Blog

Mythos, Banking, and the End of Slow Patching

Cheryl.brown@q2.com (Cheryl Brown) — Thu, 30 Apr 2026 10:00:00 GMT

Claude Mythos has pushed AI cyber risk from an abstract future problem into a live banking issue. In this episode, Adam Blue talks with Beth Anne Bygum and Ryan Hollister about what changes when AI can discover vulnerabilities at machine speed and how to think clearly about security, governance, and resilience without sliding into panic.

Watch

Transcript

Adam Blue

Hey everyone, welcome to Cut to Context. I'm Adam Blue. We are here today with Beth Anne Bygum, chief information security officer of Q2, and Ryan Hollister, one of our very, very senior architects on the engineering side, to talk about Anthropic Mythos.

So, 2026 and 2025 have been interesting years in terms of the progression of AI technology. It feels like every month we get a new announcement that the world will change at a faster pace and in an even more dramatic way. Some people likened Dario Amadei's announcements about Anthropic and Mythos and vulnerabilities and attack and defense to an arsonist selling fire extinguishers. As much as I enjoyed that metaphor, and I enjoyed it deeply, it felt maybe a little too off to one side.

As we move into a world where AI technology now appears, according to Anthropic’s claims, of being capable of uncovering zero-day vulnerabilities and exploiting them via complex multichain attacks as a matter of course, what does it mean for attack and defense in our industry? Beth Anne, you are right on top of this topic, so let's start with you. What's changed since April 7th?

Beth Anne Bygum

Hey, Adam, thanks again for having me here. And it's the acceleration, right? The ability to accelerate and activate what traditionally were lower categories or lower classification of vulnerabilities and the identification of vulnerabilities that previous to this technology being available may or may not have been as transparent and the ability to identify that. So concepts such as the scale and ability to string vulnerabilities together and leverage those vulnerabilities for a campaign at scale is definitely what's different, and most security teams are responding to ensure readiness.

Adam Blue

OK, great. Ryan, your thoughts?

Ryan Hollister

Yeah, it's interesting from like an industry perspective, you know, taking just a step out of Q2 and just thinking about how us as an industry have shipped code and how we've maintained code and how we've justified, you know, kind of putting code off to the side and thinking about, like, there are many systems out there running deep in the bowels of government and probably industry and companies out there that are still running Windows XP and all those kind of old operating systems or old versions of Linux that may have not yet been upgraded to modern kernels or modern versions.

And so I think it pulls all of that risk forward, kind of as Beth Anne was saying, that we could kind of get by and justify reasons to not do that work. And now it's just kind of bringing that to the forefront again and saying, yeah, maybe those code bases that we've kind of got by with are no longer justifiable to get by with. I think that's the existential question that I think we as software engineers and operators really got to wrestle with these days. The reasons that we could come up with before are often these days less and less valid reasons.

Adam Blue

Yeah, yeah, that's an interesting perspective. I love in the first two paragraphs of the Anthropic report, which I reskimmed this morning in preparation for the podcast, they use both the terms “stack smashing” and “JIT heap spray.” And as a reasonably technical and fairly nerdy person, I actually know what both of those things are with some familiarity. But there's a little bit of a feel when you read that document that it is built for people who don't know what those words mean, for which those are mythical things. I think there's a certain tone in calling the newest model of your tool Mythos, literally, that I think may turn out even to be a little undercutting in terms of maybe there's some overpromise here realistically.

But at the end of the day, one of the things we have to deal with in our business, and this is what I want to talk about next, is there are always assertions of new threat factors, new zero-day vulnerabilities, new cybercrime rings. There's always a new threat every single day. It's like “Men in Black” where he's like, “Hey the earth's under threat every day we deal with this stuff.”

