2025 was a year of adjustment for U.S. banks and credit unions. Margin pressure returned as rate cuts and slower lending eroded net interest income. According to the FDIC, banks reported an 8 to 10 percent decline in net interest income across the year, the steepest drop in nearly a decade.
Competition also intensified. Digital-first institutions, embedded-finance platforms, and fintech apps continued to capture share from traditional players. As 2026 begins, the sector’s focus is shifting toward stability: creating diversified, customer-anchored revenue streams that are less vulnerable to rate cycles.
The first part of our Banking Outlook 2026 explores three forces that will define that transition. Part 2, later this month, will look more closely at technology, fraud, and data-driven engagement trends shaping financial services in 2026.
The Push for Non-Interest Income
Volatile rate cycles have underscored the risks of relying too heavily on spread income. With borrowing demand softening and deposit costs rising, institutions are turning to non-interest income from payments, services, and partnerships.
Deloitte’s 2025 Banking Outlook found that over 70% of North American banks plan to expand non-interest revenue streams in 2026, especially recurring, fee-based models.
Many institutions are exploring revenue from subscription-style services such as identity protection, credit monitoring, and financial-wellness programs. These offerings provide visible value to customers, encourage engagement, and generate income without additional balance-sheet exposure.
Diversification is becoming a structural priority. It protects earnings in volatile cycles while helping banks strengthen long-term relationships through relevant, high-perceived-value services.
Regulatory and Risk-Resilience Pressure
Regulatory focus is tightening around non-financial risk. Supervisory priorities in 2025 emphasized third-party oversight, cybersecurity, and operational resilience, and those themes will continue to dominate in 2026.
New guidance from the Federal Reserve and the OCC places greater emphasis on vendor management and consumer protection, particularly where technology and data are involved. The CFPB’s stance on unfair or deceptive practices (UDAAP) has made transparency and accountability central to every customer-facing product.
Banks seeking to grow non-interest income through partnerships or digital add-ons must now demonstrate that vendors meet the same compliance standards they do. Institutions that integrate strong risk governance with customer-focused delivery will gain a competitive advantage by aligning regulation, resilience, and trust.
Relationship Banking Returns
After years of digital expansion, banks are rediscovering that growth depends on connection as much as convenience.
The 2025 Accenture Global Banking Consumer Study found that 71 percent of consumers prefer financial providers that understand their goals and tailor guidance accordingly.
Customers increasingly expect experiences that combine digital efficiency with proactive, human support. In this environment, engagement has become the new growth metric.
Banks and credit unions are responding by modernizing the principles of relationship banking: personalized insights, transparent communication, and ongoing value through services that strengthen financial confidence. These strategies deepen loyalty and open the door to additional revenue opportunities.
The differentiator in 2026 will not be rate but relevance. Institutions that deliver consistent value and peace of mind will retain customers even as competitors multiply.
Looking Ahead
2026 will test how well banks can balance profitability, compliance, and customer connection. Non-interest income will remain central, but success will depend on aligning it with transparent risk management and meaningful customer engagement.
Part 2 of our Banking Outlook 2026 series will examine how technology, fraud, and data innovation are reshaping the customer experience and redefining protection across the financial ecosystem.