US Banking Rules in 2026: What Basel III, Fintech & AI Governance Mean for Community Banks

The primary article, “What to Expect in Banking Regulation in 2026” by Mayer Brown, identifies several areas of regulatory change likely to come to the fore in the United States over 2026: implementation of the GENIUS Act, digital asset regulation, fintech bank charters, Basel III Endgame capital reforms, and oversight issues around OCC preemption [1]. Additional sources confirm these as central themes, while also identifying related regulatory shifts in community banking, supervisory practices, AI governance, and staff reductions.

Capital and Leverage Requirements
One of the major shifts expected is easing capital constraints for large and community banks. Reuters reports that in November 2025 the FDIC approved relaxed leverage rules, notably easing the enhanced supplementary leverage ratio (eSLR). For global banks this change could reduce capital requirements by about $13 billion (roughly 2%), while their insured depository institution subsidiaries might see capital needs drop by around $213 billion (approx. 27%) [2]. The CBLR proposal would lower the minimum from 9% to 8%, expanding the number of eligible community banks by about 475 institutions, with grace periods for compliance if ratios fall slightly below thresholds [3][5].

Basel III Endgame Rollout
Regulators anticipate publication of the finalized U.S. version of the Basel III Endgame rule package in early 2026. This includes a standardized credit risk framework, an output floor, a market-risk regime patterned after FRTB (Fundamental Review of the Trading Book), and revised operational risk formulae. The rollout is expected to span three years toward full compliance, softening some contentious elements in response to public comment[1]. The endgame rules are projected to increase common equity tier 1 (CET1) capital needs and risk-weighted assets under stricter standardization, especially for larger institutions [4].

Digital Assets & Fintech Charters
Regulatory developments in digital assets are foreseen to accelerate, driven in large part by the GENIUS Act, which is designed to establish a federal framework for digital asset regulation [4][1]. Fintech firms seeking bank charters are likely to face both opportunity and scrutiny as regulators emphasize system risk, custody, and consumer protection. Practice guides suggest that licensing regimes and prudential regulation will increasingly cover neobanks and fintech entrants.

Regulatory Oversight & Supervisory Restructuring
There’s a clear shift toward outcome-based supervision. In November 2025 the Federal Reserve announced that examiners will prioritize “material financial risks” rather than procedural compliance; non-material areas like reputational risk will receive less attention [4]. In tandem, the Fed plans to reduce its Washington-based supervisory staff by roughly 30%, trimming its internal structure and potentially impacting oversight capacity [2][4].

AI, Cybersecurity, and Third-Party Risk
EY’s outlook and KPMG’s reported forecast indicate that banking regulators will turn ever more sharply to AI-related governance, data security, operational resilience, fintech risk, and third-party service provider oversight [4][1]. This includes model risk, provenance of data, explainability, and vendor oversight. Financial crime risks (e.g., AML/BSA) and regulatory fairness (consumer protection, access, nondiscrimination) also remain important risk areas [1][3].

Strategic Implications for Banks & Financial Market Participants
Large banks need action plans for capital optimization, modeling, and systems readiness, especially with Basel III Endgame deployments. Community banks may benefit from compliance relief—but must monitor ratio thresholds and manage vigilance in oversight of third-party fintech relationships. Firms engaging in digital assets or fintech charters should align with regulatory clarity emerging under GENIUS and ensure operational rigor. Lastly, with reduced oversight bandwidth and shifted supervisory focus, banking organizations may see more discretion—but also greater responsibility for self-governance.

Open Questions

• How exactly will regulators define “material financial risk” versus reputational or procedural risk in supervision?
• Will the Basel III Endgame rules provoke capital-raising challenges or limit lending for large US banks during the transition period?
• How rapidly and strictly will the GENIUS Act be implemented, and how will it resolve tensions between states and federal preemption?
• Can bank oversight sustain adequacy and resilience in light of planned staff reductions and flatter organizational structures?