And so in banking, in particular, where the prize for successfully executing an attack is so valuable, what does it mean to really try and endure the constant onslaught of new challenges, and does anything really change about what I'll call cybersecurity basics of what we're doing? Or is this simply a call to action to get stronger and better along the lines of the things we're already executing? So is it real change in the world, or is it simply an acceleration of what we're actually dealing with today? Beth Anne, why don’t you start?

Beth Anne Bygum

Yeah, thanks Adam. I mean, the basics are super important, right? To your point, I mean, is this a change? The change is scale, which means you have to get better at the basics, right? It's about the precision. And then from a pivot, I think the opportunity is to begin to leverage our security tools, specifically our defense in depth capabilities, in ways that we haven't necessarily needed to use in the past.

I'll give an example is applying some of those capabilities to newly identified thematic patterns that before this time weren't necessarily seen. So the basics are super important. You stick with hygiene. You're doubling back down. But then you're applying your capabilities in something that's net new in preparation to scale, identify, and respond.

Adam Blue

Yeah, I think that's great. I saw a report, and this came out on the 13th, so it's pretty fresh, from the AI Security Institute, which is, I think, a pretty well regarded set of researchers in the U.K. In their view, and you can Google to find the report, obviously, in their view, Mythos is better, but it's not a step change better than the existing tool. And their conclusion, which I thought was interesting, was for weakly defended organizations that are subscale in their security, this is very, very bad news. But for organizations that have concepts like defense in depth and active defense, which is, I think, an interesting concept that people are really starting to lean in on, there's a very different kind of threat profile that's created by this new set of technology.

And so it brings us to this seeming paradox, right? And so on the one hand, we have a set of folks that are building new tools that are capable of doing things that are theoretically, societally harmful. And on the other hand, those same people are telling us to buy as many of the tokens to use those tools as we possibly can and just not use them for evil.

So as a thoughtful person in particular, Ryan, what's your view on that paradox? How do you think about rationalizing that for a junior developer or a non-technologist?

Ryan Hollister

Yeah, I think, you know, Beth Anne's right. The basics are always where we start with really understanding what, you know, say even just going back to basics, the OWASP Top 10 is and like really living and observing a cross-site scripting vulnerability, click jacking vulnerability, or SQL injection vulnerability and hands-on operating it and then you know because if you don't have that firsthand context it's really hard to then reason about how to apply tools to navigate those contexts. So they just come up. If you've done this long enough, you've gone through all the generations of static code analysis tools that are out there.

And so to me, this is a fairly substantial evolution of that journey, but not like a step change of like, this is a completely new thing that we need to go learn and get educated about because it all kind of comes back to the same underlying vulnerabilities. It's just like how actionable are they? And I think you're right that for the organizations that have people like Beth Anne and I and others, we have huge teams that are subject matter experts in this. We come in every day. I think it's easy for us to fold this in and add this as another tool to our tool builds.

But I think the government recognizes that those are probably the exception and not the norm and the amount of computers and software and things on the internet out there in the world these days, like at the end of the day, we all as a society probably have a risk that even if it's not our stuff, like Q2 stuff, like we still have this like codependency throughout the system of, and I think you saw it some last year or the year before where Microsoft was taking some proactive updates. There's just pushing patches on Exchange servers and Windows boxes because we just can't wait for people to prioritize patching and stuff like that.

So I think that's the struggle with the industry right now. It's like it's easy to say, “Well that's everybody's responsibility, the company should just do what they're supposed to do,” but we're probably more codependent on each other than we might realize.

Adam Blue

Yeah, I think that's a good point, you know, the nature of the technology stack in which you build the top 10% of the software in the value model, right, is that you get to live with whatever mistakes were made below you. And so it's probably not going to be code that was written at an organization or even code in a library that an organization uses. It's much more likely to be operating system level code or driver level code, some of which maybe hasn't really been examined or looked at in a long time.

And so I think that, you know, the next thing to think about then is from an operational perspective, right? When a new vulnerability ships and a patch is made available—and I think the team at Anthropic is really trying to think through what does it mean to first use the information that they gained via the Mythos model to try and reduce the total amount of risk before it's released in a way that it increases the total amount of risk. And I think that's admirable.

