September brought developments that may start to shift priorities for community banks and credit unions. The Fed raised rates, fintech and digital asset charters continued to expand, stablecoin infrastructure moved forward despite a stalled Senate bill, and regulators proposed a longer exam cycle and merger reviews. At the same time, banks are spending more on AI and asking a basic question: is the investment actually paying off? Here’s what these developments could mean for community institutions.
Fintech and digital asset companies continue to snap up bank charters. The OCC conditionally approved Revolut’s national bank application, with initial capital of at least $95 million. Mercury received conditional FDIC approval for deposit insurance, with a $300 million capital requirement. In addition, the OCC also conditionally approved national trust charters for blockchain-based de novos, including OpenReserve Bank, Bastion, and Agora. Meanwhile, new applications continue to pour in. Modern Treasury and Rain each filed to establish limited purpose national trust banks that would provide digital asset custody and, in Rain's case, stablecoin issuance and redemption.
On October 2, the ICBA sued the OCC, arguing the agency exceeded its authority in expanding national trust bank charters. The filing says the OCC is allowing crypto companies to enter the banking system without the same rigorous regulatory controls that community banks are currently subject to.
Meanwhile, traditional community bank formation continues. Portrait Bank opened in Florida after raising $43 million from 256 local investors, and Nola Bank opened in New Orleans as Louisiana’s first new lender in 16 years.
For community banks, the issue is whether fintech and crypto firms entering through specialized charters will be able to compete for deposits and payments business under a different regulatory framework. That is at the heart of the ICBA’s challenge. Traditional community banks invest heavily in compliance, risk management and supervision, while the OCC’s expanded use of national trust charters could give some digital asset firms access to parts of the banking system without taking on the full range of responsibilities that come with a traditional bank charter. How the court resolves that question could have implications well beyond the companies named in the lawsuit.
At the same time, the opening of Portrait Bank and Nola Bank shows there is still room for the traditional community banking model. Both banks are entering markets where consolidation has left fewer locally headquartered institutions. For community banks, that creates an interesting contrast: the industry is consolidating in some markets while new competitors are entering from both the community banking and fintech sides.
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Stablecoin regulation remains unresolved after the Senate failed to advance the CLARITY Act, with a 49- 50 vote falling short of the 60 needed. Banks had raised concerns that rewards on stablecoin balances could pull deposits away from smaller institutions. The bill also included provisions expanding the crypto activities banks could engage in.
The infrastructure is moving ahead anyway. Fiserv launched its new digital asset platform, hosting the Roughrider Coin, a stablecoin backed by the Bank of North Dakota. About 90 financial institutions are expected to have access for bank-to-bank transfers. The Clearing House is separately developing a network for tokenized deposits, with an early 2027 launch targeted.
The regulatory path for stablecoins is still unsettled, but the underlying infrastructure is moving forward. That creates a situation where banks may need to make decisions about digital assets before the rules are fully settled.
For community banks and credit unions, the important question may not be whether to build their own blockchain infrastructure. Fiserv’s platform and The Clearing House’s tokenized deposit network suggest that smaller institutions could eventually access these capabilities through providers they already use. That could lower the barrier to participating if customer demand develops. The technology is moving ahead of the policy, and community banks will need to watch both sides.
Read more about tokenized deposits vs. stablecoins for community FIs:
Federal banking regulators made several changes that could affect how community banks are supervised. The Federal Reserve, OCC and FDIC raised the asset threshold for the longer 18-month exam cycle from $3 billion to $6 billion, potentially adding 188 institutions.
The agencies also issued a joint statement on community banks’ relationships with core providers, acknowledging that market concentration can make it difficult for smaller banks to negotiate contracts, obtain meaningful due diligence information, and monitor vendors effectively.
Separately, the FDIC proposed faster merger reviews, including review timelines, and a process that would automatically approve certain small transactions if the FDIC does not act within a specified timeframe. The proposal would also give regulators a broader view of competition by considering credit unions as competitors.
Why This Matters to Community Banks and Credit Unions
Taken together, the changes point toward a more risk-based approach to supervision, with well-run smaller institutions facing less frequent exams while regulators put more attention on areas where risks can spread across many banks, including core technology providers. The longer exam cycle gives eligible banks more breathing room, but it also puts greater responsibility on management to identify problems between exams.
The merger proposal could matter for community banks in a different way. More predictable review timelines could make it easier to plan a transaction, while including credit unions and centrally booked deposits in the competitive analysis could change how regulators assess the market impact of a deal.
Banks are spending heavily on AI, but the pressure to show a return is growing. An Accenture report found that fear of falling behind competitors is helping drive bank investment, with AI spending estimated at more than $40 billion last year. Yet only about 20% of bank leaders report seeing widespread, sustained value from their AI initiatives. Evident's annual index of 50 large global banks offers a somewhat more favorable picture, with 12 banks reporting ROI on AI projects, up from eight a year earlier.
However, the risks often aren’t fully accounted for when calculating the costs of AI, according to an American Banker risk survey. 60% of respondents expected a significant loss from deepfake fraud and social engineering over the next year, while 49% consider AI model risk a critical or high threat.
The data in these reports come mostly from large institutions, and community banks and credit unions often start from a different position on budget, staffing, and vendor reliance. Still, the measurement questions are similar at any size: what counts as cost, over what period, and how errors are accounted for?
ROI will likely take center stage next year. An EY survey found 82% of senior leaders concerned about token costs, while only 64% actively monitor usage with budget guardrails. Evident also found that governance talent at the surveyed banks grew 33% year over year.
For smaller institutions, the lesson may be less about spending more on AI and more about being selective about where it can deliver a measurable benefit.
The Federal Reserve raised its benchmark rate by a quarter point on September 16, bringing the federal funds target range to 3.75% to 4.00%. It was the first increase since July 2023, following three consecutive cuts that began in September 2025. The Fed pointed to inflation remaining above its 2% target and a resilient labor market at the time.
Data released since the meeting has complicated that outlook. The September jobs report showed employers added 29,000 jobs, way down from 133,000 in August and below expectations, and unemployment rose to 4.2%. According to CME Group data, traders now see less than a 23% probability of a rate hike at the Fed's next meeting later this month, down from 64% a week earlier. Longer-term yields remain elevated, with the 10-year Treasury yield near 5.35% on October 1, close to its highest level in two decades. AP linked the yield swings partly to oil prices, with crude oil trading near $100 amid uncertainty over the war with Iran.
After a period of declining rates, banks may now need to reassess deposit pricing, loan growth and liquidity assumptions. Higher rates can support asset yields but also increase pressure to pay more for deposits, and the cost of funding could have as much impact on margins as the Fed’s next rate decision. Whether a softer labor market holds the Fed back, or inflation and oil prices push it toward further increases, may become clearer as the next round of inflation data arrives.
Last month, we covered a new standards body for bank-fintech partnerships, a revised open banking rule, and new guidance around suspicious activity reports. Missed it? Catch up here.
Acceleron is a modern correspondent banking platform that empowers community banks and credit unions to automate international wire transfers, capture non-interest income, and compete more effectively with big banks. With a foreign exchange (FX) marketplace and currency conversion engine, Acceleron’s API-first infrastructure helps institutions turn cross-border payment flows into efficient, revenue-generating opportunities. Serving over 200 financial institutions and facilitating more than $1 billion in international payments annually, our correspondent banking services and international payment automation solutions are pre-integrated seamlessly with Fiserv Payments Exchange, Aptys, and other leading payments platforms.
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