Four Ways Banks Can Blaze a Trail in 2026

Banks around the world have started articulating a clear set of resolutions for 2026 in a macroeconomic and geopolitical landscape marked by persistent uncertainty, interconnected risks, shifting trade alliances, and evolving tariff regimes that continue to disrupt credit conditions.

S&P Global’s forecast suggests the credit losses of global banks could rise 7.5% year-on-year to $655 billion in 2026, with a significant share coming from banks in the Asia-Pacific region, while North American banks remain exposed to tariff-sensitive sectors, facing rising costs and margin pressure.

The imperatives for banks are all too clear in this milieu: pursue strategic mergers and acquisitions (M&A) to build capability and scale, operationalize artificial intelligence (AI) at scale, backed by robust governance for risk efficiency, enhance customer experience through digital-led, relationship-centric engagement, and capitalize on the private credit opportunity.

Goal 1: Pursue strategic M&A with an integration roadmap in place

Global banking sector consolidation is regaining momentum as institutions respond to margin pressure, scale inefficiencies, and rising technology and compliance costs.

The trend is particularly pronounced in the US, underpinned by a supportive regulatory environment and micro financial conditions, with 181 deals announced in 2025—the highest since 2021—as per S&P Global Market Intelligence.

In 2026, there is likely to be a steady stream of strategic deals among community and regional banks, supplemented by selective fintech acquisitions. Scale for digital and AI will be a prime catalyst, with buyers using M&A to gain scale in priority markets, add specialty business lines, and accelerate technology and talent acquisition.

However, the success of M&As in 2026 will depend on post-merger integration, especially across risk management, including credit and operations. Early integration challenges, such as inconsistent risk policies and fragmented portfolio monitoring, can obscure underlying asset quality, delay risk recognition, and materially slow realization of synergy.

For 2026, banks should pursue strategic M&A with a clear focus on alignment from day one—not just of systems but also of risk appetite and credit philosophy, given that integration complexity can dilute risk discipline, obscure emerging vulnerabilities, and delay value realization.

Goal 2: Deploy AI at production scale, with robust governance for risk efficiency

Amid rising complexities and sustained margin pressure, banks are increasingly evaluating how AI can be applied to improve efficiency, sharpen risk assessment and support scalable growth without a proportionate increase in costs.

To date, however, AI adoption has largely remained in the proof-of-concept (PoC) stage, with only 9% of banking firms having fully deployed AI solutions in external-facing systems, according to S&P Global. Credit risk use cases such as financial spreading, credit memo drafting, early-warning signals, and covenant monitoring have shown promise in the PoC stage, but deployment is often fragmented and weakly integrated into core risk workflows. As a result, value realization has been uneven, and governance remains inconsistent.

In 2026, the industry is moving decisively toward production-scale deployment of AI by embedding it into core operating and risk workflows to realize material enterprise-level benefits. For example, scalable deployment of AI in credit risk management requires robust data architecture, domain-specific prompt engineering, audit trail and structured human review before outputs feed into credit decisions or monitoring dashboards.

A pragmatic build-versus-buy approach will be central to this transition. Large banks, backed by mature digital infrastructure and sizable innovation budgets, are better positioned to independently develop and deploy AI-powered solutions. In contrast, regional and community banks often face greater barriers and are increasingly looking to form strategic partnerships with vendors to accelerate adoption, while retaining control through proprietary data and governance layers.

Partners can also help embed AI into existing processes, enforce compliance standards from day one, and scale solutions to address evolving portfolio and regulatory needs.

Crucially, governance must evolve in parallel with AI deployment, as risks from AI span model, credit and broader enterprise risk. Banks must implement multi-layered AI governance frameworks that include formal model inventories, independent validation of AI outputs, explainability standards, performance monitoring, and clear thresholds for human override. In particular, guardrails should focus on strict data governance and controls, role-based access, audit trails, and third-party risk oversight.

Human-in-the-loop oversight must be structurally embedded across AI-enabled workflows, ensuring that judgment-intensive decisions remain under qualified risk ownership. Emerging agentic AI frameworks can support this governance model by assigning confidence scores, grounding outputs in verified data sources, and routing exceptions for review—allowing banks to scale automation while preserving control, accountability, and risk discipline.

Goal 3: Redefine customer experience through digital-led, relationship-centric engagement

In 2026, improving customer experience for banks must focus on how businesses interact with the bank across everyday needs, not just transactions. For example, small and medium enterprises (SME) increasingly expect simple digital journeys, real-time visibility, and proactive support, while still valuing relationship managers for complex decisions. Fragmented channels and manual processes risk pushing clients toward fintechs offering faster, more intuitive experiences.

Leading banks are responding by building digital client engagement platforms that provide a unified view across cash management, payments, trade services, and treasury. SMEs benefit from real-time cash-flow dashboards, automated alerts on liquidity or receivables, digital onboarding for payments and trade products, and self-service for routine requests. These capabilities allow relationship teams to engage clients with insight, supporting targeted cross-sell and up-sell conversations rather than reactive outreach.

Banks that combine digital convenience with relationship-led engagement can deliver a more consistent, personalized experience—one that fintechs struggle to replicate on scale.

Goal 4: Capitalize on the private credit opportunity

Competition for commercial banks intensified materially through 2025 as fintechs, neobanks, and private credit funds continued to gain share across SME and mid-market lending. Private credit, in particular, has expanded rapidly in the US and Europe since 2022, while higher interest rates and tighter bank lending standards drove more borrowers to non-bank alternatives.

Non-banks have gained ground through faster execution and flexible structures.

For banks, the imperative now is to close execution gaps while preserving the disciplines that protect the balance sheet through cycles.

To achieve this, banks should expand lending capabilities and adjust operating models to better match evolving borrower needs, particularly in the SME and mid-market segments—without diluting risk standards. This starts with greater product and structural flexibility, including cash-flow-based underwriting, sector-specific credit frameworks, and faster renewal and amendment processes that reflect how SMEs manage liquidity.

Operationally, this requires banks to move away from bespoke, deal-by-deal credit execution toward standardized but configurable credit architectures with risk-based approval thresholds.

Simultaneously, selectively partnering or co-lending with non-bank platforms can help banks retain client relevance while maintaining oversight and control. Several large US and European banks have established originate-and-distribute partnerships with private asset managers, where the bank remains the primary relationship manager and credit gatekeeper, while private credit funds provide incremental balance-sheet capacity.

Conclusion

Given that geopolitical shocks, tariff regimes, and trade realignments can reprice risk quickly, 2026 will be about the ability to manage an increasingly interconnected risk landscape—spanning credit, technology, and customer expectations.

The goals outlined here reflect a common imperative: aligning growth, technology, partnerships, and customer engagement within a coherent risk and governance framework.

Banks that embed risk alignment into M&A from day one, operationalize AI with strong guardrails, deliver digital-led customer engagement without losing human touch, and capitalize on private credit will be best positioned to succeed.

Amit Vora is Head of Sales — Regional Banks and Asset Managers, Crisil Integral IQ