What’s Going On in Banking 2026: A Mid-Year Update

Hey everybody. Welcome back to another episode of What’s Going On in Banking, the podcast, not the report. I’m Ron Shevlin, chief research officer at Cornerstone Advisors, and here, of course, with my co-host Stacey Bryant.

Stacey, how are you doing?

I’m doing great, Ron.

We are in the thick of summer, and it is brutally hot here in the New York City and New Jersey area. But I did not let that stop me from getting back on the road.

This time, I took it back to the hood, specifically Inwood, Washington Heights, and Upper Manhattan.

I decided to walk around my old neighborhood and be observant, which is a nicer way of saying I was being nosy.

I passed my old high school and remembered the teenage Stacey who thought she knew everything and was already very snarky.

Then I walked past a block where I used to buy used tires. The old auto shops are gone now, replaced by large commercial buildings. That is New York City for you.

Right in the middle of it all, I saw a Ponce Bank branch.

Shout-out to President and CEO Carlos Naudon and the rest of the team.

I walked in and asked the bankers, Joel Reyes and Chris Navarro, a very simple question: who is actually walking into the branch these days?

They were kind enough to indulge my curiosity.

The experience gave me another light-bulb moment about what relationship banking can still look like.

We talk constantly about digital banking, fintech, and branch strategy, but there are still community banks and credit unions embedded in neighborhoods and serving those communities directly.

That physical presence can still matter when it is connected to the right relationship strategy.

How are you doing?

Doing well.

My wife and I took a couple of days on Cape Cod and Nantucket.

We did not go into any bank or credit-union branches, but whenever we drive past a small institution, my wife still asks, “Do you know anybody at that bank? Do you know anybody at that credit union?”

I always have to remind her that I do not know everybody in the industry.

But everything is good here in Boston. It has been hot, but it is summer, so we will take it.

We’re doing something a little different with this episode.

Cornerstone has published the What’s Going On in Banking report for 11 years.

For almost that entire time, somebody at Cornerstone has said, “Ron, you should do a midyear review. What did we think was going to happen, and what has actually happened?”

I have done an excellent job avoiding that request for 11 years.

This year, I finally gave in.

I recently did a midyear review for a select group, and Stacey and I thought it would be useful to bring some of that discussion to the podcast.

Let’s start with where the industry was entering 2026.

Cornerstone surveyed more than 400 bank and credit-union executives, and I think four things characterized the outlook.

First, executives were optimistic.

They were not quite as optimistic as they had been entering 2025, when the 2024 elections had just taken place and expectations for regulatory change were high.

Tariffs, slower economic improvement, and other developments through 2025 tempered that optimism somewhat.

Still, the overall outlook remained positive, and credit-union executives were even more optimistic than bankers.

Second, institutions were extremely focused on growth.

For the first time I can remember, new-customer and new-member growth topped the list of concerns in the survey.

Third, AI remained a major technology priority.

Roughly 60% of credit unions and about half of banks had deployed some form of AI. Agentic AI was much less widely deployed, but it was clearly drawing attention.

Fourth, tokenization moved firmly onto the strategic agenda.

Roughly seven in 10 institutions said tokenization was on the board agenda, even though actual deployment remained limited.

That is not a criticism. It simply reflects how early the market still is.

Now compare that to what happened during the first half of the year.

The economy drifted in what I would consider the wrong direction.

Wage growth, unemployment, the deficit, and several other indicators moved less favorably than many people expected.

The Federal Reserve also moved into a new regime under Kevin Warsh, with a stronger emphasis on getting back to basics and a fairly optimistic view of AI-driven productivity.

Regulatory clarity came and went, which is my little joke about the CLARITY Act.

We still do not have the level of clarity many institutions expected around digital assets and related regulation.

And then something else important happened: the AI plumbing showed up.

The three major core providers all made significant AI-related announcements.

FIS partnered with Anthropic.

Fiserv announced work with OpenAI.

