They arrive alongside two additional announcements that expand this shift. The agencies finalized a major change to the enhanced supplementary leverage ratio for GSIBs, and the OCC proposed a new Community Bank Leverage Ratio (CBLR) framework with an increased eligibility threshold of thirty billion in assets. Together, these actions reflect a wider reshaping of how capital and supervision are calibrated across the banking system.  

Viewed individually, each announcement looks like a targeted adjustment. Viewed together, they fit a much broader shift that has been unfolding since September, when the OCC began redefining what it means to be a Community Bank and signaled the move away from prescriptive oversight toward judgment, evidence, and governance maturity.

Connecting the Pattern Across Recent OCC Announcements

In late September, the OCC announced a major reorganization that expanded the Community Bank category to include institutions up to thirty billion in assets. This change widened the peer group and brought more sophisticated supervisory expectations into the Community Bank line.  

Two weeks later, the OCC issued its 2026 supervisory reset. This reset eliminated fixed procedural requirements and prescriptive exam cycles for Community Banks. Examiners will now tailor scope and timing based on a bank’s governance maturity, internal monitoring, and risk posture.  

By mid October, the OCC made clear that simplification does not reduce expectations. Lighter checklists do not change the need for evidence of control effectiveness and sound governance. Responsibility shifts inward, not outward.  

Most recently, the OCC’s response to the AWS outage confirmed operational resilience expectations have not changed. Vendor oversight, continuity planning, and fourth-party risk remain non-negotiable. The tone toward Community Banks may be more collaborative, but when it comes to resilience, exam expectations look very much the same.  

These shifts set the context for understanding the OCC's latest actions.

How the Latest OCC Actions Continue the Shift

The most recent OCC announcements extend the same supervisory philosophy to BSA/AML, third-party oversight, and capital.

Tailored BSA/AML exam procedures move away from a minimum set of tests and toward risk-based, bank-specific assessments. Ending the MLR data collection signals a shift toward bank-generated intelligence and examiner judgment. The RFI on core processors acknowledges structural constraints that shape Community Bank competitiveness and previews future expectations for transparency in critical vendor ecosystems.

The OCC’s proposal to reduce the CBLR and expand eligibility to institutions up to thirty billion in assets reinforces this approach. The proposal contemplates a capital framework that is more tailored, more risk sensitive, and more dependent on each bank’s internal assessments.

Finally, the simultaneous adoption of a new enhanced supplementary leverage ratio standard for GSIBs further indicates that capital supervision is moving away from rigid constraints and toward a tailored framework centered on risk-based measures, buffers, and calibration.

The Common Thread

Across all of these changes, one theme is consistent. The OCC is reducing procedural supervision and placing greater reliance on each bank’s governance, documentation, and monitoring.

Checklist supervision is declining. Examiner judgment now plays a larger role in how exams are scoped and evaluated. Greater weight is being placed on a bank’s own BSA/AML program, third-party oversight, capital planning, and internal reporting to demonstrate effectiveness without relying on prescriptive procedures or checklists. Capital requirements are now part of the same move toward flexibility, risk sensitivity, and reliance on internal assessments.

The opportunity is significant for well-managed institutions. The exposure is equally significant for institutions that rely too heavily on legacy exam cycles or prescriptive checklists.

What Community Banks Should Do Now

Community Banks can prepare by strengthening the practices examiners will rely on most. Priority areas include:

• Improving governance evidence and board reporting
• Building reliable BSA/AML self-testing and monitoring
• Mapping third-party and fourth-party dependencies and documenting oversight
• Linking capital planning more clearly to risk posture and internal metrics

These are the areas that will determine exam scope, credibility, and supervisory confidence under the OCC’s evolving model.

Explore the Framework

iKinetiq's TPOC Risk Framework helps Community Banks translate examiner expectations into measurable governance maturity and stronger control effectiveness. It provides a structured, data driven way to anticipate supervisory focus areas, demonstrate control reliability, and maintain readiness in an environment where oversight depends on internal judgment and defensible evidence rather than fixed exam checklists.

© 2025 iKinetiq Innovation Solutions, LLC. All Rights Reserved.

When the AWS cloud blinked, thousands of businesses felt the ripple, and many banks were reminded just how dependent they've become on systems they don't control.

For Community Banks, this wasn't just another headline about technology failure. It was a real-time stress test of resilience, a demonstration that even when supervision feels lighter, examiners are still watching closely.

