At A Glance
Commercial banking is undergoing structural change — marked by consolidation, digital acceleration, and rapid AI investment. For risk leaders, the mandate is clear: protect portfolio stability while modernizing the risk framework for a technology-driven future.How Structural Shifts in Scale, Technology, and Customer Behavior Are Redefining Risk Leadership
This week’s Experian Commercial Pulse report includes great insights on the banking industry, a sector that is not simply evolving, it’s structurally transforming. The implications of banking transformation extend well beyond portfolio performance. Consolidation, digital acceleration, and aggressive investment in artificial intelligence are reshaping the competitive landscape and redefining risk management itself.
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While commercial credit performance remains relatively stable, the operating model of banking is changing quickly. The institutions that thrive in this environment will be those that modernize risk frameworks in parallel with ongoing structural change. This week’s Pulse identified four major trends CRO’s and risk teams should be watching closely.
1. Consolidation in the Banking Industry: Fewer Banks, Fewer Branches
The number of FDIC-insured banks has declined to less than half of what it was in 2000. Decades of mergers and acquisitions, including several of the largest transactions occurring in just the past five years, have materially reshaped the competitive environment.
At the same time, the physical footprint of banking has contracted. Total branch counts have fallen significantly from their 2008 peak, and branch availability continues to decline across many regions. For risk leaders, consolidation creates both opportunity and exposure. On one hand, scale can improve capital efficiency, risk diversification, and investment capacity in advanced analytics. Larger institutions may also benefit from deeper data pools and stronger enterprise risk infrastructures.
On the other hand, concentration risk becomes more pronounced, geographically, sectorally, and operationally. As institutions grow through acquisition, integration risk, model harmonization challenges, and cultural alignment issues must be carefully managed.
For CROs, consolidation is not just an industry headline, it is a structural variable influencing counterparty exposure, competitive pressure, and systemic interdependencies.
2. The Acceleration of Online Banking
As physical branches decline, digital engagement has accelerated dramatically. In 2019, just over half of U.S. consumers used online banking. By 2025, that number rose to roughly 71%, and projections suggest it could approach 80% by 2029. Younger demographics in particular show a strong preference for online-only banking relationships, while older customers continue to rely more heavily on traditional channels.
For small businesses, digital onboarding, online treasury management, mobile payments, and remote lending processes are no longer differentiators — they are expectations.
For CROs, increased digital penetration changes the risk equation in several ways:
- Fraud vectors expand as digital interactions multiply.
- Identity verification and authentication controls become mission-critical.
- Real-time monitoring replaces periodic review.
- Data velocity increases, requiring scalable analytics infrastructure.
Operational resilience also becomes more important. As customer engagement concentrates in digital channels, system uptime, cybersecurity, and third-party risk management move to the forefront of enterprise risk oversight. Digital adoption is not merely a distribution channel shift. It is a transformation in how risk manifests and must be measured.
3. Technology Trends: AI, Automation, and Real-Time Risk Intelligence
Technology modernization has become central to competitive strategy across commercial banking.
Artificial intelligence, machine learning, real-time fraud detection, and automated underwriting are moving from pilot programs into core production environments. Generative AI adoption in particular has accelerated rapidly, with nearly half of commercial banks now operating some form of GenAI solution in production.
For a CRO, the opportunity is substantial. Advanced analytics can:
- Enhance early warning systems for credit deterioration.
- Improve fraud detection accuracy while reducing false positives.
- Refine borrower segmentation and pricing precision.
- Optimize collections prioritization and recovery strategies.
- Strengthen stress testing and scenario modeling capabilities.
However, innovation introduces new forms of model risk.
AI-driven decisioning must be explainable, auditable, and compliant with regulatory expectations. Governance frameworks must evolve to ensure transparency, fairness, and mitigating bias. Data lineage and model validation processes must remain rigorous even as deployment speeds increase. The challenge for risk leaders is achieving balance, leveraging technological advantage without compromising control discipline.
4. Investment in AI: Strategic Imperative, Not Experimentation
AI investment in commercial banking is accelerating at a notable pace. Industry forecasts indicate that AI spending in the Americas banking sector could exceed $54 billion by 2028 — nearly tripling from 2024 levels.
This level of capital allocation signals a fundamental shift: AI is no longer viewed as an incremental enhancement. It is considered foundational infrastructure.
Executives report that AI initiatives are focused on:
- Cybersecurity enhancement
- Fraud detection and prevention
- Operational efficiency
- Customer engagement personalization
- Credit risk modeling improvement
For CROs, this scale of investment demands disciplined oversight.
Key considerations include:
- Are AI initiatives aligned with defined risk appetite statements?
- Is governance keeping pace with deployment velocity?
- Are internal teams sufficiently trained to interpret AI outputs?
- Is the institution prepared for heightened regulatory scrutiny around automated decisioning?
The strategic sweet spot lies in controlled acceleration — modernizing the risk stack while reinforcing control frameworks.
Final Perspective for CROs
Commercial credit performance today remains relatively stable. Yet the true story in banking is not short-term performance, it is long-term transformation. We are operating in an environment defined by structural consolidation, digital-first customer behavior, rapid AI adoption, expanding data ecosystems, and increasing regulatory complexity.
