Top of mind banking and capital markets issues

Mergers and acquisitions continue to reshape the competitive landscape, though the playbook has changed. Deal volumes have moderated, but strategic rationales have matured — banks are no longer chasing scale for its own sake. Instead, transactions are increasingly about acquiring capabilities, strengthening balance sheets, and advancing technology architecture. Execution timelines have compressed dramatically, with signing-to-close windows shrinking from twelve months to as few as three. AI is now embedded across diligence and integration, turning the M&A process into a full-coverage, intelligence-led engine that quantifies value at the contract and data level.

Digital assets have moved decisively from exploration to enterprise-scale implementation. The GENIUS Act and the Digital Asset Market Clarity Act of 2025 are establishing clearer rules for stablecoins, market structure, and institutional participation. Fintechs and traditional institutions alike are pursuing regulated charters, while tokenization is transforming capital markets through faster settlement and broader investor access. Banks must continue evolving their risk frameworks to address the unique challenges of custody, blockchain interactions, and AI integration.

Gen AI is rewriting the economics of build-versus-buy. AI coding agents now allow institutions to develop custom tools in weeks rather than months, and agentic AI is moving from pilot to production across risk, compliance, fraud detection, and core operations. The emergence of "tokenomics", which is the unit economics of AI usage, is becoming an executive-level concern, requiring institutions to manage cost per token and cost per outcome with the same rigor they apply to capital allocation. Leading banks are converging on unified agent platforms equipped with hundreds of reusable skills, making governance and cost management tractable at scale.

Digital transformation and payments modernization is shifting from incremental upgrades to structural reinvention. Cloud-native, real-time, and ecosystem-based architectures are converging with GenAI to power embedded finance, banking-as-a-service, and intelligent client experiences. Real-time payment infrastructures are becoming the expected standard, transforming payments from a utility into a strategic, data-enabled business model. Talent strategies and governance frameworks are central to making these investments sustainable.

Risk and regulatory developments remain front and center. Agencies are advancing proposed revisions to the capital framework, modernizing AML/CFT requirements, clarifying digital asset oversight under the GENIUS Act, updating model risk management guidance, and introducing a national AI policy framework. While the environment is becoming more favorable to innovation, institutions must manage diverging regulations across global, federal, and state jurisdictions.

Credit markets are navigating widening spreads, rising delinquencies across consumer and commercial portfolios, and continued stress in commercial real estate — even as overall conditions remain resilient. Private credit continues to expand into asset-backed finance, infrastructure, and real estate, while macroeconomic uncertainty around inflation, tariffs, and supply chains keeps volatility elevated. Lenders that strengthen underwriting discipline and leverage data-driven insights will be best positioned to capture refinancing and structured credit opportunities.

Cost optimization has evolved from short-term cuts into multi-year transformation programs. Leaders are recycling structural savings into AI, data, and client experience platforms; flattening operating models; and managing third-party portfolios as integrated cost-and-resiliency assets. The focus is on funding the future from the run rate and ensuring productivity gains hold beyond the program.

Cyber risk has never carried higher stakes. AI is now embedded in security operations, while cloud, SaaS, and vendor dependencies require live monitoring and rehearsed response. Deepfake-enabled fraud, API abuse, and ransomware continue to evolve, and divergent rules on data and incident disclosure are reshaping how services are designed. Governing autonomous security — defining what can be automated and how actions are logged — is a board-level imperative.

The CIO's agenda in 2026 has shifted from transformation at scale to value realization at speed. Priorities include scaling AI from pilots into production, targeted core and platform modernization, unified and governed data platforms, resilience-by-design architectures, sustained productivity gains, and AI-driven personalization that improves engagement while reducing cost-to-serve.

Tax complexity is mounting as institutions navigate stalled congressional legislation, IRS operational strain, heightened scrutiny under the economic substance doctrine, renewed interest in tax-exempt structures, and varied state conformity to OB3. Proactive modeling and structural reviews will separate the institutions that manage risk from those that capture opportunity.