But it means we're going to get a slew of patches. I mean, I don't think there's any other way to look at it. And so what does that velocity look like and what can organizations do and what is Q2 doing to really try and maximize the velocity at which we can absorb that set of security changes? Beth Anne, maybe take us through that.

Beth Anne Bygum

Yeah, I mean, I think there's two sides to that question. One is the defense side, which we are partnering with our strategic vendors to prepare and be able to interpret the weaknesses, those vulnerabilities as we are pending patches from the vendors, right? Being able to monitor that, interpret those weaknesses, apply higher level of intelligence against that. And that's a constant, right? And I'm, you know, constantly knocking on wood here because it's about practice and it's about pivoting the application of that intelligence real time. We're living in a state where it's a persistent application, persistent monitoring of that.

The other side of that conversation, which you rightly, you know, give us context around, is the speed with which we'll see Tuesday patch releases come out with more fierceness. An I think the recent change of our organization, Cloud First, being able to have faster life cycle management strategies, faster being able to rotate those strategies, is part of the future. And I think as we watch Anthropic and all of the leaders in this space deliver self-healing capabilities and organizations evolve their tech debt … I mean, we talked about that, right? You evolve the tech debt, I think, over time, holistically, most companies are going to evolve past that, but we're in this window where it's going to take some time, practice, and everyone just is operating eyes wide open at this point, for sure.

Adam Blue

Yeah, great. When you talk about patching, one of the things that I've always believed is if you don't have 15-year-old versions of operating systems, you are going to have to deal with a lot less patching. If you don't make choices that result in you having 17 different fundamental images under your docking containers, you're not going have to do nearly as much patching. And so some of this is, as technologists, when these kinds of things happen, these kinds of singular events, we invite this on ourselves by not chewing down some of the tech debt. Because if there's vulnerabilities and they're new, the fewer number of total operating systems and total versions you have to go deal with, the easier it's going to be to react. So if you've got something that runs on Python 3.6 running on some ancient version of SUSE Linux, it's like, man, that's a problem that you created for yourself to some extent.

I think this idea of getting to automation on the defense side and AI on the defense side is really interesting. And then it draws into question, before we let a model like Mythos automatically apply patches or make changes to operating environments, what are the things we need to think about in terms of how that works from a practical perspective? So Ryan, I know you're deeply involved in both the design and the execution of the SDLC at Q2. What are the kinds of things you worry about when you think about, wake up in the morning and I've got seven PRs from Mythos that tells me that I need to rebuild these containers or remove these secrets from a container, whatever it is. How do you think about keeping that from creating more chaos than the original problems themselves?

Ryan Hollister

Yeah, I mean, it's a real problem. It's a real problem for non-security, is that if the code velocity is increasing at a pace, but the overall software development life cycle pipeline is going to be unable to consume it all the way down to the value chain, then how are we going to get through it? I think Mythos will provide us, and the current models provide to a large degree this already, but I think Mythos being more focused and tuned to say will give us more insight.

But the idea that we are going to have vulnerabilities that show up and have proposed remediations, I think we're operationalizing this already today with a tool that we call AutoSecure that is running kind of on a nightly autonomous basis that is out there harvesting all the potential known CVEs, because in the In the modern technology stack, it's layers all the way down of open source packages. And in any given day you could show up in like your foundational library or five layers down from your foundational library could have a CDE that's found in it. But it's an acceleration because otherwise it would take a human to kind of navigate what is the appropriate remediation for this. Am I even exposed to it given the use cases that I have? Has historically been kind of a human curation of, well, sorry, that vulnerability applies to React server-side components, not using React server-side components.

So yes, it's a vulnerability, but probably lower risk because I don't use it. I think these models are going to really help us navigate some of the noise. Although the volume may come up, I think they're going to afford us the ability to navigate them quicker. And so it's probably not any less work, but I'm hoping that it comes out to actually be equal work and just more effective work.

