CUs Are Moving Faster On AI Than Banks—Here’s What Could Trip Them Up – CU Today

SCOTTSDALE, Ariz.— Credit unions may be winning the early race on generative AI, but Cornerstone Advisors’ newest What’s Going On in Banking 2026 report suggests that for many institutions, the bigger story heading into 2026 may be what happens after the pilot phase—when artificial intelligence collides with weak data foundations, rising fraud losses, and a still-intense fight for member growth.
That tension runs throughout the 76-page study, which surveyed 416 senior executives at banks and credit unions, with 54% of respondents from credit unions and nearly 9 in 10 institutions in the $250 million to $50 billion asset range.
More than 7 in 10 respondents were C-suite executives, including 30% CEOs, making the findings especially notable for leaders trying to balance strategy with execution. Cornerstone said the sample reflects institutions that are more aggressive about technology, growth and competition than the broader market—meaning these are not late adopters being measured, but many of the industry’s forward-thinkers.
For credit unions, the standout finding is they are not just talking about generative AI—they are ahead of banks in actually deploying it. Cornerstone found 59% of credit unions said they have already invested in or deployed generative AI, versus 49% of banks. Credit unions also outpaced banks in conversational AI/chatbots (46% to 26%), machine learning (41% to 29%) and even the still-hyped, still-early world of agentic AI, where 17% of credit unions said they have already invested or deployed compared with just 7% of banks.
But the report also makes clear that adoption alone is not the story. Among credit unions, the most common areas for current or planned generative AI use are the contact center (74%), fraud management (62%), lending (57%), marketing (56%), back-office operations (51%) and IT (47%). In other words, institutions are moving AI into places that touch member experience, risk, and efficiency—not just experimenting with internal chatbots.
One survey respondent from Marine Credit Union put it bluntly: “2026 is the year to operationalize generative AI. If you sleep on this, you’re behind.”
Yet the same report warns that institutions may be getting ahead of themselves if their underlying data quality is poor.
That may be the most important caution for credit union executives. Cornerstone found the share of credit unions rating their data strategy “very effective” more than doubled year-over-year, from 11% to 24%, while those rating their data governance “very effective” more than tripled, from 10% to 31%.
On paper, that looks like major progress. But author Ron Shevlin pushed back on the industry’s self-assessment, writing that he is “not buying” those scores and arguing that many institutions remain far less mature than they think.
Fraud Ts The Balance Sheet Threat
He cites separate Cornerstone work showing community financial institutions averaged just 241 out of 500 in data execution quality—barely halfway to where they need to be—with sales and marketing the weakest area. His warning is especially relevant for CUs racing to deploy AI in member-facing functions: “There is no AI strategy without an effective data strategy.”
If AI is the shiny object, fraud is the balance sheet threat. Cornerstone found half of credit unions said fraud-related losses increased in 2025 compared with 2024, including 17% who said losses increased significantly and 35% who said they increased slightly. Looking ahead, 72% of credit unions expect fraud-related losses to rise again in 2026, with 10% expecting a significant increase and 62% anticipating a slight increase.
Nearly three-quarters said their fraud prevention and dispute resolution budgets will be higher this year.
The report’s fraud analysis frames first-party fraud as a major strategic problem, not merely a credit loss hiding in plain sight. Cornerstone said roughly 7% of digital applications involve some form of first-party fraud, and that first-party fraud now accounts for more than 40% of total fraud losses at many institutions, especially in credit and BNPL products. That matters for credit unions because it blurs the line between underwriting and fraud management.
The study also notes that credit unions appear to be responding more aggressively than banks in at least one area: while banks repeatedly fell short of their plans to replace fraud/BSA/AML systems, credit unions actually exceeded their own prior-year expectations, with 15% selecting a new or replacement fraud system heading into 2025 versus 10% that had planned to do so.
Another number likely to resonate with credit union leaders: 69% of credit union executives listed new member growth as one of their top concerns for 2026, up from 62% a year earlier. That was the highest-ranked concern among CUs, ahead of efficiency/non-interest expenses/costs (57%), consumer-related fraud (52% in 2025 and 51% in 2024 trend data), non-interest income (48%) and cybersecurity (48%).
Deposit gathering, while still a concern, actually fell to 45%, and concern over cost of funds and the interest-rate environment dropped materially. That suggests a strategic pivot: many credit unions are moving from rate anxiety toward a deeper concern about relevance, relationship growth and whether they can win new households in a market increasingly crowded by fintechs, challenger banks and digital-first competitors.
Crypto And Tokenization Now Entering Boardroom
That competitive pressure shows up elsewhere in the study. The share of respondents who view big fintechs such as PayPal and Square as a “significant threat” rose to 80% from 64% a year earlier, while challenger banks like Chime jumped to 70% from 49%. Even crypto providers, newly added to the survey, were cited by 29% as a significant threat.
Cornerstone’s release highlighted that crypto and tokenization are now entering the boardroom, and the report bears that out: among banks, 71% said stablecoins have been discussed at the board or executive-team level, while the report notes that for credit unions, all three categories—stablecoins, tokenized deposits and blockchain—are also beginning to reach executive teams and boards, even if actual deployment remains limited. In short, institutions may not be ready to launch on-chain products, but the competitive implications are no longer theoretical.
And yet, for all the disruption, the industry remains optimistic. More than 8 in 10 executives said they are either very or somewhat optimistic about the banking industry’s prospects in 2026, including 80% combined on the optimistic side and just 1% “very pessimistic.” Credit unions were slightly less upbeat than banks—7% of CU respondents were “very optimistic” versus 12% of banks, and 17% were “somewhat pessimistic” compared with 11% of banks—but the broader tone remains positive.
That optimism, however, looks increasingly conditional. As the release noted, technology spending is expected to rise at more than 80% of banks and credit unions, but many institutions continue to miss planned system deployments, exposing a gap between strategy and execution.
©2014 CUtoday. All Rights Reserved | Unauthorized Accesses are Prohibited
©2014 CUtoday. All Rights Reserved | Unauthorized Accesses are Prohibited

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