The Office of the Comptroller of the Currency (OCC) may be evolving toward a more collaborative and proportional supervision model. This doesn't mean resilience expectations are easing. Across town, the Federal Reserve Board (FRB) hasn't signaled any comparable change. For FRB-supervised institutions, it remains examination as usual.

A Tale of Two Supervisors

Throughout 2025, the OCC made a subtle yet meaningful shift, focusing on fewer formal enforcement actions, greater emphasis on constructive dialogue, and a renewed focus on proportional oversight for smaller institutions.

Community Banks welcomed the change. It suggested that regulators were listening to the resource constraints these smaller institutions face.

But beneath that softer tone lies a steady message. Operational resilience, continuity, and third-party oversight remain non-negotiable. The OCC’s evolving framework still centers on a bank’s ability to withstand disruption, maintain critical operations, and protect customers.

The FRB, on the other hand, hasn't announced any comparable shift. Its examiner playbook continues to emphasize governance, risk management, vendor oversight, and contingency planning as cornerstones of safety and soundness.

Together, these two dynamics create a dual-lens environment:

🔍 Key Takeaway:  The OCC and FRB may differ in tone, but not in expectations. Both continue to hold Community Banks fully accountable for demonstrating operational resilience, vendor governance, and board oversight.

When the Cloud Blinks

The recent AWS outage was short by technical standards but long in its implications. For several hours, core infrastructure in the US-East-1 region faltered, disrupting applications, data processing, and digital services across industries. Community Banks faced potential exposure through their core providers, digital banking vendors, or third-party fintech integrations.

The U.S. core banking market is dominated by just three firms: FIS, Fiserv, and Jack Henry. Collectively, these providers support 70% or more of all U.S. banks, including a significant share of Community Banks. This makes fourth-party risk an immediate supervisory concern. When AWS goes down, even briefly, the ripple can extend to your bank’s core processing, digital banking, or payments operations.

The AWS event isn't just about cloud resilience. It is a reminder that a bank’s continuity is only as strong as its vendor’s architecture and contract terms.

🔍  Key Takeaway:  Even if your bank doesn’t contract directly with AWS, your vendors do, making fourth-party risk and cloud dependency an unavoidable part of every Community Bank’s resilience strategy.

Why Community Banks Are Most Exposed

Community Banks have long relied on outsourced technology to level the playing field. Core providers and fintech partners deliver digital services that small banks cannot feasibly build in-house. That convenience, however, creates dependency.

When a disruption hits a vendor or their cloud provider, Community Banks have fewer buffers and less internal redundancy to absorb the shock.

Unlike large banks, Community Banks often:

This means Community Banks must be ready to prove how they monitor vendor resilience, evaluate continuity plans, and escalate service disruptions even if they don't control the infrastructure.

🔍 Key Takeaway:  Outsourcing may reduce cost, but it never transfers risk.

What Examiners Will Expect to See

Whether your next exam falls under the OCC or FRB, they'll arrive with the same core question: “Can this institution continue critical operations despite a vendor or cloud disruption?”

That question drives examiner expectations in four key areas:

1. Board Oversight

Boards are expected to receive regular reporting on vendor dependencies, resilience metrics, and incident response outcomes. For OCC banks, this ties directly to governance accountability.  For FRB institutions, it links to safety and soundness assessments.

2. Vendor Risk Management

A bank's vendor inventory must identify all critical third parties and, where possible, their fourth-party relationships. Examiners increasingly expect evidence that banks understand their vendor’s cloud dependencies and geographic regions.

3. Contract Review and SLAs

Examiners will scrutinize vendor contracts not just for compliance but for resilience provisions such as uptime guarantees, outage communications, liability caps, data recovery time objectives, and exit clauses.

4. Continuity Testing

Paper policies are not sufficient. Banks must provide satisfactory evidence of periodic resilience testing, such as tabletop exercises, backup validation, or joint vendor continuity drills.

🔍 Key Takeaway:  Whether under the OCC or FRB, examiners will expect concrete proof including documented vendor inventories, tested continuity plans, and clear board reporting that shows control and awareness.

From Risk to Readiness

Operational resilience isn't built overnight, but it can be demonstrated methodically. This is where Community Banks have an opportunity to get ahead.

At iKinetiq, we translate enforcement data and real-world events like the AWS outage into practical readiness frameworks that help banks align to examiner expectations.

