With strategic planning underway for 2026, community financial institutions (CFIs) are contending with changes to regulatory standards, increasingly complex and expensive technological needs, and continued economic uncertainty. We sat down with PCBB’s CEO and Executive Chairman Curt Hecker to glean expert insights on what CFIs should expect and plan for in 2026.Q: What regulatory changes do you anticipate will have the biggest impact on CFIs in 2026?Curt: The Trump administration issued many new executive orders (EOs), but two in particular are ones that bankers should really keep their eyes focused on, as they will impact many aspects of the US economy, including financial services. The EOs, combined with leadership and structural changes at the federal banking agencies (FBAs), imply that significant regulatory changes are forthcoming in the regulation and supervision of banks. The new regulations will also address bank partnerships with fintechs.The first EO for CFIs to be attentive to is EO 14215, Ensuring Accountability for All Agencies. This EO requires the FBAs to craft new strategic plans to submit to the Office of Management and Budget. This EO applies to the regulation and supervision activities of the Federal Reserve and will likely, at least initially, slow down the flow of new regulatory burdens and new interpretations of existing law.The second EO that will greatly impact CFIs is EO 14222. This requires all independent agencies, including the FBAs, to collaborate with their designated Department of Government Efficiency (DOGE) team leads and the Attorney General to, among other things, identify regulations that are potentially unlawful, harm national interests, impose burdens on small business and impede private enterprise, or impose significant costs that are not outweighed by public benefits.The OCC, FDIC, and FRB are all undergoing leadership changes. Recent industry discussion implies the FBAs are being directed to further open channels for digital assets to have Federal Reserve master accounts. Stablecoin tokenization is in process and the largest financial institutions are leading the new currency development. CFIs and fintechs are also developing technologies to accommodate new forms of currency. These changes will benefit bank partnerships with fintechs; however, these partnerships are subject to safety and soundness concerns.Q: With rate cut expectations fluctuating so much this year, how should CFIs plan for continued rate uncertainty in 2026?Curt: CFIs should always plan for interest rate uncertainties and never become overly confident with future rate movements. To prepare adequately, CFIs should be stress testing interest rates with rolling forecasts and developing contingency plans for whichever direction rates move, if they do at all. Sentiments regarding rates are still changing rapidly. With jobs numbers adjusting downward and minimal impacts on inflation, the expectation has moved toward aggressive rate cuts starting this month and continuing into 2026, which is a very different story from what we were anticipating one or two months ago. That’s what makes it so important to be prepared for any scenario and not take chances with your strategy based on short-term predictions. CFIs witnessed bank failures last year where liquidity, credit, and deposit portfolio vulnerabilities were mismanaged. To maintain stability in the long term, a CFI’s leadership team must always focus on leveling risk-adjusted yields in their investment portfolios and not taking on excessive duration or credit risk. Q: What concerns are you hearing most frequently from CFI executives as they begin strategizing for the year ahead?Curt: Cybersecurity and data privacy remain top priorities for CFIs' concerns for next year,
with executives recognizing that customer trust depends on safeguarding data. Margin compression and profitability pressures are also driving a sharper focus on efficiency and smarter use of analytics.Digital transformation is another major theme. Many CFIs are increasingly adopting embedded finance programs and integrating banking services into third-party platforms. This is essential for capturing new markets and increasing revenue streams. Talent management is also pressing, in order to meet the needs of various strategic plan initiatives.Q: How do you see CFIs addressing ongoing talent challenges in their 2026 planning?Curt: It’s important to treat talent initiatives as investments rather than expenses. To stay competitive, institutions will need to strategically position themselves to recruit, develop, and retain the workforce required not only for digital transformation but also for sustaining long-term success. This means going beyond traditional hiring approaches to modernize recruitment methods, expand compensation and benefits intelligently, and showcase career development opportunities that appeal to both emerging and experienced talent. By approaching talent strategy with the same level of rigor as financial planning or technology investment, CFIs can build resilience into their organizations.At the same time, professional development and leadership training will be critical to align teams with strategic goals. Institutions that invest in continuous learning, encourage cross-functional skill development, and foster inclusive leadership practices will be better equipped to navigate change. Equally important is working toward a best-in-class culture — one that supports flexibility, rewards innovation, and strengthens employee engagement. This type of environment not only attracts high-caliber candidates but also helps retain top performers and reduce turnover. For CFIs, the real differentiator in 2026 won’t just be products or technology — it will be how effectively they nurture, grow, and retain their people.Q: What are some signs that a strategic plan may be misaligned with an institution’s capabilities or resources? Curt: Setting goals either too high or too low, or without the necessary allocation of resources, are signs of misalignment and can prevent CFIs from implementing their strategic plan. Driving digital transformation in a culture resistant to change, for example, creates friction, just as pursuing aggressive growth without developing talent can damage engagement. Overly ambitious objectives can drive burnout, demotivate your team, while goals that are too modest fail to inspire teams or create