I have loosely organized the predictions I received into different themes. The most popular theme, you’ll be shocked to learn, was AI.
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Folks’ thoughts on AI are decidedly mixed.
Agentic AI and agentic commerce are popular areas of prognostication, with some anticipating significant progress:
- In 2026, AI will evolve from driving operational efficiency & growth on the supply side to reshaping demand itself. As AI agents go mainstream, they’ll act on behalf of consumers by scanning for better offers, optimizing balances across institutions, and directing transactions to the most advantageous products in real time.
- We will see progress on standards and governance in agentic commerce, (re)building the trust infrastructure for a platform shift in commerce.
And others seeing problems on the horizon:
- Agentic commerce will run into more legal issues and challenges.
- AI will blow up over a lack of governance. Some financial institution, if not more than one, will be moving too fast with AI.
On a broader level, there does seem to be agreement that AI, as a sector, is massively overvalued and will experience a correction this year:
- AI overvaluation will begin to normalize either via bubble burst or (hopefully) gradual value correction.
And that the big AI labs and their customers will need to start answering tougher questions regarding explainability and data lineage:
- AI explainability becomes table stakes. 2026 is the year “trust our AI” stops being an acceptable answer. Regulators are done with black boxes, especially in financial services. The interesting shift is that it’s not just about having the right model. It’s more about being able to explain it on demand to supervisors who are simultaneously deploying their own AI tools. The SEC is both an “AI user and an AI cop” now, and that dynamic is going to force real transparency.
- Data lineage finally matters. For years, firms have been vague about where their data actually comes from. That ends in 2026. Between the EU Data Act and the patchwork of US state privacy laws, companies can no longer hand-wave about data provenance (especially when they’re feeding it into AI models for surveillance, compliance, or customer-facing decisions). If you can’t map the full journey of your data, you’re exposed.
My two cents on AI in 2026 is that we will likely see a more violent correction regarding capital expenditures and debt financing for AI infrastructure, although that may not happen until the end of the year or 2027. I also think that existing legal regimes around “agency” and “explainability” will be more difficult to square with LLMs and the ways that consumers and companies use them than most people think.
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Stablecoins and crypto inspired a similar volume and ambivalence.
Everyone seems to agree that we will have more (too many?) stablecoins in 2026:
- There will be 500 different stablecoins issued by the end of 2026 …
But will that volume translate into meaningful adoption, particularly within the enterprise segments of different industries:
- Stablecoins (and tokenized MMFs) will be used for internal treasury management at tech-forward first adopters, seeding future enterprise adoption.
Or, will the blooming of 500 stablecoin flowers in 2026 fail to produce much in the way of enterprise or TradFi adoption:
- Stablecoins will be everywhere, but there won’t be any traction or real use cases outside cross-border payments.
- I may be a Debbie Downer, but banks will adopt stablecoins more slowly than fintech enthusiasts think. Remember, banks are risk-management entities. And beyond what they tell investors, why would they put much effort into something for which the regulations have not yet been written?
Some people had some entertainingly far-fetched (but plausible!) scenarios:
- Could this happen? A large retailer (take your pick) decides to issue their own stablecoin; paying with the retailer’s coin gets a price discount and/or they raise prices for shoppers “paying with fiat”; the retailer opts to pay their workers in their own coin, who predominantly spend it with the retailer; retailer accepts direct deposits from anybody, who increasingly spend more of their coin with the retailer; ultimately the retailer applies for and gets their own bank charter, offering loans, mortgages, all in their own coin with rewards, discounts, agentic automation, etc. that make it hard to get your money out. Repeat this across 2-3 other large retailers – will we have the financial services & currency ecosystem battles equivalent to Apple vs. PC, or iPhone vs. Android?
Others made what I consider to be fairly safe predictions:
- Some weird thing in crypto or fintech will blow up, creating a minor panic and putting an FDIC-insured bank out of business.
I’m on record as thinking that we will see something in the stablecoin/crypto space blow up this year, though I’m not sure it will put a bank out of business or cause a panic outside of the crypto community. Regarding stablecoin adoption, I think one of the areas where we will see traction the quickest (outside of the typical international dollar storage and cross-border money movement use cases) will be in banking-as-a-service. This will likely lead to problems, but those may be 2027 problems, rather than 2026 problems.