Adam Blue

Yeah, OK, great. I think that's a great perspective. So Beth Anne, one of the things that you do so well for us is you've got a set of communications that goes outward and upward to customers and our board, who I know you spend a lot of time communicating with. And then you've got communications inside Q2 that go to employees and managers and leaders. So talk to me a little bit about post-Mythos, like what changes about what you're communicating both kind of up the organizational chart and then down the organizational chart and what are the messages you think that security and development leaders should be modeling?

Beth Anne Bygum

Yeah, thanks for the question. I want to pull the thread on what Ryan just said. It's all about rich context, rich interpretation, and then being able to communicate more meaningful insights. The minute we're able to interpret what the weakness or vulnerability means, you know, and again, as I mentioned earlier, it's real time and persistent analyzing that so that when we do release the message, it is clear, it's actionable, and we have teams that are able to respond and also running side by side with the teams to help them as they're walking through.

You know, I think the interesting thing about this conversation is that in reality, what Mythos is helping us do is get ready for what's in front of us, which is the next generation of what quantum computing, but you can't carry some of this tech debt into that next chapter. And so to Ryan's point, it's going to be slightly a little bit of an adjustment right now. We'll get through that together. And then to more specifically your point, Adam, is the communication is continuing to lean in role-specific, action-oriented, context-rich so that we are able to get in, address, and get out as quickly as possible.

Adam Blue

I think you brought up the Q word, I really don't want to get into today's podcast. But it is very likely that this is not going to be the last time that an improvement in an AI model or an improvement in technology kind of knocks out one of the legs of the stool in what we think about as foundational security and foundational, even to some extent, governance about how we manage technology.

I think one of the takeaways, and I think it really, you really highlight in your point about communication, but one of the takeaways is being good at the basic things and having rigor and discipline around them will always make you stronger, regardless of what the changes are. So if you are good at applying patches, if the velocity of patching goes up, you'll be good at doing that. If you understand your SDLC deeply and you have people that care about security, and they're thoughtful and you minimize your attack surface by being thoughtful about your tech debt, you will be in a better position.

There is no unbreakable. I remember Oracle put it on a side of trucks and drove it around at conferences for a while and I just thought, you're whistling through the graveyard right now. And OpenBSD, which was thought to be nearly unbreakable as an operating system, it was the one you used when you really needed guarantees. It's got a 17-year-old remote, exploitable, zero-day buffer overflow, if I remember the CD correctly. I think just working forward from a belief that nothing is unbreakable, nothing is really fully grounded, nothing is uncompromisable is a much better way to go forward. And think that's what effective organizations are probably going to do.

So the other lesson here to think through a little bit is we've had this kind of shock. People are absorbing it. We're thinking about what it means for banking. Maybe we can draw a little bit of conclusion, although it's very early. What does this tell us about AI in banking generally? What does it tell us about the application of AI or what's going to happen? Ryan, how do you take the lessons we've learned about this new model and everybody's excitement about it or terror about it and apply that broadly to AI and financial services?

Ryan Hollister

Yeah, I mean, I think just more and more the technology is the service and, you know, it is at the very, very least the primary vehicle for the services that our financial institutions deliver to their end customers. And, you know, the deeper that they understand it, the closer we can partner with them and not just have this, you know, vendor tell me and give me the software that you're shipping. And it's a tighter partnership and we can be equal partners and equally educate each other on what we're seeing out there, the better off we are. And those are the best partnerships that we have. And so the technology is a mutual responsibility and so as we communicate to our customers what our perspective is of what this means to our software and what we think it means to their systems, it's great to have partners like our customers who can kind of give us their perspective and what they're seeing and how that applies to their systems and software.