To start, we recommend banks:

🔍 Key Takeaway:  Resilience isn’t about preventing every outage. It is about proving your institution can withstand an outage and has mapped, tested, and governed vendor dependencies.

How iKinetiq Helps Community Banks Prove Resilience

Most Community Banks already perform many of these activities but often struggle to show examiners what’s being done behind the scenes.

At iKinetiq, we help institutions bridge that gap every day by translating vendor oversight, contract reviews, and continuity planning into clear, examiner-ready documentation.

Here’s how we typically support our clients:

📥  Download our sample checklist to see how your bank measures up.

The Office of the Comptroller of the Currency (OCC) has launched the most significant overhaul of its supervisory framework for Community Banks in more than a decade. In just three weeks, the agency has:

• Announced a major organizational restructuring that expands the Community Bank category to include institutions up to $30 billion in assets.
• Issued three new bulletins (2025-24, 2025-25, and 2025-26) that collectively redefine how Community Banks will be examined, validated, and overseen.

Together, these actions signal a new era in OCC supervision, one that replaces prescriptive, policy-driven oversight with a more flexible, risk-proportionate model. For Community Banks, this means the responsibility for defining and demonstrating sound risk management now shifts inward. Banks will need to strengthen self-examination, deepen governance practices, and enhance internal monitoring to anticipate examiner expectations. Because exam standards will be less uniform and more judgment-based, institutions must navigate greater uncertainty about how those expectations will evolve and be applied in practice.

Examinations: Frequency and Scope for Community Banks (Bulletin 2025-24) 

The Change

Effective January 1, 2026, the OCC will eliminate all policy-based examination activities that are not required by statute or regulation. Instead of following fixed checklists and mandatory cycles, examiners will use their discretion to tailor exam scope and frequency based on each bank’s size, complexity, and risk profile. The agency will also place greater reliance on quarterly monitoring and bank-provided reports as part of its ongoing supervision.

The Rationale

For years, examiners were required to perform certain reviews at predetermined intervals, such as annual fair lending assessments or flood insurance testing every three cycles, regardless of whether risk levels warranted that scrutiny. The OCC concluded that this approach drained resources from both examiners and banks without proportionally improving safety and soundness. This bulletin formalizes a transition toward risk-based discretion, where examiners focus only on areas of material concern while reducing procedural burden for well-managed institutions. For most Community Banks, this creates both opportunity and exposure.  Those with disciplined self-assessment and credible governance will benefit from lighter touch exams, while others may experience deeper scrutiny under examiner discretion.

The Impact on Community Banks

This shift changes more than exam scheduling. It redefines accountability:

• Less Prescription, More Examiner Judgment:  With predefined tasks eliminated, banks can no longer rely on routine cycles to anticipate examiner focus. Each exam will now be shaped by how the OCC perceives a bank’s risk posture and internal control maturity.
• Heavier Reliance on Self-examination:  Banks must proactively identify, document, and monitor risk between exam cycles. Quarterly internal reviews, management reports, and governance oversight will now form the primary evidence base examiners rely upon.
• Governance as a Differentiator:  A bank’s ability to demonstrate credible self-assessment, risk monitoring, and remediation discipline will directly influence the intensity of its next exam. Weak documentation or inconsistent monitoring will invite deeper reviews.
• Uncertainty in Standards:  Without defined procedural standards to reference, banks will face greater ambiguity about what constitutes “enough” oversight or documentation.

In effect, the OCC has shifted the supervisory burden inward. Community Banks are now expected to act as their own first-line examiners and to be ready to evidence that discipline when OCC arrives.

Retail Nondeposit Investment Products (RNDIPs): Exam Procedures for Community Banks (Bulletin 2025-25) 

The Change

The OCC announced that it will no longer use the “Retail Nondeposit Investment Products” (RNDIP) booklet of the Comptroller’s Handbook when examining Community Banks. Those procedures were originally developed for large banks with complex investment programs. Going forward, examiners will assess Community Bank RNDIP activities using only the core standards in the Community Bank Supervision booklet, which are less burdensome and more proportionate to the scale of these programs.

The Rationale

Most Community Banks engage in RNDIP activities through third-party partnerships or limited retail offerings, far different from the direct investment platforms operated by large banks. Applying the same comprehensive procedures used for major institutions created an excessive burden and discouraged smaller banks from offering legitimate, well-controlled products. The OCC’s revision recognizes that smaller, well-managed Community Banks can oversee these activities effectively without being subjected to large-bank exam depth.

