Artificial intelligence biggest factor in industry predictions for 2026

Partnering with William Mills Agency, Atlanta, we asked several leaders in the fintech world for their community bank industry predictions for 2026. Here are their responses:.AIIn 2026, community banks will become far more open to adopting new technologies, especially AI, as they navigate a market where large banks continue to scale through consolidation. To stay competitive, community banks will look for tools that improve decision-making, strengthen risk management and streamline operations. The winners will be the institutions willing to innovate fastest.~Daniel Ahn, CEO and co-founder, DelfiIn 2026, community banks will move from AI curiosity to AI productivity, using targeted automation to reduce back-office strain and strengthen customer-facing speed. Regulators will demand clearer documentation and explainability, making AI with guardrails not a slogan but a requirement for safe modernization. The banks that pull ahead will prioritize modular upgrades, safe starts and partners whose systems are API-friendly enough to integrate cleanly with legacy cores.~Lisa Pent, CEO and founder, PentedgeBy 2026, community and regional banking will recognize that margin pressure is an operational problem, not a rate problem. The cost to manufacture a mortgage or small-business loan has become unsustainable, but AI will begin reversing that trend. Successful banks will deploy domain-specific AI to automate income analysis, document ingestion, guideline mapping, and compliance checks — freeing credit teams to focus on judgment rather than paperwork. By leveraging AI, smaller banks can deliver enterprise-grade mortgage capabilities without enterprise-scale overhead. Decisive banks will capture market share from larger competitors while serving borrowers—particularly diverse and multilingual communities—that traditional models historically underserve. ~Angelo Farooq, president of business & external affairs, ZeitroIn 2026, more community banks will recognize that generative AI isn’t a regulatory risk to avoid but a tangible driver of operational efficiency and growth. As regulators expect clearer oversight, banks will adopt clear policies, structured frameworks, and compliant AI tools with built-in guardrails. This mindset change will open the door to practical, safer and more productive AI use cases that deliver real value. ~Mitch Rutledge, CEO and co-founder, Vertice AI2026 will see community financial institutions shift from isolated AI pilot projects to enterprise-wide AI strategies, moving from R&D and experimentation to where they can deliver highly-personalized, real-time financial experiences. Recent industry surveys indicate almost 50% of financial institutions are already using and/or developing generative/agentic AI systems. CFIs scaling AI across channels can move from one-off features to continuous, predictive engagement. Coupled with accelerating new deposit acquisition strategies and product development in youth banking, CFIs can deliver tailored generational experiences, proactive financial advice, frictionless onboarding and context-aware offers at scale. 2026 will see many CFIs adopt personalization and youth banking as a strategic growth engine.~Marcell King, President and COO, NuuviaIn 2026, the competitive edge will not just come from offering digital features, but from intelligently integrating AI and automation to deliver a seamless, human-centered experience from the very first interaction. As a result, AI moves from a "nice-to-have" add-on to a core operational component. The adoption of a unified digital origination and AI growth engine to create a near "zero-friction" onboarding experience enables community banks to more effectively compete with larger fintechs. This strategy leverages technology to amplify the human-centric service model that community banks are known for, rather than replacing it. The goal is a "zero-click" or "zero-visit" experience where a new customer opens an account or applies for a loan almost instantly.~Philip Paul, CEO, CotributeBanks and fintechs will begin deploying a truly intelligent financial wellness layer powered by conversational AI, micro-agents, and behavior-based guidance. Instead of static budgeting tools, customers will receive continuous, proactive advice tailored to their financial journey. This requires a unified intelligence layer that reads income flows, obligations, behaviors, upcoming life events, and real-time transaction context, then recommends the next right action. With LLM micro-agents, vector personalization, converged data, and conversational interfaces already emerging, intelligent wellness is achievable in 2026. This is the foundation of intelligent lifecycle banking. The technology is ready, institutions must decide if they are.