5 Banking Predictions for 2026

To stay competitive, forward-thinking financial institutions must anticipate what's next and position themselves strategically—without having to become technology companies in the process.

nCino's predictions for 2026 offer a clear vision of the market forces and trends set to reshape the industry. From navigating interest rate uncertainty to leveraging AI for relationship amplification, these forecasts will help you prepare your institution for long-term success. Join us as we explore the opportunities ahead and uncover how the right strategies and partnerships can help you thrive in 2026.

1. Younger Generations Will Force Financial Institutions to Rethink Value Creation

Recent research reveals that 35% of Gen Z respondents and 32% of Millennials plan to change their primary bank within the next six months. With companies like Chime, Venmo, and Cash App venturing further into banking channels, it's easier than ever for younger consumers to move their money around without a traditional primary bank.

Beyond distribution channels, Gen Z is increasingly turning to AI for financial guidance that previous generations sought from traditional in-branch advisors.

This presents both a challenge and an opportunity for traditional banks. When asked about desired banking upgrades, 30% of respondents ranked 24/7 customer service as their number-one wish, while 24% wanted the ability to text a live person.

2. Interest Rate Cuts Will Come Slowly, Creating Refinance Opportunities for the Prepared

The Federal Reserve's cautious approach to rate cuts in 2026 will create a window of opportunity for mortgage lenders—but only for those prepared to handle volume efficiently. Expect rate reductions of 50-75 basis points throughout the year, delivered slowly as the Fed balances inflation concerns with labor market uncertainty.

For mortgage lenders, this translates to a significant opportunity. The Mortgage Bankers Association projects total single-family mortgage origination volume will increase 8% to $2.2 trillion in 2026, with refinance originations expected to jump 9.2% to $737 billion. More homeowners now have rates above 6% than below 3%—for the first time in years—creating a substantial refinance pool.

The catch? More volume has traditionally meant more employees. The institutions that capitalize on this opportunity will be those that break that model.

The lenders who win will be those who use automation to bridge the gap between opportunity and capacity—turning the refinance wave into a profitability engine rather than an operational burden.

3. Relationships Will Matter More Than Ever—When Amplified by AI

While younger consumers flock to digital-first platforms and big banks deploy increasingly sophisticated AI, a countertrend is emerging: customers are experiencing AI fatigue from impersonal "personalization." This creates an opening for institutions that have always competed on relationships—if they act quickly.

The technology playing field has leveled. AI tools that were enterprise-only 18 months ago are now accessible to institutions of any size. But 75% of large banks are well on their way to developing AI-native strategies compared to just 15-20% of community banks under $10 billion in assets. The window to capitalize on relationship advantages is open, but it won't stay open forever.

The winning approach: use AI to enable front-line staff to be relationship superheroes, not to replace them. Credit unions that deploy AI as a relationship enhancement tool will see 3-5x higher ROI than those focused purely on cost reduction. The institutions that win will be those that move quickly to amplify their relationship advantages before larger competitors replicate them at scale.

4. Deposit Growth Will Require More Than Competitive Rates

Deposit growth returns to the forefront in 2026. Recent research reveals that 82% of banks expect to grow deposits next year, compared with just 61% in the prior year's survey. With 44% of customers giving all future deposits to their primary institution, the competition for primary banking relationships has never been more critical.

But financial incentives alone won't win. When asked about desired banking upgrades, 30% of respondents ranked 24/7 customer service as their number-one wish, while 24% wanted the ability to text a live person. Younger generations expect speed, simplicity, and accessibility on their terms.

The challenge is compounded by rising operational risks. Regulatory fines increased by 417% in the first half of 2025, totaling $1.23 billion, while new fraud vectors like synthetic identity fraud require more sophisticated monitoring. Institutions that want to grow deposits in 2026 will need to deliver security, convenience, and experiences that meet evolving expectations—not just competitive rates.

5. Bank & Credit Union Consolidation Will Continue—Changing the Competitive Landscape

The banking industry's consolidation trend shows no signs of slowing. Research indicates roughly 181 U.S. bank deals were announced last year—a 45% increase over 2024—and that momentum is expected to continue in 2026.

Smaller institutions face mounting pressure from succession issues and technology costs, wondering if they should sell before their "buyer universe disappears." Meanwhile, midsize lenders that could have acquired smaller competitors are increasingly becoming acquisition targets themselves, shrinking the pool of potential buyers.

For institutions that remain independent, the imperative is clear: invest in technology and efficiency now, or risk becoming less competitive as the market consolidates around institutions that can operate at scale.

No matter what happens in the year ahead, nCino will continue to serve as your ally, helping your financial institution transform challenges into opportunities and navigate the evolving banking landscape toward a profitable and sustainable future.