The Impact on Community Banks

While this bulletin reduces procedural overhead, it also transfers more responsibility for self-monitoring and third-party oversight to bank management.

• Simplified Oversight, But Not Fewer Obligations:  Community banks must still comply with all applicable laws, including the Gramm-Leach-Bliley Act, securities and insurance laws, consumer privacy rules, and BSA/AML requirements, but now must also determine internally how best to evidence compliance.
• Stronger Vendor Management Expectations:  With the OCC no longer performing detailed RNDIP transaction testing, banks must ensure third-party partners (e.g. broker-dealers, insurance providers, referral networks) maintain adequate controls and reporting.
• Heightened Need for Risk Reporting:  Examiners will depend more on internal reports and board oversight summaries to gauge risk management effectiveness.
• Uncertain Depth of Review:  Because examiners will apply only core standards, banks cannot assume uniform coverage across institutions. Examiner judgment will determine how deeply RNDIP activities are reviewed.

This change underscores a key theme of the new OCC model – fewer checklists and greater self-accountability. Banks that cannot demonstrate ongoing oversight of their RNDIP partners or control environments may find that examiners compensate with more intrusive follow-up. In this environment, documentation of third-party due diligence and ongoing oversight will carry as much weight as the partnerships themselves.

Model Risk Management: Clarification for Community Banks (Bulletin 2025-26) 

The Change

The OCC clarified that Community Banks are not required to conduct full model validations annually and may tailor model risk management practices based on their risk exposure, model complexity, and business activities. The agency emphasized that examiners will not issue negative supervisory feedback solely for validation frequency or scope, provided the bank can justify its approach as risk-appropriate.

The Rationale

This is not simply regulatory relief. It is a call for structured discretion:

• Tailored Validation Planning: Banks must now determine and document what “reasonable” validation frequency looks like based on model importance, complexity, and risk exposure.
• Greater Self-Governance Responsibility:  By giving flexibility, the OCC expects banks to justify their decisions with written frameworks, board-approved policies, and evidence of ongoing model performance monitoring.
• Enhanced Examiner Reliance on Bank Documentation:  Examiners will look for credible model inventories, change controls, and performance tracking to assess whether oversight is sufficient.
• Potential Inconsistency in Supervision: Because examiners now exercise more judgment, banks could face differing interpretations of adequacy until supervisory norms stabilize.

The takeaway is that the OCC is trusting Community Banks to exercise professional judgment, but it will expect them to prove that judgment was exercised thoughtfully. Documentation, rationale, and risk monitoring will now be the defense against examiner challenge.

What It All Means

Viewed together, these actions reflect a deliberate and cohesive policy shift toward a supervisory philosophy designed to balance regulatory efficiency with heightened institutional accountability. While each bulletin addresses a distinct operational area, their collective effect is unmistakable.  Community Banks are now expected to self-identify, self-govern, and self-correct with far less procedural guidance than before.

Several key themes emerge from this reset, each redefining how Community Banks will be evaluated going forward:

• Risk-Proportionate Supervision:  Examiner judgment now replaces fixed OCC checklists. Scope and intensity will vary based on a bank’s demonstrated control maturity, risk profile, and governance practices. For Community Banks, this introduces both opportunity and risk. Those with strong frameworks may see reduced exam disruption, while others may face intensified scrutiny if risk management appears inconsistent or reactive.
• Expanded Community Bank Portfolio:  With “Community Bank” now defined to include institutions up to $30 billion, OCC supervision will cover a much broader spectrum of balance sheets, complexity, and risk exposure. This means the same supervisory category now encompasses small-town lenders and near-midsize banks with multi-state operations and fintech relationships. Examination expectations are likely to scale upward, prompting smaller banks to align at least partially with practices once reserved for mid-tier institutions.
• Governance Over Procedure:  The OCC is effectively moving from a rulebook-driven model to a governance-driven one. Examiners will place greater emphasis on the strength of internal reporting, the integrity of risk frameworks, and the role of boards and senior management in overseeing emerging risks. A well-run risk committee, robust management information systems, and timely escalation mechanisms will now matter more than adherence to static policy requirements.
• Efficiency With Accountability:  The OCC’s stated goal is to reduce regulatory burden, but the tradeoff is clear.  Efficiency for examiners will only be possible if Community Banks shoulder greater responsibility for their own supervisory readiness. The agency expects institutions to invest in better data, better analytics, and more disciplined internal oversight to sustain the credibility of their “self-monitoring” posture.

