Community banks and credit unions face a tougher path to growth as consolidation raises the competitive bar and traditional lending weakens. AI offers a way to scale relationship banking, but digital expectations keep rising.

Key Question: How can community financial institutions (FIs) remain competitive as the market, banking landscape, and customer needs shift?

Key Stat: The share of Gen Zers who rely on neobanks the most for banking needs nearly doubled to 17.2% in 2025, overtaking credit unions at 7.3%, per our October 2025 survey, as community institutions lose out on primary relationships to evolving digital competitors.