As competition intensifies and consumer expectations rise, community banks and credit unions are under pressure to operate more efficiently while delivering modern, personalized services. Meanwhile, accelerating developments in artificial intelligence (AI), growing adoption of open banking, heightened cybersecurity and financial crime risks, and evolving regulatory expectations are keeping financial institutions busy on all fronts—while also creating new opportunities for institutions that adapt.

CSI’s 2026 Banking Priorities survey captured how community financial institution leaders are preparing for the year ahead. Their responses reflect an industry navigating rapid change with cautious optimism, focused on strengthening foundational capabilities while exploring new technologies that can support long-term growth.

In this blog, we explore the top challenges, technology investments and opportunities shaping community banking in 2026. For a deeper look at the data and expert analysis behind these trends, explore the interactive 2026 Banking Priorities Executive Report.

What Did Bankers Identify as Top Issues for 2026?

Respondents identified artificial intelligence (AI) and cybersecurity as the industry’s two most pressing issues for this year, highlighting how innovation and risk are accelerating in tandem.

2026’s Foremost Challenge: AI

27% of community bank and credit union leaders listed AI as their top concern for 2026, surpassing last year’s top issue and this year’s runner-up, cybersecurity.

Impact of AI on Community Banking

Leaders increasingly view AI through a dual lens: on the one hand, a powerful driver of efficiency and automation across operations—on the other, a catalyst for fraud, scams and operational risk.

Community banks and credit unions are gaining greater confidence and clarity about where AI can make the most impact: automating routine tasks, strengthening security and freeing staff to focus on relationship-driven work. That confidence is most pronounced among larger institutions: 97% of institutions with $5B–$10B in assets say they understand what AI is and how it can be applied in banking.

At the same time, institutions will need to balance AI’s potential with critical considerations around governance, data readiness, risk and customer perception. The challenge ahead lies not in adopting AI tools, but in integrating them thoughtfully into existing workflows and risk frameworks.

AI Strategies

With tight budgets and overworked staff, many community banks and credit unions are turning to AI to augment staff capabilities. AI is increasingly employed to support cybersecurity, analyze data, detect fraud and improve customer service and engagement.

Tackling AI Challenges Head-On

Recent global research from IBM and the Ponemon Institute reveals that AI adoption is outpacing security and governance. Nearly all (97%) organizations reported experiencing an AI-related security incident, often tied to insufficient access controls. 63% had no AI governance policies to manage AI or prevent the rise of shadow AI.

As institutions explore use cases, strong governance frameworks and clear policies will be essential to guide responsible and effective adoption.

2026’s Second Most Significant Challenge: Cybersecurity/Data Privacy

Cyber threats and data privacy fell from last year’s top spot, down 12 percentage points, but remain a critical concern. As technology and AI advance, cybercriminals continue to develop more sophisticated techniques, increasing the need for investment in prevention and incident response capabilities.

Impact of Cybersecurity and Data Privacy on Community Banking

Though the average cost of a data breach in the financial services industry decreased from $6.08 million in 2024 to $5.56 million in 2025 (thanks in part to faster identification and containment), cyberattacks continue making headlines and plaguing institutions of all sizes. Financial institutions are particularly attractive targets for cybercriminals, due to the sensitive customer data, including account details, that they hold.

In addition to the direct financial repercussions of a breach, a successful cyberattack can open an institution up to reputational and legal consequences. The rise of hybrid and remote work, paired with consumers’ reliance on digital channels, has increased the surface for attacks. Further, regulators are increasingly focused on stricter compliance requirements to protect consumer data, adding pressure on institutions to comply.

Cybersecurity Strategies

To stay competitive and secure, institutions must continue to prioritize investments in advanced monitoring and proactive threat detection tools, while also employee training, and proactive threat detection systems to safeguard data and uphold trust in an increasingly digital economy.

Tackling Cybersecurity Challenges Head-On

To keep up with the evolving cybersecurity threat landscape, institutions need around-the-clock monitoring and response. A managed cybersecurity monitoring platform helps institutions identify anomalies and send alerts for investigation to ensure the threat doesn’t spread. Solutions like data loss prevention (DLP) help institutions protect their data and control how it’s shared. Implementing good cyber hygiene is another effective strategy to improve security and keep employees and consumers safe.

What Are Bankers’ Top Technology Investments for 2026?

The top tech investments for 2026 are tightly clustered, suggesting that financial institutions are pursuing multiple modernization paths simultaneously, rather than focusing on one clear priority.

For the third year in a row, efficiency drivers like automation and AI top the list of technology priorities. In a close tie for second are data analytics/actionable insights and digital account opening. Institutions with $5B-$10B in assets named conversational AI as a top priority, signaling greater interest in automation as part of customer service for this segment.