For Community Banks, this combination does not mean lighter oversight. It means fewer predefined instructions and more performance-based evaluation. Institutions will face fewer regulatory touchpoints, but each will carry greater weight. Success under the new framework will depend on how effectively a bank can demonstrate continuous self-assessment, sound governance, and readiness to evidence risk control even without prescriptive guidance.

Why Community Banks Choose iKinetiq

The OCC’s new supervisory framework does more than change examination logistics. It fundamentally reshapes the relationship between Community Banks and their examiners. Where the OCC once prescribed what to test and when, it now expects institutions to define, monitor, and demonstrate their own risk discipline. This shift is where many banks will struggle and where iKinetiq delivers distinct advantage.

Community Banks now need partners who understand both the regulatory mindset and the operational realities of implementing credible, exam-ready risk governance. iKinetiq sits precisely at that intersection. Our team’s experience spans the full supervisory spectrum from community institutions to systemically important banks, and we translate that knowledge into actionable frameworks that scale to a bank’s size and complexity.

Our solutions are not templates. They are designed to help Community Banks build examiner-reliant governance, including structures, processes, and reporting systems that examiners can rely on as a credible basis for their supervisory work. This alignment saves time, reduces disruption, and signals control maturity to the OCC.

How iKinetiq Helps Community Banks Lead in the New Environment:

Each of our solutions is built to align precisely with this new direction for OCC supervision, helping Community Banks demonstrate control maturity with confidence.

• Exam Readiness and Governance Support:  We help banks move beyond document gathering to develop cohesive, examiner-reliant narratives that connect board oversight, risk assessments, and control evidence into a unified story of safety and soundness.
• Quarterly Monitoring and Analytics Design:  The OCC has reaffirmed its focus on off-site monitoring and data-driven supervision. iKinetiq builds customized dashboards and key risk indicators that mirror what examiners monitor, allowing banks to anticipate questions, not just answer them.
• Model Risk Governance:  Under the new flexibility, Community Banks must now justify validation frequency and scope. We design proportional validation frameworks that demonstrate sound judgment and satisfy examiner expectations without unnecessary cost or complexity.
• Third-Party Risk Management:  As OCC reduces RNDIP exam intensity, responsibility shifts squarely to the bank. We help Community Banks strengthen vendor due diligence, oversight, and documentation, especially for fintech and investment partnerships, so they can expand safely under the new regime.
• Enforcement Avoidance Intelligence:  Using our proprietary TPOC scoring and RegHQ analytics, we identify early warning signals that align with enforcement patterns. This insight allows banks to remediate issues proactively and enter exams with data-backed confidence.

In a supervisory model built on examiner judgment, the banks that will thrive are those that can demonstrate sound judgment of their own. iKinetiq equips Community Banks to do exactly this, building the governance, analytics, and readiness disciplines that turn regulatory uncertainty into strategic advantage.

The Bottom Line

The OCC’s new framework signals a modernized approach to Community Bank supervision that reduces procedural noise but raises the bar for governance maturity, internal monitoring, and examiner engagement.

For Community Banks, 2026 will not bring fewer expectations, just fewer checklists. The responsibility for demonstrating safety, soundness, and compliance now rests squarely within each institution’s own governance and reporting systems. Those that adapt early will shape the new definition of examiner-ready performance.

iKinetiq helps Community Banks lead through this transition with intelligence, structure, and foresight, transforming regulatory uncertainty into strategic readiness.

🔗    Want the full framework behind this post? Download iKinetiq's 2026 Community Bank Supervision Blueprint to see five examiner focus areas and practical exam prep steps.

👉  Schedule your free consultation now to ensure your institution is prepared for the OCC’s new supervisory framework before the 2026 exam cycle begins.

OCC Publication Links:

OCC News Release 2025-89 (Organizational Updates)

OCC Bulletin 2025-24 (Examinations: Frequency and Scope)

OCC Bulletin 2025-25 (Retail Nondeposit Investment Products)

OCC Bulletin 2025-26 (Model Risk Management Clarification)

© 2025 iKinetiq Innovation Solutions, LLC. All Rights Reserved.

