The Retention Revolution: My Predictions and Hopes for 2026 | Pulsate CEO Sarah Martin

2026 Banking Industry Trends

Every year around this time, I hear from various trade publications asking for my thoughts on the year ahead, what trends I expect to see, what I’m “wishing” for the industry, etcetera, etcetera. This year, I thought: why not just share my thoughts here, to save everyone the wait? So, here you go: two predictions and a wish for community financial institutions for 2026.

Prediction #1: AI gets us closer to a future where we finally use data to meet consumers’ needs. 

Obviously, I think that AI will continue to be a hot topic as FIs become comfortable with the technology and find ways to take advantage of it. We’re already seeing it in a lot of solutions, and that will only accelerate as we see it making a difference in terms of consumers being better served. For me, and for Pulsate, the real breakthrough is finally being able to act on the data FIs already have, turning signals into timely, relevant moments that actually help people when they need it.

Prediction #2: Neobank spending will keep driving up the cost of acquisition.

Another trend I think will continue is the aggressive efforts by neobanks to gain – or I’d say buy – market share. I read recently that the average digital-only bank allocates more than 17% of their expense budget to marketing spend! Meanwhile, the average bank or credit union’s marketing budget is under 4% of total expenses, so it’s tough for them to compete. And there’s no sign of that easing; in fact, the spending gap is widening, and community FIs are the ones being priced out of the acquisition battlefield.

For community banks and credit unions, all that money pouring into the market makes acquiring new business more and more expensive. We already see acquisition costs running as high as $600 per relationship; I see that going even higher, unfortunately. Which brings me to my wish. 

My wish: Retention becomes Job One.

If acquisition keeps getting more expensive, and it will, the only move left is doubling down on the account holders you already have. Not as a defensive play, but as the most profitable growth strategy there is.

In light of my two predictions, my wish is that traditional FIs will realize, even more than they already do, that trying to outspend or out-offer the venture-backed neobanks and giant mega-banks to gain new customers/members is a losing proposition. Instead, this can be the year that they reallocate their marketing budgets to where I think they’ll find the best possible ROI: retaining and developing the consumer relationships they already have.

We’re operating in a zero-sum market. Most “growth” is really just churn moving from one institution to another. So why exhaust your team chasing expensive new relationships when keeping and deepening the ones you already earned delivers far better ROI? That’s still winning, only with a smarter cost base.

You’re spending around $600 per new account holder, but somewhere around 25% of those you acquire are likely to churn in the first year, and yet another 15% go dormant. And here’s the kicker: improving retention by just 5% can lift profitability by 25–95%. Few initiatives in a financial institution move the bottom line that dramatically, that quickly. So why do less than 20% of FIs focus more on retention than on acquisition?

So, that’s my wish: that community FIs in 2026 will focus on doing whatever it takes to keep the relationships they have, and make them stronger and more profitable by understanding what they need and providing solutions. This will require that they engage in conversations with them, which today mostly means listening to what their data says (back to that AI prediction), and communicating about solutions through the channels they are most likely to use, see, and respond to. 

And overwhelmingly, that channel is mobile, the only place your account holders reliably show up, day after day. 

2026 is the year community FIs can turn retention into their competitive edge, and I’m excited to help make it happen.

Let’s talk! Book a quick call to see how Pulsate can help your FI reach its 2026 goals.