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.

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.

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.

Why Growth May Be Masking Risk in Atlanta, Richmond, and Dallas Districts

Introduction

In Part 4 of our Beige Book series, we move to the Southeast and South-Central U.S., focusing on the Federal Reserve Districts of Atlanta (Sixth), Richmond (Fifth), and Dallas (Eleventh). While these regions reported relatively steady activity, that stability may be deceptive. Underneath the surface, Community Banks are navigating slowing momentum in services, softening tourism, and pricing shifts that signal mounting stress. Examiners are likely to question whether banks in these markets are relying too heavily on previous year growth assumptions.

Regional Highlights

• Atlanta (Sixth District): Slight growth overall. Employment remained steady, but wage pressures eased. Retail and auto sales were flat. Travel and tourism declined modestly, and commercial construction slowed.
• Richmond (Fifth District): Modest growth with signs of softening in manufacturing and transportation. Some firms reported challenges in passing through price increases. Labor markets were stable but showed signs of cooling.
• Dallas (Eleventh District): Little change in economic activity. Nonfinancial services were steady but manufacturing decelerated. Business sentiment weakened, and many firms noted uncertainty tied to tariffs and input costs.

Key Implications for Community Banks

• Growth May Be Decelerating Under the Surface – While top-line numbers suggest stability, regional soft spots in tourism, logistics, and construction point to areas of emerging risk.
• Examiners Will Question Assumptions – Banks that continue to rely on prior year growth models may be seen as failing to adapt to current regional realities.
• Pricing Discipline Is Being Tested – Input cost volatility and customer pushback on rate increases are already pressuring margins. Fee income and relationship pricing strategies should be reevaluated.
• Loan Demand May Shift, Not Disappear – While total credit demand may hold, composition is changing. Look for shifts toward short-term working capital and away from fixed investment.

📌 Next Up: Western & Plains Outlook

We will take a look at San Francisco and Kansas City, districts where activity is slowing and localized risks are rising.

Stay with us as we help Community Banks navigate examiner expectations before they become enforcement actions.

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

Credit, Consumers, & Margin Pressures for Cleveland, Chicago, St. Louis, & Minneapolis

Introduction

In Part 3 of our Beige Book blog series, we shift focus to the Midwest, specifically the Federal Reserve Districts of Cleveland, Chicago, St. Louis, and Minneapolis. These regions reflect the pulse of America’s industrial and agricultural core, and this month’s Beige Book paints a picture of plateauing activity, cautious consumers, and growing cost concerns. For Community Banks, this isn’t just a macro story.  It’s a call to reevaluate assumptions around credit demand, deposit behavior, and interest rate sensitivity heading into Q3.

Regional Highlights

• Cleveland (Fourth District): Business activity remained flat. Retailers reported declining discretionary spending, while manufacturers cited softer orders. Labor markets stabilized, and most firms held wages steady.
• Chicago (Seventh District): Slight economic growth overall, but cracks are emerging. Manufacturing ticked down. While consumer spending and employment edged up, uncertainty and cautious inventory management were prominent.
• St. Louis (Eighth District): Overall activity was flat. While some firms hired modestly, the outlook deteriorated slightly. Wage growth was modest, and pricing pressures continued.
• Minneapolis (Ninth District): Slight contraction reported. Consumer spending declined, and construction activity eased. Labor markets were steady, but businesses were hesitant to expand.

Key Implications for Community Banks

• Consumer Behavior Is Shifting – Declines in discretionary spending and early signs of caution in retail and services may foreshadow weakening demand for certain loan categories.
• Margin Pressures Are Local, Not Just National – With input costs rising and wage growth stabilizing, CBs may need to revisit pricing models especially in competitive deposit environments.
• Deposit Strategies Need Reevaluation – With consumer and business confidence cooling, expect changes in deposit behavior. Liquidity planning should be appropriately stress-tested under slower inflow assumptions.
• Business Loan Demand May Soften – Manufacturers and service providers are pulling back, and capital expenditure plans are being delayed. Credit risk teams should monitor for signs of contraction across local portfolios.

📌 Next Up: Southeast & South-Central Shifts

In our next post, we will dive into the Atlanta, Richmond, and Dallas regions—where growth is slowing but regional resilience may be masking underlying pressure points.

Stay with us as we continue distilling regional signals into practical risk insight for Community Banks.

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

Introduction

In Part 2 of our Beige Book breakdown, we turn to the Northeast and Mid-Atlantic: the districts covered by the Federal Reserve Banks of Boston, New York, and Philadelphia. Each of these regions reported modest declines in economic activity driven by softening demand, tariff-related cost increases, and mounting business uncertainty. For Community Banks, these trends may not show up immediately on balance sheets, but they will influence how examiners assess risk posture and responsiveness.

Regional Highlights

• Boston (First District): Slight decline in overall activity. Retail and restaurant spending weakened. Employers largely paused hiring due to economic uncertainty, and wage growth slowed. Residential real estate softened, while commercial markets were stable.
• New York (Second District): Modest contraction. Businesses reported continued input cost pressures and widespread uncertainty tied to tariffs. Capital spending was pulled back. Employment flattened, and the business outlook was the most pessimistic in over a year.
• Philadelphia (Third District): Modest overall decline. Manufacturing and retail activity slipped. Employment decreased slightly despite some sector gains. New home sales dipped, and businesses reported hesitation to make long-term commitments.

Key Implications for Community Banks

• Credit Risk May Be Lagging, Not Absent – While asset quality indicators may still look stable, examiners will expect management to show heightened monitoring in sectors facing contraction (retail, manufacturing, and discretionary services).
• Strategic Planning Assumptions May Need Revision – With business sentiment deteriorating and hiring plans pausing, banks may need to revisit forecasts for loan growth, deposit trends, and local borrower behavior.
• Tariff Sensitivity Is a Risk Marker – Input cost pressures are rising, especially in New York and Boston. Banks should assess which clients may be vulnerable to tariff-induced margin compression and how that could impact credit exposure.
• Examiners Will Look for Local Awareness – Institutions in these regions should be ready to demonstrate how they’re integrating local economic data into their risk assessments and business planning cycles.

📌 Next Up: Midwest Reality Check

In our next post, we review Cleveland, Chicago, St. Louis, and Minneapolis, regions where economic activity has flattened and margin pressures are tightening.

Stay with us as we continue helping Community Banks anticipate examiners' expectations.

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