The New Supervisory Framework

Under the reorganization, the OCC will realign institutions into three supervisory categories:

• Large & Global – institutions with $500B+ in assets and foreign-owned banks
• Regional & Midsize – institutions with $30B–$500B in assets
• Community Banks – institutions up to $30B in assets

What This Means for Community Banks

1. Expanded Peer Group

Institutions in the $10–30B range will now be included in the Community Bank line. Smaller Community Banks will now be benchmarked against a larger and more complex peer group, even if exam scope is tailored to their size and risk profile.

2. Broader Examiner Expertise

With $10–30B institutions now included in the Community Bank portfolio, examiners will need to draw on supervisory tools more common in the midsize line such as stress testing, advanced liquidity oversight, and vendor/fintech risk analysis particularly for larger Community Banks.

3. Tailored Exam Scoping

According to Comptroller Gould, the OCC’s new approach will tailor the exam scope to each bank’s size, complexity, and risk profile. Smaller Community Banks may see lighter exam scoping, but larger Community Banks should expect broader, more robust modules.

4. Higher Enforcement Visibility

With larger and more complex banks now included, enforcement actions and civil monetary penalties will feature more prominently across the Community Bank portfolio.

Why It Matters Now

This shift redefines the playing field. For Community Banks, it means new peer comparisons, evolving supervisory expectations, and greater focus on enforcement trends.

At iKinetiq, we have supported institutions across all supervisory categories from Community Banks to midsize institutions to systemically important banks. We know how examiner expectations shift across portfolios, and we bring that insight to help Community Banks prepare under this new supervision framework.

Next Steps

Now is the time to get ahead of the change. Our Regulatory Risk Profile provides a data-driven view of enforcement trends, peer benchmarks, and risk distribution for Community Banks under the OCC’s new supervisory structure.

📅  Schedule your complimentary consultation with our team to review your bank’s risk profile in this new environment.

👉  Official OCC announcement: OCC News Release

© 2025 iKinetiq Innovation Solutions, LLC. All Rights Reserved.

After a year of regulatory back-and-forth, the American Fintech Council (AFC) has urged a federal court to deny a request by bank trade groups to delay implementation of the Consumer Financial Protection Bureau’s (CFPB) open banking rule while litigation is pending.

The Rule at the Center of the Fight

Originally finalized in 2024, the CFPB’s open banking rule, authorized under Section 1033 of the Dodd-Frank Act, was designed to give consumers greater control over their financial data. The rule:

Banks Sue. CFPB Flips. Litigation Paused.

In early 2025, bank trade groups, including the Bank Policy Institute, Kentucky Bankers Association, and Forcht Bank, filed suit arguing the rule exceeded the CFPB’s authority and raised data security concerns. The CFPB initially supported these claims but later reversed its position.

By late July 2025, the CFPB made an abrupt shift. Under new leadership, the agency:

     •    Asked the court to pause litigation

     •    Announced plans to rewrite the rule through an accelerated rulemaking process

     •    Opened a 60-day public comment window beginning August 21, 2025

Fintechs Warn Delays Threaten Competition

Enter the American Fintech Council (AFC). In a strongly worded legal brief, AFC urged the court to reject banks’ request for further delay, arguing that:

“Prolonged litigation undermines regulatory clarity and harms consumers who deserve safe, cost-free access to their financial data.”

AFC and others fear that momentum is shifting away from consumer-first innovation and toward bank-friendly cost structures, especially after JPMorgan Chase announced earlier this year its plans to charge fintechs for data access.

What Comes Next?

The CFPB is now in an active comment period on key issues like:

     •    How to define “consumer representatives”

     •    Whether banks can recoup costs

     •    What security protocols should apply to data sharing

Meanwhile, fintech advocates like AFC are working to ensure the core principles of open banking including consumer control, no-fee access, and healthy competition are preserved in the final version.

Why This Matters to Community Banks

While much of the focus is on fintechs and the largest of the banks, Community Banks have a big stake in how the final rule takes shape. Open banking isn’t just a compliance issue. It’s a competitive one.

If the rule tilts too far toward limiting access or adding friction, it could:

     •    Undercut third-party integrations that improve consumer experience

     •    Preserve legacy barriers that inhibit product innovation

     •    Shift the compliance burden without delivering clear benefits

Our Final Take

    ✅ The fight over open banking isn’t just about data. It’s about who controls the customer relationship in a rapidly evolving financial ecosystem.

    ✅  The CFPB has promised a rewrite. The courts are watching. Fintechs are pushing back hard against efforts to delay.

