How to Filter Out the Hype for Your 2026 Bank Tech Planning
By Alex Jimenez, Lead Principal Consultant, Backbase
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Recent discussions I’ve had with bankers reveal a common struggle to understand what tech they should be prioritizing in the nest few years.
There is a never-ending list of new capabilities available. However, not all trends deliver equal value nor deserve equal consideration.
• Some are already reshaping operations, customer experience and risk management.
• Others remain largely speculative.
Understanding which technologies are real and which are hype helps institutions focus resources effectively. This article walks through key trends, highlighting my own subjective “Real vs. Hype score,” examples of adoption, and implications for banks.
Need to Know:
- The most impactful technology banking trends in 2026 will be those delivering measurable operational value: cybersecurity, cloud-native cores, real-time payments, data modernization, AI-assisted operations, and API-first banking.
- Aside from cybersecurity, the prioritization of these technologies depends on a financial institution’s existing capabilities, readiness and overall strategy.
- Speculative areas such as stablecoins, retail central bank digital currencies, and decentralized finance (DeFi) remain experimental.
- Banks that prioritize proven trends will improve efficiency, agility, and competitive advantage. Chasing hype carries significant risk of wasted investment.
Cybersecurity (Real 100% / Hype 0%)
Cybersecurity issues underpin every aspect of modern banking. With digital channels, cloud platforms and open APIs, financial institutions are exposed to increasingly sophisticated attacks, including ransomware, phishing and systemic fraud. Strong cybersecurity frameworks protect customer data, ensure regulatory compliance, and maintain operational continuity.
Example: While multi-factor authentication, AI-driven fraud detection, and continuous monitoring are widely deployed across financial institutions, cybersecurity extends well beyond these capabilities. Just this month, Marquis, which provides marketing and compliance data services to hundreds of U.S. financial institutions, alerted dozens of banks and credit unions that they had customer data stolen in a cyberattack.
Implication: Effective cybersecurity protects reputation, ensures compliance, and supports operational resilience.
It is non-negotiable for any modernization effort.
Cloud Migration & Core Modernization (Real 95% / Hype 5%)
Legacy core systems constrain banks’ ability to innovate, integrate with partners, and scale efficiently. Cloud-native or hybrid-core architectures provide flexibility, reduce maintenance burdens, and accelerate product delivery. By decoupling core functions from hardware limitations, banks gain resilience and the agility to respond quickly to market changes.
Example: JP Morgan Chase’s strategy around its core modernization is a great example of progressive modernization. Chase have decoupled core-adjacent services that core vendors have built into legacy cores, to discourage moving core systems, to the cloud. In the meantime, they have been moving their retail core to a cloud-based vendor.
Implication: Cloud-native cores accelerate product development, simplify integration with fintech partners, and reduce infrastructure costs. They also enable API-first architectures by providing the scalable infrastructure needed for modern integration patterns.
Hype exists only in assumptions of instant transformation.
Real-Time Payments (Real 90% / Hype 10%)
Real-time payment infrastructure allows immediate settlement of transactions, eliminating delays inherent in batch processing. This capability is critical for consumer expectations, B2B cash flow, and operational efficiency. It also supports modern business needs, such as instant payroll, vendor disbursement, and high-frequency transfers. While The Clearing House Real-Time Payments network and FedNow have been available for some time, actual customer solutions leveraging these rails have only recently emerged. The hype was much higher in past years, but significant change has occurred lately.
Example: U.S. Bank offers instant payables and receivables for corporate treasury clients that ride both RTP and FedNow but are packaged as use case solutions, with APIs and portal workflows rather than just “rail access.” Use case solutions include just-in-time supplier payments, wage and gig worker payouts, insurance disbursements, and on-demand refunds.)
Implication: Real-time payments provide operational efficiency and customer satisfaction.
Hype comes from overstating transformative impact beyond these gains.
Read more: Three Must-Dos: Faster Payments, Stablecoins and Agentic Commerce
Data & Analytics Modernization (Real 85% / Hype 15%)
Modern banks rely on consolidated data platforms and advanced analytics to make timely, informed decisions. Predictive modeling, fraud detection and customer insights depend on high-quality, integrated data. Analytics also enables proactive risk management, operational efficiency and personalized customer experiences.
Example: A 2025 KPMG banking technology survey found that about three quarters of financial institutions globally have moved beyond foundational data work into developing “data products” that package curated, reusable data sets and analytics for specific business domains. This is the pattern of shifting from monolithic warehouses to domain-oriented, “productized” data assets that business teams can consume directly via APIs and self-service tools, and that U.S. banks can mirror as they modernize.
Implication: Data modernization drives better decisions and efficiency.
Hype lies in claims of fully automated, flawless decision-making.
AI / Machine Learning (Real 80% / Hype 20%)
AI and machine learning are increasingly embedded in banking workflows to analyze large datasets, detect anomalies, and provide actionable insights. Beyond traditional models, banks are exploring use of large language models (LLMs) to automate document processing, generate customer-facing communications, summarize regulatory content, and provide decision support.
While LLMs are powerful tools, their adoption is still emerging. Banks must carefully manage accuracy, bias and regulatory compliance.