~Mitch Rosenbaum, SVP – innovation, TyfoneDigital engagementThe easy days of growing deposits are over; there is more competition than ever, and consumers are increasingly willing to shop around for the best deal and digital experience. Despite community banks often offering deposit products such as CDs with the most competitive terms and yields, they continue to lose to large national bank brands because of these players’ bigger advertising budgets. Next year, we predict more community bankers will make their strong offers more visible, leveraging tactics such as more seamless digital account opening experiences, participation in unbiased digital marketplaces and AI-enabled search optimization to attract deposits and customers. ~Mary Grace Roske, head of marketing & communications, CD ValetWe expect to see a growing shift among banks toward strengthening their digital engagement capabilities. As we move into 2026, success will favor banks that combine modern digital tools with human connection and engage customers early, when decisions are forming and guidance carries the most influence. Proactive strategies, such as applying “active listening,” empower banks to recognize needs before customers voice them. By placing listening posts across digital channels, institutions can surface real-time insight into customer intent, timing and financial priorities — enabling them to respond faster, personalize more deeply, and win loyalty that lasts.~Wendy Wilson, director of customer delivery, ARGO Banking in 2026 will be shaped by hyper-personalized digital finance powered by an AI-led workforce that automates operations, risk analysis and customer engagement. Stablecoins will gain mainstream adoption for cross-border payments, pushing banks to integrate regulated digital currencies into their core platforms. Strengthened cybersecurity frameworks—driven by zero-trust architecture and real-time threat detection—will become essential as digital transaction volumes surge. Traditional banks will partner more with fintechs to modernize legacy stacks, while embedded banking and real-time payments become standard. Regulators will tighten oversight on AI, digital identity and stablecoin reserves, reshaping global financial infrastructure.~Bikram Saha, banking and financial services, TavantCommunity banks, already some of the leanest and most operationally disciplined institutions in financial services, now recognize that adopting AI is no longer optional and must happen faster. With their agility advantage, they are better positioned than large national and regional banks to accelerate into the future of work. In 2026, we will see community banks move decisively to deploy AI-powered work intelligence to drive efficiency, eliminate BS work, and strengthen customer relationships. The institutions that win will choose solutions built for regulated environments and guided by a Human in the Loop ethos. These banks will use AI to enhance their people, improve outcomes, and compete more effectively in a demanding market.~Todd Michaud, CEO, HuLoop AutomationEmbedded finance, instant payments to be focus points in ’26 In 2026, we'll see an uptick in the number of community banks leveraging embedded finance capabilities to increase accessibility to small business (SMB) lending initiatives. Many banks remain apprehensive about SMB lending due to high costs and the operational strain of building SMB lending in-house. Instead of community institutions bearing the brunt of managing all aspects of the lending process, they can partner with third-party providers who specialize in purpose-built platforms that handle underwriting, risk assessment and loan servicing. This approach enables community banks to scale their infrastructure while adding fully baked SMB lending programs to their portfolios. ~Will Tumulty, CEO, Rapid Finance The future of community banking hinges on seamless, embedded payment experiences that move beyond the transaction. We predict a shift where data, device intelligence, and AI become the primary engines, enabling community financial institutions to offer highly personalized, non-traditional services — like automated business invoicing and cash flow forecasting — directly within their clients' existing workflows. CFIs that strategically embed these intelligent payment layers now will retain their relevance and deepen customer relationships against increasing competition.~Keith Riddle, general manager, Payfinia Inc. and Payfinia CUSOCommunity banks are likely to face further mounting pressure in the new year to preserve free, open data connectivity as more large institutions seek to charge for its access. It's critical fintechs continue to be trusted collaborators with their community bank partners to help them resist this shift and maintain their role as the primary financial partner for both consumers and small businesses, focusing on building a flexible infrastructure that supports everyone. Those banks that invest in secure, interoperable ecosystems and modern SMB banking capabilities will strengthen their competitive edge and deepen those vital community relationships, setting themselves up for success in 2026 and beyond.~Jennifer Dimenna, VP product management, CSI To stand out in 2026, community banks should prioritize vendor consolidation, instant payment adoption, and streamlining operations while enabling faster, smarter money movement. By investing in automation, API-driven integration and embedded finance, and working with their trusted fintech partners to balance innovation with operational stability to overcome key pain points like legacy infrastructure, they can set themselves up to lead the industry and their competitors in the coming year.