As the banking industry looks ahead to 2026, financial institutions are preparing for continued economic uncertainty, evolving customer expectations, and rapid technological change. Banks and credit unions are under growing pressure to modernise operations, strengthen relationships, and compete effectively without becoming technology companies themselves.
nCino has outlined five key predictions for 2026, highlighting the market forces and strategic shifts expected to reshape the banking landscape over the next 12 months.
1. Younger generations will force banks to rethink value creation
nCino points to shifting consumer behaviour among Gen Z and Millennials as a major catalyst for change. Research cited by the company shows that 35% of Gen Z respondents and 32% of Millennials plan to switch their primary bank within six months, with digital-first platforms such as Chime, Venmo, and Cash App making it easier to move funds without a traditional banking relationship.
The use of AI is also changing how younger consumers seek financial guidance. nCino chief economist Taylor Nadauld said, “Younger consumers are already using conversational AI for banking; researching products, resolving questions, getting investment advice, flagging fraud. They’re comfortable with it in a way previous generations aren’t, so they’ll keep demanding more. They’ll want innovations that actually help them understand credit, not just access it.”
Nadauld added that banks must reassess how they create value as consumer expectations evolve.
“The real question I think banks need to ask themselves is this: as the consumer changes, how does their value proposition change? There’s a gap opening up between how financial institutions created value for the last generation and how they’ll need to create it for this one. The banks who win are ready to think about value creation differently.”
2. Gradual rate cuts will create refinance opportunities
nCino expects interest rate cuts in 2026 to be delivered gradually, creating refinancing opportunities for mortgage lenders prepared to handle increased volume efficiently.
Forecasts referenced by the company suggest single-family mortgage origination volume could rise to $2.2tn, with refinancing activity also increasing.
nCino general manager of mortgage lending Casey Williams said, “Finding efficiencies in the mortgage process will be key for lenders in 2026. Intelligent automation allows loan officers to scale their business without having to onboard and train at the same pace—these workflows reduce clicks, save time, and create greater profitability.”
3. Relationships will matter more, amplified by AI
While AI adoption continues to accelerate across the industry, nCino notes growing customer fatigue with impersonal automation. This presents an opportunity for institutions that traditionally compete on relationships, particularly credit unions and community banks.
nCino vice president of credit unions Nicole Haverly said, “Members are experiencing AI fatigue from big banks—they’re getting ‘personalised’ offers that feel creepy, not helpful. This creates a massive opening for credit unions to do personalisation with humanity rather than instead of it.”
However, competition is intensifying. nCino AVP of community and regional banks Britney Pope said, “These Tier 1 banks may find ways to leverage AI to replicate the personalised, relationship-driven models of community banks. This poses an existential threat to these institutions’ growth strategies.”
4. Deposit growth will require more than competitive rates
Deposit growth is expected to return as a top priority in 2026, but nCino argues that pricing alone will not be enough. Research cited by the company shows customers increasingly value 24/7 service, real-time communication, and fast digital experiences.
nCino general manager of banking solutions Michael Chung said, “Consumers are going to have raised expectations around digital channels, simple applications, quick approval times and getting their money or accounts opened instantly. Customers are going to respond well to FIs that can help them manage those needs.”
Rising fraud risks and regulatory scrutiny mean institutions must also balance convenience with security to sustain deposit growth.
5. Consolidation will continue reshaping competition
nCino expects bank and credit union consolidation to continue through 2026, further altering the competitive landscape. Increasing technology costs, succession challenges, and regulatory pressure are pushing smaller institutions towards mergers or acquisitions.
nCino CEO Sean Desmond said, “When I started in the industry, there were 12,000 banks. Now there’s something like 3,000. With less and less banks in the market, we actually see this continuing to accelerate. What’s interesting is how this changes the dynamics for everyone—fewer competitors means different strategies for growth, different pressures on the institutions that remain, and different opportunities for those who can scale effectively.”
For institutions aiming to remain independent, nCino suggests investing in technology and efficiency now to remain competitive in a consolidating market.
Read the full blog from nCino here.
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