The global banking industry is entering a new phase after years of economic uncertainty, shifting consumer habits, and rapid technological change. As macro conditions stabilize and digital adoption accelerates, banks are recalibrating their strategies to align with a new operating environment.
Heading into 2026, analysts and industry executives are closely watching how these changes will reshape banking models and what they will mean for everyday customers. From artificial intelligence to interest rates and payment behavior, the coming year is expected to mark a decisive shift in how people save, spend, and borrow.
AI moves from experimentation to execution
In 2026, banks are expected to move beyond pilot programs and fully integrate artificial intelligence across core operations. Competition from fintech firms and digital-native banks is accelerating the push toward AI-driven pricing, risk management, and lending decisions.
David Becker, founder and CEO of First Internet Bank, notes that AI is already transforming how institutions assess risk and allocate capital. Predictive models are increasingly used to identify potential loan defaults earlier and flag market risks before capital is committed.
For customers, this transition is likely to deliver more personalized financial products, stronger fraud detection, and faster credit approvals driven by data-based underwriting. At the same time, the expansion of neobanks, fintech platforms, and online lenders is broadening consumer choice and, in many cases, lowering costs.
Cash continues to fade from everyday transactions
Cash usage is expected to decline further in 2026 as digital payments become the dominant method of transaction. Capital One data shows that nearly half of US adults make no cash purchases in a typical week, while roughly 87% of all transactions are now cashless.
As more businesses adopt digital-only payment models, consumers are increasingly turning to digital wallets and other non-cash alternatives. Younger demographics are leading this shift. Americans aged 18 to 26 show the highest adoption, with more than 90% using digital wallets as their primary payment method, far outpacing older age groups.
Despite this trend, cash is unlikely to disappear entirely in the near term, as adoption among older generations remains slower and certain sectors continue to rely on physical currency.
Fed rate cuts remain likely but gradual
Monetary policy is set to remain a key factor shaping banking conditions in 2026. After cutting the federal funds rate three times this year, the Federal Reserve is widely expected to continue easing, although the timing remains uncertain amid concerns over tariffs, trade policy, and inflation dynamics.
The CME FedWatch Tool currently assigns a modest probability to another rate cut in January, while BofA Global Research expects two quarter-point cuts in June and July, potentially bringing the target rate range to 3%–3.25%.
Becker argues that the Fed is navigating a complex backdrop that calls for measured adjustments rather than aggressive easing. Gradual rate cuts, he says, would give the economy time to absorb change without triggering new shocks, supporting financial stability as growth slows.
Physical bank branches become increasingly scarce
The decline in branch visits, combined with high operating costs, is accelerating the closure of physical bank locations. Since late August, major US banks have announced plans to shut more than 300 branches, with JPMorgan Chase and TD Bank leading the reductions.
This trend is expected to intensify in 2026 as banks continue to align their footprint with customer behavior. According to the American Bankers Association, only a small fraction of consumers now prefer managing their accounts in person, with branch visits particularly unpopular among Gen Z and millennials.
As digital banking becomes the default, physical branches are likely to shift toward advisory and complex services rather than everyday transactions.
Buy now, pay later emerges as a growing consumer risk
Buy now, pay later services have surged in popularity, allowing consumers to split purchases into interest-free installments. PayPal data shows that more than half of shoppers are more likely to complete a purchase when BNPL is offered.
However, industry experts warn that heavy reliance on BNPL could become a growing risk in 2026. These loans are often spread across multiple providers, making it difficult for consumers to track obligations and manage repayment schedules.
Becker cautions that shoppers can accumulate significant BNPL debt in a short period, with risks becoming visible only after payments are missed. Late fees, collections, and increasingly, credit bureau reporting can amplify the financial impact, potentially damaging credit scores and limiting future borrowing options.
While greater transparency and coordination between BNPL platforms could improve consumer outcomes, the segment remains a blind spot for lenders and regulators. Until safeguards improve, BNPL is likely to remain a fast-growing but underappreciated source of financial stress for households heading into 2026.
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