    ✅  At iKinetiq, we’ll continue monitoring every turn because the rules of engagement are being rewritten in real time and could greatly change Community Bank strategy.

        Source:  American Banker, July 2025, using Capital Performance Group data 

Introduction

American Banker just released its annual ranking of the 20 top-performing banks with $2B–$10B in assets. These institutions stood out not because of massive growth or fintech flash, but because of something more fundamental, risk discipline.

While 2024 squeezed margins across the sector, these banks managed:

• Lower cost of funds (1.97% vs. 2.46% peers)
• Higher Net Interest Margins (NIMs) (4.08% vs. 3.18%)
• Stronger Return on Average Equity (ROAE) and lower efficiency ratios

Why It Matters

In a year of much greater regulatory enforcement actions, these banks still pulled ahead by doing the basics exceptionally well, controlling funding costs, maintaining credit quality, and investing in deposit relationships. That makes their 2024 performance really stand out.

Now, in 2025, regulatory enforcement actions have virtually gone quiet.  But that’s exactly why this matters.

The vast majority of these top-performing banks have no enforcement history over the last 25 years. That’s not luck. It’s disciplined risk management, and it shows up in their performance. Even among the few FDIC-regulated banks with past enforcement issues, the record shows correction and recovery rather than repeat violations.

What this proves is simple.  Banks that consistently manage risk well outperform their peers even amidst heightened regulatory enforcement. These institutions stay exam-ready, strategically focused, and financially strong through every cycle. “Discipline first” isn’t just a compliance mindset. It’s a performance advantage.

Where iKinetiq Can Help

We help forward-looking banks, especially Community Banks with total assets $1B to $10B:

• Benchmark against risk and regulatory trends (including top-performer profiles)
• Identify blind spots before examiners do
• Prepare for the coming shift in enforcement posture expected for the remainder of 2025 and into 2026

👉  Want to see how your bank stacks up?  Book your free 30-minute consult.

© 2025 iKinetiq Innovation Solutions, LLC. All Rights Reserved.

Introduction

In back-to-back speeches just weeks apart, the former Vice Chair for Supervision Michael Barr and the current Vice Chair for Supervision Michelle Bowman offered sharply contrasting visions for how the Federal Reserve should regulate and supervise banks.

Although both emphasize the need for a responsive, adaptive regulatory framework, their perspectives diverge sharply on what went wrong in the past and what should happen next.

A Tale of Two Speeches: Comparing Barr and Bowman

Despite these differences, both leaders stress one important point: regulation must evolve, and neither rigidity nor neglect serves the public interest.

What This Means for Community Banks

For Community Banks (CBs), this changing narrative is more than philosophical. It has practical implications that tie directly to three areas of regulatory scrutiny that iKinetiq tracks closely:

1. Supervision Drift: A Rising Risk

Bowman’s speech directly confronts the supervision drift we’ve seen in our Enforcement Actions analysis where we found CBs are penalized for process failures even when capital and liquidity are sound. Her critique of ratings misalignment and excessive horizontal reviews supports what we’ve seen in Enforcement Actions: a supervisory framework that prioritizes documentation over meaningful analysis of real risks.

"Ratings must reflect risk... supervisory box-checking can be a distraction from the core purpose." — Gov. Bowman

2. Tailored Supervision for Community Banks

Bowman explicitly calls for a separate supervisory framework for CBs and criticizes the spillover of large-bank standards. Bowman’s call directly acknowledges what our CB clients have felt for years - - being held to large-bank standards without the resources those large banks have.

For CBs, a Bowman-led framework could result in less burdensome expectations, more room for risk-aligned innovation, and exam outcomes right-sized to real risks.

3. Evolving the Capital Narrative

Barr views capital reforms like Dodd-Frank as necessary firewalls. Bowman, however, questions whether capital rules are distorting behavior or unintentionally penalizing low-risk lending (e.g., Treasury intermediation).

For CBs already thinly staffed, unclear or over-calibrated capital expectations add to compliance fatigue. Our Enforcement Actions dataset shows how capital-related Corrective Actions often stem from legacy expectations poorly matched to CB risk profiles.

