Videos
Top Trends Reshaping Regional Banking in 2026
Insights
- AI at the front line
AI is becoming customer facing and embedded into day-to-day decisions. It is credit decision, relationship management, and service interactions. - AI-native mortgages
Underwriting is becoming AI-native, speeding decisions while keeping judgment with the bank. Agentic AI copilots now support loan officers and servicing teams across the mortgage lifecycle. - Core modernization
Regional banks are expected to focus on modernizing core systems, digitizing processes, and upgrading critical platforms. - Customer intimacy
Regional banks are sharpening their core offerings to serve communities more deeply and expand share of wallet. Technology enables them to quickly extend into areas like wealth, private, or student banking that fit local needs. - Trust by design
Protecting systems and information is foundational. Strong identity controls, continuous monitoring, and disciplined data governance are not optional.
Ajay Bhandari:
Regional banks, servicing households, small and medium enterprises and mid-market companies, they play a central role in our local economies. As we head into 2026, their role becomes clearer and more demanding.
Bharat Rathod:
Some of the key trends that converge will reshape how regional banks operate and compete. First, AI is moving to the front line. AI is becoming customer facing and embedded in day-to-day decision making. It is already influencing credit decisions, service interactions, and relationship management.
Ajay Bhandari:
Generally in the past, regional banks have not been the first ones to adopt their most emerging technologies, but AI is a little bit of a different situation.
They are looking at AI as one of the key that will redefine the experience of their customers. That's driven by how customers are expecting the banks to leverage technology and understand their preferences. If you look at things like loan originations or advisor, clients are expecting that the loan officers or the advisors would be augmented with their information already. And that's where banks are investing to see how they can leverage the latest in AI while also keeping humans in the loop. So a lot of areas in contact centers, fraud in collections, and payments, you can see a lot of AI coming into picture. And that's a key place where banks would be investing and continue to figure out ways of leveraging newer technologies.
Bharat Rathod:
Mortgage underwriting is increasingly becoming AI native and assisted by design. AI supports income validation, risk signals, and exception management, allowing underwriters to focus on judgment rather than manual review. Decisions remain explainable and owned by the bank, but they move faster and with greater consistency. At the same time, agentic AI copilots are entering across the mortgage lifecycle. Loan officers use copilots to guide conversations, prepare scenarios, and respond to customer questions in real time. Servicing teams, on the other hand, use them to anticipate issues and recommend the next best actions.
Ajay Bhandari:
The other trend that's picked up after that is on the digital and modernization. To be able to leverage AI and really make the best out of it for their customers, banks are looking at modernizing their cores. A lot of the banks, regional banks have been on the same core for a very long time and they dare not touch it because it's working. But you can clearly see with technology becoming easier, products coming at a much faster pace, they are now confident of looking at the right core. So core modernization or digitization of the processes as well as modernization of the key platforms is something which is on the cards that regional banks would be focused on.
A lot of these trends are actually based on the fact that customer intimacy is something which is core to them. Regional banks are community banks. They are the banks which run a lot of small and mid enterprises in the US. They are the ones who keep the community going. And that's where they are looking at how they can serve their customer better, how they can penetrate and go more deep with the customer's wallet rather than just being focused on a couple of areas. And in that process, we are seeing a lot of banks really figuring out what is their core offering for their customers and how they can use that to build around that experience.
We are seeing regional banks stepping into private banking or wealth management or student banking. So they are picking up a core and then expanding into areas which they feel is relevant to their communities and investing in creating those capabilities. Those capabilities are being able to launch faster because technology has become front and center for their business.
Unlike in the past where the CIO was a cost function, CIO of a regional bank now sits at the board, is part of the key discussions that are happening. And in fact, we can see a lot of business leaders also adopting and wearing the hat of technology, trying to figure out how technology can help them differentiate their services and their offerings.
All of this has to be secured. As we know, all the banks, regional banks, the trust is a primary factor. That is what runs them. They cannot lose the trust of their customer.
And that's where cybersecurity is going to be a key focus to ensure that the digital assets and the platforms that the banks have are secured. They are up and running and the clients, their customers, feel very confident in leveraging that.
So in a nutshell, it's a year that's going to be about AI, which is going to be driven by a lot of digitization and modernization of processes and platforms. But at the center of it would be cybersecurity, which will really make them secure and something which the clients can trust and expand into multiple areas.