2026’s Leading Investment: Efficiency Drivers like Automation or AI

Efficiency technologies remain the top investment priority, with 37% of bankers citing automation or AI as critical to improving operations, especially in improving back-office processes.

Strategies for Driving Efficiency

As community banks and credit unions experience increased competition from all sides, they look to AI and automation to help them do more with less. Conversational AI is gaining momentum, but many institutions are still searching for its most valuable use cases.

The real differentiator ahead will be how prepared institutions are to use their data, both to support AI initiatives and strengthen decision-making.

2026’s Second-Highest Investment: Data Analytics/Actionable Insights & Digital Account Opening

Both garnering 31% of the vote, digital account opening and data analytics/actionable insights are transforming banking and customer experience.

Many institutions recognize the value of analytics but are still working through data silos and integration challenges that limit what insight can be gained. Data helps institutions understand account holder behavior and identify areas to better serve them, including customizing offerings and promoting them via the digital experience. Interpreting data to create a personalized experience also helps institutions solidify relationships and decrease attrition.

At the same time, continued focus on digital account opening suggests that even institutions with established solutions see opportunities to streamline onboarding and back-office processes, with open banking increasingly serving as an enabling layer that accelerates integration.

Strategies for Data Analytics & Digital Account Opening

Using data analytics and reporting to provide personalization throughout the digital experience is the core of digital engagement. Personalization through smarter segmentation and relevant recommendations drives real outcomes, including stronger onboarding, higher card usage, better digital engagement and lower churn. By connecting data across channels and using it to inform timely, relevant outreach, institutions can shift from reactive service to proactive engagement that further strengthens relationships and increases lifetime value.

For digital natives Gen Z and Gen Alpha, instant and friction-free digital account opening and onboarding are table stakes. From account setup and ID verification to mobile funding, if banks and credit unions can’t deliver, they risk losing these consumers before they can even welcome them aboard.

What Are Bankers’ Top Opportunities for 2026?

Bankers are strategically engaging with consumers and embracing transformative trends that promise to redefine banking operations and customer service in the years to come.

2026’s Greatest Opportunity: Harnessing the Power of AI

AI was named as the most significant technology trend for the third consecutive year. Up 17 percentage points from 2025, AI is increasingly top of mind for executives as they explore ways to transform operations, drive efficiency, fight fraud and sharpen decision-making.

AI-powered tools present a unique opportunity to level the playing field against big banks by offering assistance and smart automation. Generative AI applications, in particular, hold the promise of hyper-personalized, around-the-clock service, allowing banks and credit unions to leapfrog their capabilities and retain a competitive edge. From virtual assistants to content creation tools, the applications of generative AI are vast, offering financial institutions newfound agility and efficiency in meeting customer needs.

AI Strategies

Strategically deploying AI can unlock productivity gains, streamline processes and empower banks and credit unions to make data-driven decisions. By embracing these deep learning technologies, institutions can position themselves as leaders in innovation and customer-centricity, driving sustained growth and profitability in an ever-evolving landscape. However, experts caution against directing disproportionate attention to AI exploration while underinvesting in risks that already affect daily operations.

2026’s Second-Greatest Opportunity: Digital Assets

With one-fifth of the vote, digital assets (including stablecoins, tokenized deposits and cryptocurrencies) were named the second most important tech trend for 2026. Tokenized deposits and stablecoins are emerging areas that institutions are monitoring closely as regulatory frameworks develop.

Digital Asset Strategies

Though stablecoins and tokenization are drawing heightened attention across the industry, the regulatory landscape is still taking shape. At the end of 2025, the FDIC released its Most near-term applications remain limited, primarily in cross-border transactions, and any strategic engagement will require careful analysis and strong compliance frameworks.

Navigating the Road Ahead for Community Banking

As the banking industry charts its course through 2026, strategic foresight and adaptability are key. By confronting challenges head-on, making strategic investments and embracing emerging opportunities, banks and credit unions can pave the way for sustained growth and competitiveness.

Despite the challenges, a spirit of resilience prevails among community financial professionals: 86% of bankers expressed optimism about the future. From digital banking to AI and open banking, community financial institutions appear ready to move forward with cautious optimism. Their responses point to a clear focus on strengthening the foundational capabilities needed for sustained transformation. When paired with the relationship-centered service that has always defined community banking, these investments position institutions not just to adapt, but to compete.

Want the Full Results of the 2026 Banking Priorities Survey?

This article only scratches the surface of the 2026 Banking Priorities Executive Report. Over 250 community banking leaders have provided a wealth of data on their technological investments, latest strategies and emerging trends spanning modern banking, cybersecurity and fraud, compliance and beyond. Explore the complete 2026 Banking Priorities Executive Report today.

Read the report