What’s Driving Community Bank Strategy This Year?

Community banks are facing familiar challenges—but the risks are evolving fast. According to the 2025 ProSight Community Bank Survey, which drew responses from 115 institutions across the country, top concerns include fraud, tariffs, cyber threats, and an aging customer base. Still, many respondents emphasized the enduring value of community banking’s personal touch. 

Fraud is still public enemy number one. Even though 73% of respondents feel equipped to fight it, just as many plan to boost their fraud budgets next year. The threat mix is changing fast—combining legacy scams like check and romance fraud with generative AI tactics. As one banker put it: “Banks need to work together better on this.” Another warned that fraudsters often “work their way through the industry with the same exploit”—and too many banks realize it too late. 

Cyber risk is rising—and so is spending. Nearly two-thirds (65%) expect cyber threats to worsen in the coming year. More than half (54%) are increasing their cybersecurity investment, and 8% see cybersecurity as a critical differentiator over the next five years. AI is beginning to show up here too—on both sides of the equation. 

Tariff confusion may be the bigger risk. Tariffs ranked third on the risk list, but it’s the uncertainty that concerns many bankers most—how shifting trade policies and tariff schedules might ripple through supply chains, surprise borrowers, and dent loan demand. One respondent recalled a borrower bankrupted by unexpected tariff obligations. 

Insurance pressures are creeping into credit. More than a quarter of banks reported a rise in borrower insurance lapses. As high deductibles become more common—especially in storm-prone areas like Texas—some lenders are updating underwriting criteria and watching collateral values more closely. 

CRE exposure and deposit battles remain top of mind. Office CRE isn’t setting off alarms, but banks are tightening policies, stress testing, and limiting exposure. Owner-occupied CRE remains a bright spot. Deposit competition, meanwhile, is here to stay—regardless of where rates go next. 

Agility remains a community bank superpower. Whether it’s responding to scams, weather events, or surprise acquisition opportunities, community banks stay quick on their feet—and close to the people they serve. As one banker put it: “We are constantly looking at metrics to be ahead of the curve.”