Because as Beth Anne said, the AI accelerates the ability to kind of traverse otherwise low-risk things and we're all in this together. And so it's not just like is our software secure and buttoned up, but is our software secure and buttoned up in the context of the systems that it's integrating with that the financial institution is bringing to the table because those are, it's the totality of the system, not just our software in isolation.

And so we really need customers that are willing to kind of come in and roll up their sleeves with us and partner through it so that we can really get a good context of what it means in the entirety of the system.

Adam Blue

Yeah, yeah, I think that's a really interesting insight. Now if I think about when I've seen or read about organizations or been first party to security issues or breaches or whatever, it's been very rare in my experience that someone has a security event as a result of a brand new zero day that came out 36 hours previously. It's usually some system that a bunch of people knew that they were issues with and they had a reason why they didn't fix it, there's a communication failure, there's a lack of orchestration, there's a lack sometimes of leadership. And so the real impact, right, comes from not managing the business, not managing the tech debt, not managing the attack surface, the portfolio in an effective way. Not somebody waking up at three o'clock in the morning and inventing a new exploit just against your organization.

I'm not saying that doesn't happen, but typically the kinds of things that are getting exploited are already so fixable in an environment that it's orchestration, communication, and organization that I think end up undermining security posture and security practice, much more so than some fascinating new technique that somebody throws out. So just kind of a takeaway there for everybody to think about. Doing your basics, being disciplined, applying governance, working as a team, leaning on partners, and being kind of in stoic, in some sense, about how you approach these things can be really valuable.

Ryan Hollister

Yeah, I think we've said AI amplifies everything, right? And so if the process is broken, then it's going to amplify the brokenness of that process. And if you don't have the right processes in place, it's only going to amplify that. But if you're in a good position and you have the right processes, it's really going to amplify the good practices as well as that.

Adam Blue

Mm-hmm. Alright Beth Anne, anything you'd add to give everybody a little hope?

Beth Anne Bygum

Yeah, you know what? As human beings, it's about leaning in, right? When the folks that win what they win because they get up every day, they get up and they show up and they keep at it. And so I think good. Good is about not letting the house get too dirty. Like you get in there, you stand, you get in and you clean it up and you just keep cleaning. And so the basics are where we will continue to lean in. The technology is going to do what the technology is designed to do. And so the opportunity now is to be prepared to win with this technology and run side by side with it. So thanks so much, Adam, for allowing me to be here with you.

Adam Blue

You bet. All right. Thanks, Beth Anne. Thanks, Ryan, for spending some time today on Cut to Context. So last, before we depart, I always have a recommendation of a piece of media or art for everyone to enjoy. There's a Christopher Nolan film called “The Prestige.” It stars Christian Bale and Hugh Jackman. And it is a phenomenal film about two men who destroy each other and everybody else around them by trying to be the best at a very specific thing. I don't think I've ever seen as amazing a film about magicians who despise each other in my entire life.

And somehow, I can't quite put my finger on it, but there's an extraordinary parallel between this film and what's going on in the AI space today. So if you've got some time, watch “The Prestige.” You will need to take notes because it is a classic Christopher Nolan twisty plot, but just a fantastic, fantastic piece of film to help you think about today's context a little bit differently.

So thanks everybody. Adam Blue. Thanks for joining us on Cut the Context. Have a great day.

Governance Drifts Before Performance Does

Nicholas Koutouras — Thu, 30 Apr 2026 09:00:01 GMT

In any financial institution that’s working toward more streamlined, more meaningful, and more strategic processes and metrics, once an operating rhythm is in place, there’s a temptation to believe the hardest work is behind you. Reporting is integrated, pricing is tighter, portfolio review is more consistent. From a distance, the system looks sound. What becomes clear over time is that structure doesn’t preserve itself.

Standards loosen incrementally. A concession gets justified because a client relationship is strategic, or a review gets expedited because timing is sensitive. Some team with a strong track record gets latitude others might not receive. Each decision makes sense on its own, and collectively they shift expectations without anyone noticing until the expectations have already moved.