For Chief Risk Officers, the mandate is clear: safeguard portfolio quality while modernizing risk infrastructure. The institutions best positioned for sustainable growth will not simply extend capital efficiently, they will integrate advanced analytics, strengthen governance, and proactively manage emerging digital risks.
Transformation is underway. The question is not whether it will continue. The question is whether risk organizations will lead it — or react to it.
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The U.S. small business landscape is undergoing a structural transformation — and commercial lenders may need to rethink what a “small business borrower” looks like. According to Experian’s May 26th, 2026 Commercial Pulse Report, new business formations remain at historically elevated levels, averaging approximately 450,000 per month since the pandemic. That pace represents a 54% increase compared to pre-pandemic averages from 2018 and 2019. Watch the Commercial Pulse Update According to Experian’s latest Commercial Pulse Report, new business formations remain at historically elevated levels, averaging approximately 450,000 per month since the pandemic. That pace represents a 54% increase compared to pre-pandemic averages from 2018 and 2019. But perhaps more importantly, the composition of those businesses has changed dramatically. In early 2026, approximately 93% of newly formed businesses were sole proprietorships, up from 85% in 2018. Many of these businesses have no employees, limited operating history, and different borrowing behaviors than the traditional small businesses lenders historically underwrote. That shift is creating a fundamentally different commercial credit environment. A Different Kind of Small Business Owner Historically, many small business lending models were designed around businesses with employees, established operations, recurring revenue streams, and longer credit histories. Today’s wave of new businesses often looks very different. Many newer firms are being launched by individuals pursuing consulting work, freelance opportunities, side businesses, creator-economy income streams, or post-retirement self-employment. These businesses may operate leaner, carry lower fixed costs, and rely more heavily on revolving credit products rather than traditional financing structures. In many cases, the business owner and the business itself are financially intertwined. That evolution matters because underwriting a sole proprietor is not the same as underwriting a mature operating company. The rise in sole proprietorships is being driven by several long-term labor force and demographic trends now reshaping the U.S. economy. Demographic Shifts Are Driving Entrepreneurship One of the most important forces behind the surge in sole proprietorships is the aging U.S. population. By 2050, individuals aged 55 and older are projected to represent nearly 40% of the total U.S. population. At the same time, Americans are increasingly working later in life. Labor force participation among older workers has steadily increased over the past two decades, while participation among younger workers has trended lower. Retirement itself is also evolving. Many retirees are no longer fully exiting the workforce. Instead, they are remaining economically active through part-time consulting, contract work, side businesses, and self-employment arrangements. According to research highlighted in Experian’s report, 59% of workers expect to continue working during retirement, while 61% of recent retirees express interest in continued employment. These trends are contributing to a growing segment of “microbusinesses” — businesses with few or no employees operating primarily around the skills, experience, or services of an individual owner. At the same time, broader workplace dynamics are also influencing entrepreneurial activity. Employee Engagement Is Falling According to Gallup, employee engagement in the U.S. and Canada declined to 31% in 2025, down from post-pandemic highs. Gallup estimates that low engagement costs the global economy nearly $10 trillion in lost productivity. Younger workers in particular appear increasingly affected by workplace stress, burnout, and changing expectations around flexibility and career mobility. As a result, more individuals may be pursuing alternative work arrangements, independent income streams, or self-employment opportunities. The side-hustle economy continues to expand as well. A recent PYMNTS study found that nearly 20% of workers engaged in regular side work during the previous six months. Collectively, these labor force dynamics are reshaping not only how Americans work, but also how small businesses are formed, financed, and evaluated from a credit perspective. Commercial Credit Usage Looks Different Experian data shows meaningful differences in how smaller and larger businesses use commercial credit. Smaller businesses and sole proprietors rely more heavily on commercial credit cards, while larger firms tend to utilize a broader mix of leases, lines of credit, and term loans. Businesses with four or fewer employees received average commercial card credit lines of roughly $8,900 in 2025. By comparison, businesses with more than 100 employees averaged approximately $29,500 in new commercial card credit lines. Even when loan origination rates appear similar across business sizes, loan amounts differ substantially. Businesses with fewer than four employees averaged approximately $119,000 in term loan originations, while larger businesses averaged closer to $268,000. Risk performance differs as well. Larger firms generally continue to demonstrate lower delinquency rates and stronger commercial credit scores, reflecting greater operational scale, more established financial histories, and broader access to capital. Why Risk Models May Need to Evolve For lenders, these shifts present both opportunity and complexity. The surge in new business formation creates potential growth opportunities across commercial credit markets. However, many of today’s borrowers may not fit historical underwriting assumptions. Traditional business risk models often relied heavily on factors associated with mature operating businesses — payroll size, years in business, trade depth, and established commercial borrowing history. Today’s newer firms may instead require a more blended view of risk that incorporates both commercial and consumer-level behaviors, cash flow dynamics, and alternative indicators of financial stability. As sole proprietors and microbusinesses continue to account for a growing share of the small business economy, lenders may need to remain agile in balancing portfolio growth with disciplined underwriting and risk management strategies. The definition of “small business” is evolving — and commercial risk models may need to evolve alongside it. Learn more ✔ Visit our Commercial Insights Hub for in-depth reports and expert analysis. ✔ Subscribe to our YouTube channel for regular updates on small business trends. ✔ Connect with your Experian account team to explore how data-driven insights can help your business grow. Download the Commercial Pulse Report Visit Commercial Insights Hub Related Posts
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