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Folks seem fairly convinced that we will see rate cuts this year:
- The Federal Reserve will reduce interest rates by 1.75% by the end of 2026. The recent small reductions by the Fed still leave the Fed Funds rate about 185 basis points above historical levels. Powell is likely to reduce rates by another 50 basis points before the end of his term, with his successor returning rates to the historical norm.
But there is disagreement as to how good a development this will be, for both financial institutions and for the economy overall. Some expect it to lead to lower borrowing costs, higher employment, and greater economic growth. Others see more negative consequences:
- I think we’ll likely see a recurrence of stagflation in the U.S. in 2026/2027. In the 1970s, the exogenous shock that caused stagflation was the oil crisis. In the coming year, the shock will be caused by tariff policy, job loss, and Federal Reserve manipulation.
- In 2026, falling interest rates will put pressure on depositories to decide how they show up for consumers: offer responsible debt consolidation solutions that earn trust and long-term relationships, or lose out on the market opportunity and risk leaving borrowers stuck in expensive revolving credit. This pressure comes as U.S. households carry more than $1.23 trillion in credit card debt, much of it priced above 20%. After three Fed cuts, rates are down about 175 bps since late 2024, creating a meaningful opportunity, but lower rates alone won’t deliver relief.
If these more negative scenarios play out, the expectation is that we will see a slowdown in investment and more mergers and acquisitions, in both banking and fintech:
- I believe we will experience a bear market in equities and eventually a recession in 2026. Within fintech, this will cause a slowdown in investment, resulting in the “big getting bigger” while the smaller firms struggle to survive.
- We will see a few more bank mergers. Big eating little.
- Expect more community & regional banking consolidation.
- Fintech M&A will continue to surge with fewer IPOs.
For myself, I got out of the economic predictions business last year, and I have no intention of going back!
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Being a lending nerd, I was thrilled to receive some fairly specific and creative predictions regarding lending and credit in 2026:
- In 2026, we’ll see an increased trend in SMBs seeking alternative financing options as larger banking institutions remain loyal to traditional lending products and maintain tight underwriting.
- Consumer finance will become more automated and less forgiving. As underwriting, servicing, and collections continue to scale through automation, marginal borrowers will experience faster decisions but harsher outcomes. The debt recovery trends we are seeing won’t reverse; they’ll normalize.
- There will be a new form of pricing for consumer credit based on their willingness to promote the lender (think Instagram/FB post saying, “Love my new car…and loan from NBKC”)
- Capital will be accessed continuously, not applied for.
I agree with all of these, although that last “streaming credit” concept may be more of a five-year prediction than a one-year prediction. I also think we will see more adoption of cash flow underwriting (boring prediction!) and more innovation in collateralized lending.
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The award for the funniest 2026 prediction goes to my friend Evan Weinberger, correspondent at Bloomberg Law:
LOL!
For what it’s worth, others agree with the sentiment that we will see more pain and confusion in the regulatory sphere in 2026, especially when companies don’t get their way:
- There will be litigation. Every industry thought they’d get their way in this administration, and when they don’t, they will sue.
There were also a few more specific predictions:
- More new banking charters, but a continued decline in the number of banks overall.
- De novos return in a noticeable way by the end of the year.
- Credit unions will be barred from acquiring banks.
I talked extensively about regulation in 2025 and 2026 with Jason Mikula in our first Fintech Recap podcast of 2026, so hop over there if you want to hear my thoughts!
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- The CFPB makes a new 1033 rule, gets instantly enjoined. They ultimately lose, say “we tried, it was the court,” knowing all along what they were doing had no basis in the law and was to appease special interests close to the White House. Banks start charging or shutting down APIs.
- Egged on by BPI and member banks, the CFPB kills pay-by-bank.
Things are going great in open banking! Why do you ask?!?
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Compliance for U.S. banks and fintech companies becoming more European is not a prediction I expected to receive, but I received it from two different people! Huh:
- 2026 is the year US regulators force banks & third party SaaS/fintech partners to reveal what’s actually in their software – supply chain attacks doubled in 2025, AI-generated code is everywhere creating new security holes, and it’s frankly kind of shocking that the FDA requires detailed ingredient lists for a bag of chips but your banking app handling your life savings is a complete mystery (unless you are in the EU – where shared SBOMs – aka software ingredient lists – are mandated).