~Samy Kogan, VP of product management, SWIVELThe fundamental rules of banking are changing. Community banks face unprecedented fragility as economic, political and regulatory uncertainty intersects with the rise of stablecoins, decentralized finance, and agentic banking. Success will hinge on agility: banks must connect traditional banking with emerging digital finance, using existing scale and customer relationships to capture time-sensitive opportunities in tokenized deposits and new crypto channels. The industry is moving quickly to secure its position before the next political shift, creating a level of systemic change bankers have not experienced before. Those that embrace ecosystem thinking and deliberate innovation will stay relevant in a financial world that rewards trust, speed, and adaptability.~Lee Wetherington, senior director of corporate strategy, Jack HenryAs banks enter 2026, continued pressure on deposit growth and margin compression makes human-centered digital strategies increasingly important. Using data and behavioral intelligence to better understand customers will help personalize experiences and strengthen long-term relationships, ensuring customers feel truly known. Beyond engagement, banks must focus on building a strong deposit franchise, the foundation of valuation and market stability. Optimizing NIM and balance sheets through relationship-based pricing and improved loan and deposit strategies will protect profitability amid rate volatility. Preparing for increased M&A will also be critical as organic growth slows and competition from nationals and fintechs intensifies.~Mac Thompson, CEO and founder, White Clay. Lending rebound expectedIn 2026, community banks may see a gradual rebound in commercial lending. Commercial real estate loan activity should improve as fewer banks tighten standards, though $1.5 trillion in maturing loans will present challenges and opportunities. Commercial & industrial lending is poised to grow as businesses gain confidence in longer-term investments, while modest Fed rate cuts could lower borrowing costs. Overall, the strongest growth will favor well-capitalized borrowers with quality assets, and banks that strategically adjust terms and rates may capture market share from private credit competitors.~Richard Guillot, president and CEO, BAFSCommunity banks are a vital part of the commercial lending landscape and their relationships with businesses are critical to their local economies. Right now, these banks have a lot of manual processes that expose them to risk and ultimately hold them back from the relationship building that is so vital to their success. I expect in the new year we’ll continue to see more banks looking to modernize their commercial lending operations so they can save time, reduce risk amid economic uncertainty, and deliver the level of service that’s expected of a community bank.~David Eads, CEO and co-founder, VineHeading into 2026, consumers face both a financial and emotional burden: high-interest credit card debt. U.S. households now hold more than $1.23 trillion in credit card debt with interest rates above 20%. Community banks have an opportunity to step in with meaningful guidance and solutions, such as debt consolidation loans — helping customers reduce high-interest debt through personal loans that offer a predictable, fixed monthly payment and APRs averaging about 7.5% less than credit cards. Personal loans offer borrowers significant relief while giving banks an effective way to diversify their balance sheets and drive responsible growth.~Matt Potere, CEO, Happy MoneyPreventing fraudIn 2026, community banks will prioritize the modernization of their receivables operations as competitive, operational and fraud pressures intensify. Many banks still rely on paper-heavy, siloed systems that slow cash application for business clients and increase back-office workload. The shift ahead is toward integrated receivables environments that enable banks and their commercial clients to manage checks, digital payments, and online banking bill payments through a single, secure portal. This approach reduces exceptions, accelerates posting, and increases visibility across receivables activity. By simplifying receivables, banks can improve client retention, grow treasury fee income and reinforce their value to business clients.~Jason Schwabline, EVP of revenue and growth, CheckAltCommunity banks remain central to their local economies, but increasingly sophisticated fraud schemes are putting new pressure on their operations. In this new era of check fraud, manual and legacy verification systems can no longer keep pace, and 2026 will push more community banks to adopt AI and machine-learning driven fraud detection, especially tools that authenticate checks at the point of presentment and stop fraudulent transactions before funds move. Strengthening these defenses will help banks prevent losses earlier, protect customer trust and ease the growing operational strain on their teams while ensuring they can continue delivering the reliable service their communities expect.~Emiliano Giacchetti, CEO, ParaScript