meaningful impact. Another indicator to watch is when departments operate in silos with conflicting goals, leading to KPIs not being met, lower morale, poor communication, missed deadlines, and, ultimately, high turnover rates. A plan that doesn’t have the right funding, talent, or time behind it will inevitably fall short, regardless of how strong the vision looks on paper.The best-aligned plans set long-term goals that are realistic yet motivating, supported by appropriate resources, and reinforced by a culture that champions teamwork, accountability, and adaptability.Q: How can smaller institutions with limited resources approach long-term planning without becoming overwhelmed?Curt: By setting focused, realistic goals and combining them with adaptable, stepwise execution and frequent review, small institutions can engage in meaningful long-term planning that drives sustainable progress without being overwhelmed. CFIs can also innovate strategies to leverage existing resources and at the same time deploy third-party experts to fill both resource and talent gaps. Regular plan reviews help adjust and adapt to changing circumstances and improve efficiency. You may also want to break long-term goals into smaller, achievable short-term actions, allowing staff to stay engaged and celebrate consistent achievements.As new regulations and changes to supervision set the stage for uncertainty and technological demands ramp up, it can feel overwhelming to plan for the next year. But remember: the key to a good strategic plan is to make it a living document that you review and update consistently to ensure you’re on the path to success. The clearest way to set your CFI up for competitive success next year is to find the crucial balance between innovation and stability. Ultimately, CFIs that embrace change strategically — not reactively — will stand out as community leaders.
with executives recognizing that customer trust depends on safeguarding data. Margin compression and profitability pressures are also driving a sharper focus on efficiency and smarter use of analytics.Digital transformation is another major theme. Many CFIs are increasingly adopting embedded finance programs and integrating banking services into third-party platforms. This is essential for capturing new markets and increasing revenue streams. Talent management is also pressing, in order to meet the needs of various strategic plan initiatives.Q: How do you see CFIs addressing ongoing talent challenges in their 2026 planning?Curt: It’s important to treat talent initiatives as investments rather than expenses. To stay competitive, institutions will need to strategically position themselves to recruit, develop, and retain the workforce required not only for digital transformation but also for sustaining long-term success. This means going beyond traditional hiring approaches to modernize recruitment methods, expand compensation and benefits intelligently, and showcase career development opportunities that appeal to both emerging and experienced talent. By approaching talent strategy with the same level of rigor as financial planning or technology investment, CFIs can build resilience into their organizations.At the same time, professional development and leadership training will be critical to align teams with strategic goals. Institutions that invest in continuous learning, encourage cross-functional skill development, and foster inclusive leadership practices will be better equipped to navigate change. Equally important is working toward a best-in-class culture — one that supports flexibility, rewards innovation, and strengthens employee engagement. This type of environment not only attracts high-caliber candidates but also helps retain top performers and reduce turnover. For CFIs, the real differentiator in 2026 won’t just be products or technology — it will be how effectively they nurture, grow, and retain their people.Q: What are some signs that a strategic plan may be misaligned with an institution’s capabilities or resources? Curt: Setting goals either too high or too low, or without the necessary allocation of resources, are signs of misalignment and can prevent CFIs from implementing their strategic plan. Driving digital transformation in a culture resistant to change, for example, creates friction, just as pursuing aggressive growth without developing talent can damage engagement. Overly ambitious objectives can drive burnout, demotivate your team, while goals that are too modest fail to inspire teams or create meaningful impact. Another indicator to watch is when departments operate in silos with conflicting goals, leading to KPIs not being met, lower morale, poor communication, missed deadlines, and, ultimately, high turnover rates. A plan that doesn’t have the right funding, talent, or time behind it will inevitably fall short, regardless of how strong the vision looks on paper.The best-aligned plans set long-term goals that are realistic yet motivating, supported by appropriate resources, and reinforced by a culture that champions teamwork, accountability, and adaptability.Q: How can smaller institutions with limited resources approach long-term planning without becoming overwhelmed?Curt: By setting focused, realistic goals and combining them with adaptable, stepwise execution and frequent review, small institutions can engage in meaningful long-term planning that drives sustainable progress without being overwhelmed. CFIs can also innovate strategies to leverage existing resources and at the same time deploy third-party experts to fill both resource and talent gaps. Regular plan reviews help adjust and adapt to changing circumstances and improve efficiency. You may also want to break long-term goals into smaller, achievable short-term actions, allowing staff to stay engaged and celebrate consistent achievements.As new regulations and changes to supervision set the stage for uncertainty and technological demands ramp up, it can feel overwhelming to plan for the next year. But remember: the key to a good strategic plan is to make it a living document that you review and update consistently to ensure you’re on the path to success. The clearest way to set your CFI up for competitive success next year is to find the crucial balance between innovation and stability. Ultimately, CFIs that embrace change strategically — not reactively — will stand out as community leaders.