Bottom Line

This transition from Barr’s historically grounded caution to Bowman’s forward-looking pragmatism reflects a philosophical tug-of-war at the Fed. For Community Banks, the outcome could shape:

• How exams are scored
• Which risks are prioritized
• How capital and third-party expectations evolve, and,
• Whether innovation is enabled or suffocated

You don’t have to choose sides, but you do need to prepare. Whether Bowman’s approach brings meaningful change or not, the supervisory shift is already in motion. And for those CBs recently under the examiner microscope? The direct connection between these speech themes and Enforcement Actions findings couldn’t be clearer.

📊  Curious how your bank stacks up?

© 2025 iKinetiq Innovation Solutions, LLC. All Rights Reserved.

Introduction

The June 2025 Beige Book revealed a sharpening set of economic pressures: softening growth, rising input costs, cautious hiring, and tariff-driven volatility. For Community Banks, these signals are upstream forces that can expose real gaps in enterprise risk management.

How These Pressures Can Lead to Heightened Examiner Focus

The Beige Book’s signals align closely with the areas examiners are already scrutinizing. As these pressures grow, expect deeper inquiry not only into credit and liquidity, but also into:

• Whether third-party risk assumptions reflect vendor instability or cost pass-throughs
• How operational staffing and resource allocation are being adjusted for shifting volumes
• What steps compliance and audit teams are taking to localize monitoring and controls 
• Whether BSA/AML programs are recalibrating thresholds and alerts for behavioral shifts

How iKinetiq Helps Community Banks Respond

At iKinetiq, we built our TPOC Risk Framework to help banks translate broad economic signals into targeted exam readiness. We connect the Beige Book’s upstream pressures to four core areas that examiners probe:

• Third-Party Risk: Economic stress can trigger vendor delays, cost shifts, or service gaps demanding additional due diligence and contract oversight.
• Operational Risk: Flattened labor markets and slowing activity can stretch lean teams and degrade controls. Proactive staffing and continuity planning are key.
• Compliance Risk: Regional divergence increases the risk of misaligned assumptions. Monitoring and testing must stay current with real-time conditions.
• BSA/AML Risk: Transaction patterns are shifting. Institutions must adjust detection rules and alerts in real time to stay exam ready.

Final Takeaway: Economic Signals Are a Warning

When the economy shifts, risk failures are certain for banks that fail to adapt. The Beige Book is a call to act. Use it to demonstrate how your institution is proactively aligning risk management with evolving conditions.

Want to know where you stand? Let us show you how peer banks are tackling shifting risks.  👉 Schedule your free consult!

© 2025 iKinetiq Innovation Solutions, LLC. All Rights Reserved.

Economic Cooling & Localized Risk in San Francisco & Kansas City

Introduction

In our Beige Book blog series, we now turn to the western and central US, specifically the Federal Reserve Districts of San Francisco (Twelfth) and Kansas City (Tenth). These districts span a wide geographic and economic range, from high-tech urban centers to rural agricultural regions. While the macro headline is “slight slowdown,” the underlying signals point to diverging stressors – sluggish consumer demand in tech-heavy areas and growing uncertainty in commodity-dependent communities.

Regional Highlights

• San Francisco (Twelfth District): Economic activity slowed modestly. Retail and services demand softened, while labor markets remained stable. Wage growth moderated, and housing activity cooled further. Technology and professional services firms noted hesitancy in hiring and investment.
• Kansas City (Tenth District): Moderate decline in activity. Retail sales fell, manufacturing contracted slightly, and many businesses expressed uncertainty around future demand. Lending activity slowed, particularly among small businesses.

Key Implications for Community Banks

• Consumer Softness May Hit Early in Tech-Driven Regions – As professional services and tech hiring stalls, local consumer activity is pulling back. Banks in these regions should monitor early indicators of credit fatigue.
• Small Business Lending is Losing Momentum – In Kansas City and surrounding areas, demand for small business loans is slipping. Portfolio managers should reevaluate assumptions around origination pipelines and credit risk exposure.
• Real Estate Activity Remains Cooled – Slowing home sales and continued weakness in CRE activity could weigh on fee income and balance sheet plans.
• Divergent Risks Require Tailored Responses – Institutions serving urban innovation hubs vs. rural agricultural markets will face very different economic dynamics. Risk and compliance teams should adjust monitoring practices and thresholds accordingly.

📌 Next Up: Translating Beige Book Signals to Exam Readiness

In the final post of our series, we will connect these regional signals to areas where examiners may press hardest in the second half of 2025.

Stay with us as we bring this series home and help your team translate economic insight into practical exam readiness.

© 2025 iKinetiq Innovation Solutions, LLC. All Rights Reserved.