Comfortable quarters are the dangerous ones

Governance is most vulnerable during the stable stretches: capital ample, liquidity steady, margin acceptable, relationships expanding. Performance looks reliable, forecasts hold, and exceptions seem manageable.

In my past role at a large bank, I recall a period when results were strong and dispersion was narrowing. Pressure mounted to accelerate growth in a segment we’d previously constrained under capital focus. The argument was logical. Conditions had improved, we’d earned flexibility, and the discussion carried momentum. What held us back was institutional memory. We’d seen how quickly things drifted during the last favorable stretch, and the decision was to keep the same documentation and review intensity in place even though it slowed momentum slightly.

The flip side is what happens when enforcement gets uneven, which it inevitably does if you’re not deliberate about preventing it. High performers get discretion others don’t, legacy relationships are treated with more latitude, documentation quality drifts, and nobody announces any of it. In my own experience, one well-defended exception without a clear economic expectation attached to it created ambiguity about what would be required going forward. The economics weren’t flawed; the standard had just shifted enough to make the next conversation harder, and it took months to clean up.

What I learned to watch for

Before returns deteriorate meaningfully, the signals are there if you know where to look. Exception rates cluster unevenly, forecast accuracy requires more explanation, capital intensity rises in pockets, and dispersion widens across teams. I learned to watch the shape of performance rather than the average. A portfolio can report acceptable overall return while containing widening gaps beneath the surface, and those gaps tend to cluster where review intensity softened or documentation thinned.

Here’s one that stuck with me. In a favorable stretch, overall exception volume stayed inside policy thresholds. There was nothing alarming on paper. What caught my attention was the timing. A disproportionate number of approvals landed in the final weeks of the quarter, tied to projected deposit growth not yet materialized. The following quarter, some of those projections didn’t hold, and while the income statement was fine, the pattern needed recalibration.

I’m not sure we would have caught it if we hadn’t been tracking timing and concentration rather than just volume. This is the kind of thing that falls through the cracks when governance loosens. By the time it shows up in headline results, your options have narrowed considerably.

Adapted from “Beyond Pricing: Disciplined Performance. Real Impact” by Nicholas Koutouras.

Commercial Loan and Deposit Pricing Market Update: April 2026

Anna-Fay Lohn — Wed, 29 Apr 2026 10:00:01 GMT

Our April analysis of the Q2 PrecisionLender commercial loan pricing looks at March 2026 activity and the strong finish to the first quarter. Pricing volume reached its highest level in the past nine months, with strength evident in both the Community and Regional+ segments.

March also brought a sharp steepening in the PrecisionLender all-in marginal funding curve. That move pushed fixed-rate funding costs higher, brought fixed coupons back into parity with SOFR structures, and changed the backdrop for fixed-rate pricing as the quarter came to a close.

Read on for more details.

Data Notes

• When we discuss the cost of funds (COF) on loan pricing activity, we refer to the marginal duration matched funding cost employed in pricing, not the bank’s actual average (historical) cost of funds.

• We define Regional+ as institutions with $8B+ in assets, while Community are <$8B.

March volume confirms a fast start to 2026

March pricing activity posted at its highest level in the past nine months, completing a fast start to 2026 in the first quarter. That increase was not isolated to one corner of the market as activity was strong across the Community and Regional+ segments.

Priced Commercial Loan Volume
Indexed to July 2025=100

The funding curve steepens sharply and inversion disappears

The PrecisionLender all-in marginal funding curve steepened significantly between the Feb. 28 and March 31 snapshots, with all rates beyond 3 months moving higher. The largest increases were in the 24- to 84-month range, which drives the marginal funding costs for fixed-rate structures. The 60-month rate in particular rose 46 points (3.52% to 3.98%).

PrecisionLender All-In Marginal Funding Curve

That steepening eliminated almost all remaining inversion in the curve. The 1- to 60-month carry, which had been inverted at the end of February, moved back to a positive slope of 26 bps by March 31. This is the highest slope since we began tracking in early 2023.