Example: JPMorgan Chase is a leading real-world example of large-scale LLM use in banking, via its internal “LLM Suite” platform used by tens of thousands of employees for coding, content creation, and knowledge queries. Developers use LLM tools to generate and refactor code, write tests, and assist with mainframe modernization of the cards platform. Double-digit productivity gains have been reported.
Beyond engineering, staff use LLM Suite to draft documents and summarize internal materials, and leadership has outlined a roadmap where AI “agents” increasingly support complex, multistep employee and client tasks, positioning JPMorgan Chase taking concrete steps toward agentic AI at scale.
Implication: AI, including LLMs, boosts operational efficiency, supports decision-making, and enhances customer engagement.
Hype exaggerates LLMs’ ability to fully replace human judgment or operate autonomously in high-stakes banking functions.
Read more:
- Warning: AI Fatigue is Fueling a CX Backlash in Banking
- What Banks Can Learn from BofA’s Multi-Billion Dollar AI Bet
- Is AI Learning the Job Faster Than Banks Can Redefine It?
Digital Identity & Biometrics (Real 75% / Hype 25%
Digital identity solutions are central to secure, frictionless banking. Biometrics, adaptive authentication, and device fingerprinting allow seamless yet secure access while minimizing fraud. These systems also support regulatory compliance, particularly for high-risk or cross-border transactions.
Example: Financial institutions using advanced digital identity solutions report 87% agreement that fraud prevention efforts, including biometric verification, deliver net cost savings through reduced manual reviews and lower fraud losses. Alloy’s 2025 State of Fraud Report notes that only one-third of U.S. FIs detect most fraud at onboarding, but those with robust digital ID catch it earlier, minimizing later-stage remediation costs.
Implication: Identity verification strengthens security and customer experience.
Hype arises from claims that it can eliminate all fraud or compliance risk.
Embedded Finance (Real 70% / Hype 30%)
Embedded finance integrates banking services directly into digital platforms, enabling payments, lending, or deposit accounts without requiring users to leave their app or workflow. This approach opens new distribution channels, reaches underserved customers, and reduces friction in accessing financial services.
Example: U.S. Bank expanded its embedded payments suite in June 2025, enabling fintechs like Basefund and Rain to integrate secure, real-time payments (including for benefit of accounts and instant payments) directly into their platforms for multi-party transactions and earned-wage access. This generated new revenue for the bank through partnerships across industries like municipalities, corporations and gig employers, while leveraging its compliance expertise to scale without building everything in-house.
Implication: Embedded finance expands reach and convenience.
Implementation complexity tempers hype. However, this opportunity is primarily available to institutions with the infrastructure, compliance expertise, and scale to serve as effective embedded finance partners.
Read more: Brett King: Bankers Have Five Years to Rebuild for Agentic AI, Or Perish
API-First Banking (Real 65% / Hype 35%)
API-first banking emphasizes designing banking services as modular, programmatic endpoints that can be consumed by internal systems or third-party applications. This approach enables faster product development, easier integration with fintechs and partners, and smoother digital experiences for customers.
By exposing core functions via APIs, banks can innovate without overhauling legacy systems, scale services efficiently, and support embedded finance initiatives.
Example: Citi’s API-first strategy via its Developer Hub provides standardized APIs for real-time payments, foreign exchange rates, and transaction history, used by corporate clients and fintechs for treasury automation. The bank reports 40% faster partner onboarding and new revenue from premium API services, positioning it as a leader in enterprise API ecosystems without full core replacement.
Implication: API-first architecture increases flexibility, accelerates innovation, and improves integration with partners.
Hype arises when API-first banking is portrayed as a cure-all for legacy system limitations, rather than a step toward more modular, connected banking operations.
Read more: The Innovation Gap Forcing Banks into Fintech M&A
Stablecoins & Tokenized Money (Real 25% / Hype 75%)
Stablecoins and tokenized money rails promise instant settlement and programmable transactions. However, most banks remain in pilot or exploratory phases. Regulatory uncertainty and limited mainstream adoption keep practical applications rare.
Example: Banks like JPMorgan (exploring joint issuance with BofA/Citi/Wells) prepare to defend deposits against Circle/Tether while testing tokenized cash for B2B efficiency, but widespread domestic impact awaits regulatory scale and proven ROI over existing rails.
Implication: Beyond cross-border settlements, stablecoin applications for U.S. banks remain limited and largely experimental in 2025, with domestic retail/P2P use cases overshadowed by faster rails like RTP/FedNow.
Banks should watch the space but not commit resources unless they have a firm case for use.
Retail CBDCs (Real 15% / Hype 85%)
Retail central bank digital currencies are being piloted in several countries, but broad adoption is distant. Banks are largely observing regulatory frameworks and technical feasibility before considering integration.
Example: Some central banks run pilot programs for retail CBDCs; broad adoption is not yet viable.
Implication: CBDCs are largely aspirational for mainstream banks in 2026.
DeFi / Web3 / NFTs (Real 5% / Hype 95%)
Decentralized finance, Web3 platforms, and NFTs are mostly experimental and niche. They have not been integrated into mainstream banking operations and remain largely disconnected from regulatory and operational realities.
Example: Major banks have not integrated DeFi or NFTs into core operations.
Implications: These technologies are mostly hype and unlikely to impact mainstream banking significantly in 2026.
Read next, from Alex Jimenez: Bank Digital Marketing Is Obsessed with Leads. That’s Only Half the Goal