Jack Henry deepened its relationship with Google, primarily around cloud infrastructure but with clear AI implications.

There was also a lot of discussion around AI agents and orchestration.

That matters because the large infrastructure providers are beginning to create the plumbing that makes enterprise AI easier for community and midsize institutions to adopt.

Let’s talk about one of the biggest competitive shifts: fintechs eating more of the checking-account market.

For the last five or six years, we have asked executives which types of companies they see as the biggest threats to banking.

Big fintechs and neobanks have been on that list for years.

But between 2025 and 2026, the percentage of executives identifying those companies as significant threats jumped from roughly 50% to about 70%.

That is a big year-over-year change.

And consumer data supports the concern.

A few months into 2026, we surveyed consumers about accounts they had opened during 2025.

Fintechs captured roughly 56% of new checking and payment-account openings, up from about 47% several years earlier.

So the concern from bank and credit-union executives is not hypothetical.

Why do you think the shift is happening?

I think it is the same disruption wearing different jackets.

The key point is that this is not primarily about a better mobile-banking experience.

Only about one in five consumers who opened a new account said the mobile experience was the main reason.

The bigger issue is product architecture.

PayPal, Chime, Square, and other providers have created mashups of capabilities that traditionally lived in separate financial products.

Younger consumers increasingly do not draw a hard line between checking, spending, payments, savings, and investing.

That matters.

And while everybody is watching checking-account share, the ground is moving again around crypto and stablecoins.

One analysis found that a very high percentage of community banks already have customers moving money to Coinbase.

Another survey found that many consumers would consider opening a crypto or stablecoin wallet inside their existing bank relationship if the institution offered it.

So why would a consumer wait indefinitely for a bank to catch up?

These are the questions boards need to ask now, because we are already at midyear. The next couple of quarters matter.

There is another layer involving the mega banks.

You recently wrote about JPMorgan Chase, Bank of America, Citi, and Wells Fargo discussing a shared tokenized-deposit network.

Your point was that the announcement felt almost like a press release about a future press release.

There was limited client demand, no final vendor, and not even a settled name.

Meanwhile, the real behavior shift is already happening as consumers and businesses move more money through fintech platforms and crypto wallets.

That is the deeper competitive issue.

To me, fintechs won the first round on convenience, but many did not fully win on trust.

The mega banks are spending round two defending the relationship.

Community banks and credit unions still have an advantage around trust and belonging.

The third round may be the underlying rails themselves, including stablecoins and tokenized deposits.

And for once, a $2 billion community bank and a trillion-dollar bank are closer to the same starting line because the market is still being built.

So if a board cannot articulate its stablecoin position by the next couple of quarters, what does that say about who is actually driving strategy?

I agree with nearly all of that.

The part I want to emphasize is product design.

The industry often focuses on the threatening company: the fintech, the neobank, the crypto provider.

The real threat is product displacement.

The real question is whether the institution is designing and offering products that meet the needs of the right niches and segments.

Chime may look like a broad neobank, but its product design is heavily focused on lower- to middle-income consumers.

USAA has been successful for decades because its business is designed around the needs of military families, even though active-duty service members are only part of its broader membership.

So the answer is not simply, “Let’s improve digital account opening.”

That is not enough.

The institution needs a better product for a specific group it understands and can serve unusually well.

The mega banks have historically played a much broader retail game, and their share of new account openings has declined sharply over the last several years.

Community banks and credit unions have been more stable, but stable at relatively low market share.

Not losing share is not the same thing as growing.

That raises a question I wanted to ask you.

You present to a lot of bank and credit-union boards. Would you recommend that every community or regional institution have a chief product officer?

First, let me correct one thing. I do not facilitate board meetings. I am a terrible facilitator because I want to dominate the conversation.

I much prefer presenting.

But on the chief product officer question, I think the idea is strong.

I am generally skeptical of creating a “chief fill-in-the-blank officer” for every new problem.

But product is different.

