By Michael L. Stevens, President & CEO
Last month, the American Banker published its list of “25 People Who Will Change Banking in 2025” (subscription required). I have pondered what this list of individuals means for community banks. The article provides an analysis of everyone, but what is the big-picture takeaways community bank leaders should focus on?
With a couple of notable exceptions, I am not going to name individuals to keep the focus on the bigger picture and not on personalities. The American Banker’s list includes:
- Six current and prospective regulators
- Eight large bank executives
- One mutual holding company CEO
- Four technology-related executives
- One democratic senator
- One bank lawyer referred to as the “credit union-bank merger pioneer”
- A well-known trade attorney
- President-elect Donald Trump
- President Xi Jingping of China
- Taylor Swift
The Lens: Drivers of Change
As I read through the article, I couldn’t help but think about the Drivers of Change created by GSBC’s Board of Trustees in 2023. To support curriculum and student project decisions, the board collaborated to identify five long-term trends that are known to be impacting community banking. Not surprisingly, the drivers have much to say about American Banker’s list.
Driver: Regulatory Demand
There has been a persistent drive by regulators to increase the demand on the industry in recent years. This requires banks to secure additional expertise and increase costs. In the fourth quarter Community Bank Sentiment Index published by the Conference of State Bank Supervisors, community bankers’ sentiments on regulation surged 80 points, indicating increased optimism about the burden facing the industry. This is unprecedented for the index and a very clear reaction to the results of the presidential election. In comparison, last quarter, this element of the index had an 80% negative response rate.
The president-elect has been very clear in his goal to reduce regulatory burden. While this was an objective in his first term, there seems to be a greater focus from Trump and those around him. The regulators listed by the American Banker are representative of the change in agency leadership that is sure to come. Given the statutory composition of the FDIC Board, this is more complicated than simply appointing a new chair. The new administration will either need to find a new position for the two Republicans currently on the Board or encourage them to step down. New leadership at the CFPB has been a priority for the industry. While moderating the regulatory and enforcement approach of the current director is widely sought, the “whiplash” every four years creates its own burdens for the industry.
Once everyone is in place, there are significant opportunities to improve the regulatory and supervisory environment. Historically, the caution would be that changes in public policy take time. There is little doubt the new administration desires to break these norms.
The democratic senator on the list is a reminder that there will be headwinds in implementing change. It is also a reminder that the FDIC Board of Directors will likely have two Democrats on the board. This is a product of federal law, and the Democrats aren’t likely to approve an FDIC chair without the seats being filled. Historically, this has led to consensus-driven policy from the FDIC Board. More recently, divergent views and dissension have been the order of the day. Even more importantly, the clock will be running. January 1, 2027, will bring a new Congress. While it will not change agency leadership, it may impact the legislative agenda and the tone over Congress’s other role, oversight.
What does this mean for community bank leaders? The bottom line for community banks is to have clearly articulated examples of the negative effects of regulation and supervisory approaches. The industry needs to offer specific proposals. Lawmakers and regulators need specific items to act on. They need more than “reduce regulatory burden.”
Driver: Evolution of Technology
The technology executives listed are a reminder that there is no slowing down the impact technology will have on financial services. Technology is a complicated issue. It provides convenient solutions for customers and efficiency to the organization.
While technological solutions are varied and accessible, they come at a cost that adds up as more solutions are added to the stack. Technology has also changed the face of competition as some technology firms offer services directly to consumers. The project work of our students affirms community banks are identifying creative solutions to meet customer expectations and further enabling the relationship business model foundational to community banking.
What does this mean for community bank leaders? If you were wondering how Taylor Swift fits in the list of 25, this is the place. In 2024, Swift made a comment about the use of AI to spread misinformation. This is a real issue and scary if your image or voice has been used without your permission. The cyber threats and opportunities for fraud can be overwhelming. These are new types of risks bankers have to learn how to manage. Let’s be honest: Taylor Swift on the list had to be a tactic to boost readership.
Driver: Economic Factors
Community bankers have managed through changes in inflation and interest rates after a decade of a benign environment. The balance sheet composition and financial performance for most community banks are significantly impacted by local economic conditions. However, no bank is immune to macroeconomic factors, most notably monetary policy and international trade.
What does this mean for community bank leaders? The president-elect has been very vocal about charting a different course with trade, international relations, and Federal Reserve leadership. No matter how anyone may feel about this, a new course will cause change that community bank leaders will need to manage through.
Driver: Sustained Resiliency
As our board discerned the Drivers of Change, they centered on the value of resiliency. For generations, community banks have uniquely demonstrated an ability to adapt as the needs of their markets change.
The eight executives of large banks on the list represent a variety of notable issues and serve as a testament to their resiliency, influence, and market impact. Large banks have access and a lot of influence over public policy. In terms of the regulatory environment previously mentioned, they will have no problem getting attention to their issues.
However, the list is a reminder that large banks indeed have regulatory challenges that take significant time and money to address. Finally, several of the largest banks are experiencing or planning for a significant change in leadership. Given the impact they have on the financial system including stability as well as their political influence, the leadership succession of the largest banks is worth monitoring.
What does this mean for community bank leaders? More than any other Driver of Change, resiliency for community banks has existed the longest. Obviously, this can vary by organization which is at the heart of a capitalistic system. Skilled leadership always matters and creates opportunity. Embrace this resiliency as you join “the 25” in leading this great industry and your community.
The views and opinions expressed in this editorial are those of the author and do not necessarily reflect the official policy or position of the Graduate School of Banking at Colorado.