In 2025, deregulatory signals are evident everywhere—softer oversight of third-party risk, easing regulations surrounding fintech partnerships, and a reconsideration of the Community Reinvestment Act (CRA). Legal experts at Skadden describe it as a more "bank and fintech-friendly environment," as political leadership pushes for less friction and fewer regulatory guardrails. But this trend isn't a reason to relax for the community banks we work with at iDENTIFY. It's a reason to double down on structure and visibility, especially regarding data.
As Kyle Thorton, iDENTIFY's compliance and risk expert team member, explains, "Just because the regulators are pulling back doesn't mean your risk team will—or should. You still have to protect your business."
The issue often isn’t intent—it’s infrastructure. Even well-run institutions can fall short if they lack centralized systems to monitor BSA/AML, CIP, or third-party fintech activity. Without a unified data layer, it becomes nearly impossible to catch issues early, demonstrate oversight, or respond confidently when examiners do come calling.
CRA Isn't Going Away—It's Just Harder to Prove
One area undergoing quiet transformation is the Community Reinvestment Act. The current administration appears to be stepping back from the broader modernization efforts, potentially relaxing expectations around how banks demonstrate their impact on low— and mid-income (LMI) communities, particularly through digital or fintech-driven services.
However, the CRA's performance remains a gatekeeper for M&A approvals, expansion plans, and fintech onboarding. And if your programs serve users beyond your branch footprint, you should be able to demonstrate how you're supporting the local communities that matter to regulators.
Unifying your data isn't only about operational efficiency—it's also about being able to draw a straight line between fintech activity and CRA impact. That's hard to do when your transaction records, core data, and partner systems live in disconnected environments.
Risk Doesn't Vanish—It Moves to the Bank
At FinovateSpring 2025, industry leaders emphasized the progress of fintech innovation. From AI in fraud detection to crypto-linked payments and digital onboarding, sponsor banks expect to monitor more activity with less guidance. But when regulators ease up, the expectation is that banks will self-govern, and that only works if your internal systems are ready.
Many banks are proactively building that readiness, well before regulators require it. They're unifying fragmented data across cores, fintech partners, and compliance tools to create a real-time, audit-ready foundation. The goal isn’t to overbuild—it’s to ensure visibility, consistency, and control.
Because when regulators pull back, self-governance becomes the standard, and that only works if your systems are ready for scrutiny.
Community Banks Aren't Built to Pivot on a Dime
Unlike megabanks that can absorb regulatory shifts by allocating legal teams and absorbing fines, community banks don't move on political whim. They take a long view.
Many of our clients operate on 9— to 12-month build cycles to support their fintech programs. Even if they wanted to adjust the course based on what Washington's doing today, they wouldn't see operational results until the regulations have likely changed again. That's why they're staying the course—and why we're helping them build for long-term resilience, not short-term advantage.
"Banks don't move fast enough to change their entire risk posture midstream," Kyle notes. "And honestly, that's a good thing. It keeps them from making short-sighted decisions based on political cycles instead of business health."
That discipline is part of what makes community banking a durable institution. These institutions aren't just protecting their compliance score—they're protecting their legacy.
Conservatism is a Competitive Advantage
A conservative approach to infrastructure doesn’t mean slowing innovation—it means building with structure and discipline. Most community banks aren’t trying to blow up their cores or chase the latest buzzword. They want modernization that works with existing systems—not against them.
That’s why many are unifying data across legacy cores like Fiserv and Jack Henry, alongside fintech processors and compliance tools, into a governed, real-time foundation. When the architecture is sound, compliance becomes a natural outcome—not a last-minute scramble.
"Being conservative in banking leads to success," Kyle says. "These banks have survived for 100 years by protecting their institutions. That doesn't change just because the rules do."
Whether regulations loosen further, tighten unexpectedly, or reverse altogether, the banks we support are ready. They're not building for the news cycle. They're building for the next decade.
Want to stay compliant without overcorrecting?
Let's discuss how your institution can unify its data and stay in control, no matter what happens next in Washington.