One of the biggest weaknesses in community financial institutions is that product design has effectively been outsourced to vendors.

The core provider, digital-banking vendor, loan-origination vendor, and other technology providers often determine much of what the product can actually do.

The second problem is organizational fragmentation.

Retail, lending, payments, wealth, and commercial banking may each be making product decisions independently.

A chief product officer, even if the role exists only for a period of time, can help create a coherent product-development discipline across the institution.

Somebody needs to own product design, development, prioritization, and the lifecycle.

So yes, I think there is a strong case for the role.

What else stood out to you from the midyear review?

The other area I wanted to revisit is delivery and the branch debate.

You have written recently about Chase’s branch expansion, and we talked about it in another episode, but it fits the midyear review because the headlines keep getting repeated without enough context.

Marianne Lake said increasing branches was directly correlated with deposit growth and that new branches accounted for roughly 40% of JPMorgan’s new deposit share gains.

That statement has been misquoted repeatedly as branches generating 40% of all deposits or 40% of total deposit growth.

Those are not the same thing.

And I keep thinking about the contrast between a local small-business owner and a large institution.

Imagine a business owner who has banked with the same community institution for 10 years.

The banker knows the family, remembers the bad years, and understands the business history.

That relationship took a decade to build.

Then the business suddenly needs $40,000 quickly.

If the owner cannot wait weeks to find out whether the bank will approve the request, she may open her phone and go somewhere else.

So is that a trust problem or a speed problem?

I think institutions often confuse the two.

Community banks and credit unions still have enormous trust.

Surveys consistently show consumers view them favorably.

But favorable sentiment does not automatically translate into daily usage if the tools and products are frustrating.

I trust broccoli. I think broccoli is healthy. That does not mean I want to eat it every day.

That is how I think about some of those trust statistics.

People can have a positive view of a credit union and still choose another provider because the product is easier to use.

And we should correct the branch statistic again because it matters.

Lake said branches accounted for about 40% of new deposit share gains, not 40% of deposits and not 40% of deposit growth.

Share gain is a much smaller figure.

Also, she did not say retail deposit share gain.

A significant portion may come from commercial and middle-market relationships.

That aligns with Chase’s broader strategy.

The branches support commercial bankers, small-business relationships, wealth advisors, and other high-value activities.

They are not simply a retail-account-opening strategy.

Chase itself said years ago that roughly half of consumer accounts were already being opened digitally, and I doubt that percentage has moved backward since the pandemic.

So if we are talking about small business, I am convinced the branch strategy is largely commercial.

A few years ago, Cornerstone studied small businesses and found that many considered a mega bank their primary bank for day-to-day operations, but often borrowed from a community bank.

Why?

The mega banks did not always want to spend time underwriting small loans. The community institutions were willing to do it and used judgment to make those decisions.

Now even that lending relationship is under pressure from fintechs.

Companies such as Brex, Mercury, Ramp, Square, SoFi, and others increasingly see the customer’s day-to-day cash flow.

They have the operating relationship and the data.

That lets them underwrite more quickly.

The SoFi small-business product we discussed recently is a good example. It is often aimed at the gray zone between consumer and traditional business, what I call the bizumer.

Community banks are not going to defend that business simply by opening more branches.

They defend it by investing in better technology, data, products, and speed.

Exactly.

And that brings the midyear review back to the first theme.

Fintechs are combining data, cash flow, and product design in ways that let them make decisions much faster.

Community institutions still have the relationship advantage, but they have to modernize the experience around it.

We had one more topic planned around a concept Cornerstone has been calling pre-building, but I’m looking at the clock and do not want to stretch this episode too far.

Let’s make that topic number one next time.

There are five areas where institutions should be pre-building capabilities now, and the gap between institutions that are preparing and those that are waiting is widening.

The money and opportunity are there. The real risk is doing nothing.

Agreed.

Thanks, Stacey.

And thanks to everybody listening. We hope you’ll join us for another episode of What’s Going On in Banking.

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