- One big shift we are going to start to see in 2026 is that US fintechs are going to start to act more like European fintechs. European fintechs are often forced to operate at a higher standard simply because they have to. With multiple regulators, cross-border frameworks, and stricter expectations around data, identity, and ongoing risk monitoring, companies can’t treat compliance as a one-time checkbox. Instead, they’ve embraced continuous, dynamic approaches like perpetual KYC because it’s the only way to scale responsibly across markets. Meanwhile, the U.S. is falling behind. In the U.S., regulation has historically been more fragmented and slower to evolve, which has allowed many companies to grow without implementing the same level of rigor in ongoing monitoring. But that gap is closing quickly. Regulators are increasing expectations around fraud prevention, AML controls, and consumer protection. And as more U.S. fintechs look to expand internationally — or simply raise the bar on risk management — they’re recognizing that reactive approaches no longer work.
That sound you hear is JD Vance screaming, “Over my dead body!” somewhere in the distance.
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B2C Fintech & Financial Health
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Most VC investors may not care about B2C fintech or financial health, but I sure do. I was delighted to receive a bundle of optimistic and inspiring predictions regarding the B2C fintech and financial health in 2026.
Folks emphasized the importance of aligning around outcomes:
- We will start to see a greater shift toward financial products whose revenue models depend on customers actually becoming more secure and prosperous, linking business success to household success (rather than fees/churn).
- “Access” will stop being the right metric. Fintech has largely solved access. What it hasn’t solved is consumer comprehension or long-term outcomes. Companies that can demonstrate improved financial behavior, not just usage, will gain a regulatory and reputational advantage.
And removing friction:
- The next phase of fintech won’t be won by smarter advice or better interfaces; it’ll be won by execution. You talked through in your Friday post about how consumers need to feel hope that long-term goals are still attainable — very much agree. Hope only works if money systems make progress actually achievable. The companies that will rise above the rest will reduce friction so dramatically that doing the “right” thing becomes the default, not an act of discipline. That’s how we rebuild trust and momentum in personal finance, without lecturing people or selling false certainty.
And helping consumers earlier in their wealth-building journeys:
- 2026 is when investing stops being a privilege and starts becoming a default. Trump Accounts will change how a generation relates to money by normalizing investing from birth. As more employers and philanthropies add support, and technology removes friction, more Americans will start earlier, stay invested longer, and build real resilience through market cycles. The biggest fintech shift won’t be a new app — it’ll be a new starting line.
I love all of these and hope they come to fruition this year. I’ll add that as consumers lean more on AI agents to help them make decisions, companies that align their products and business models around positive long-term customer outcomes will be better-positioned to win because the AI agents will recommend them. Max Levchin and I talked about this on the Fintech Takes podcast.
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Let’s end with three fascinating predictions on how bank and fintech business strategies will change. I’ll offer some brief comments after each prediction:
- Banking re-bundles around industries, not products.
Banks would be very wise to do this, IMHO. This has proven to be a winning strategy for vertical SaaS operating systems for small businesses, which have become a big beachhead for embedded finance. Banks need to find a way to get into this game.
- Distribution will matter more than product innovation. The next winners won’t be the most technically elegant products, but the ones embedded into trusted human or habit-based channels. Attention and trust will outperform feature sets.
This prediction makes sense to me if you think about it as a reaction to the increasing amount of AI-generated slop we are seeing everywhere online. A natural reaction to that trend, by consumers, will be to seek out raw, rough-edged authenticity. The less polished it is, the better.
- Personalization shifts from marketing to balance sheets. 2026 is when banks realize growth isn’t campaigns. It’s reallocating attention and incentives toward the right households, deposits, and relationships. Same customers. Different math.
It has baffled me, for decades, that banks can be as bad as they are at holistically measuring and investing in customer loyalty. Delta knows who its most valuable customers are, and that knowledge (expressed through the SkyMiles program) is the gravity that defines its entire ecosystem. Outside of private banking, banks don’t do this, even though they have the necessary data and technology to do it at scale. I’d love to think that this is the year they finally head down this path.
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