the highest compliance cost whenever the state intervenes with people voluntarily exchanging goods in a marketplace.
No, small, local banks are not a better bet than the big banks, because the small banks have their problems too. The person who runs a small bank might not be as talented as a large bank owner, and the bank might have other problems, like a website that malfunctions more often