Curve Carry Between Common Tenors

All-in funding costs move higher on fixed-rate structures

As the funding curve steepened, fixed-rate funding costs rose by 14 bps (4.06% to 4.20%) in March. The gap between the COF increase in relation to the larger jump in the funding curve rates suggests that bankers are still working to keep pace with a funding environment that shifted rather quickly.

Meanwhile, SOFR funding costs moved slightly higher in March (from 4.29% to 4.32%) but continued to be stable in in Q1 2026.

All-In COF by Month
Rolling Trend

Spreads show small signs of resilience

Against that backdrop, SOFR spreads improved modestly (from 2.15% to 2.18%), marking the first month-over-month uptick in four months, while Prime spreads also moved higher (+6 bps to 0.14%) and back toward the upper end of their recent range.

Weighted Average Spread to SOFR

The fixed-rate coupon over COF dropped modestly in March (from 1.65% to 1.62%) as bankers largely held onto the revenue side even as their funding math became more difficult. The steeper curve did create headwinds for fixed-rate structures, but it did not lead to a break in spread discipline. Still, it’s worth noting that the spread here is down 11 bps since the end of 2025.

Fixed-Rate Coupon Over COF

Fixed and SOFR coupons converge

Since late 2025, fixed and SOFR coupons have moved into near parity, and that convergence persisted through March (5.83% SOFR coupon vs 5.82% fixed). These two structures would not typically be expected to remain in such close alignment for this long, given stable liquidity costs and a positive carry on funding curve. We will continue to monitor this in the coming months.

Coupon Rate by Month
Rolling Trend

With the upward shift in the funding curve, fixed-rate coupons would ordinarily be expected to move higher if bankers want to preserve relative performance. That occurred in March, and we'll continue to monitor this to see if fixed coupons separate more clearly from SOFR in the months ahead. 

NIM holds steady

Net interest margin was relatively steady in March, though the path differed somewhat by structure. SOFR NIM was little changed (-2 bps to 1.84%), reflecting the combination of stable funding costs and only modest movement in spreads.

Fixed-rate NIM had a modest increase (+2 bps to 1.94%), which reflect bankers' ability to move coupon rates in real time with the shift in market rates. Bankers will likely face a challenge in April to continue moving the coupon higher to hold on to profitability. 

Net Interest Margin by Month
Rolling Trend

Community Corner: Balanced mix and a continued revenue premium

At the end of the quarter we check in again on the Community banking segment to see how it compares to the market as a whole.

We noted that the Community mix remains more balanced between SOFR and fixed-rate structures (35% of the balance for each), while the overall market leans more heavily toward SOFR (58%) than fixed (20%). That makes the fixed-rate story particularly relevant in the community segment.

Balance Mix by Structure, Q1 2026
Community vs. Overall

Meanwhile, Community bankers continue to price a revenue premium across structures, which is consistent with prior Community Corner updates. The fixed-rate coupon is 9 bps higher (5.81% to 5.72%), while SOFR spreads are 46 bps higher (2.64 to 2.18%) and Prime spreads are 17 bps higher (0.31% to 0.14%) The Community segment still appears to be pricing from a position of relative strength compared with the overall market.

Fixed-Rate Coupon
Community vs. Overall

Weighted Average Spread to SOFR
Community vs. Overall Market

Deposit rates remain largely unchanged

Finally, we checked in again on deposits. There was little to report in March. Interest-bearing non-time deposit rates, which we often use as a proxy for management-set deposit pricing, were essentially flat in Regional+ institutions and slightly lower in Community.

Interest Bearing Non Time (MMDA, CWI, Savings) Rate Paid

Roll-Off Watch: Q1 2026 Review

Finally, we did another check-in on how newly priced and repriced loans compare with the pandemic-era loans continuing to roll off the books. While new/repriced loans are being priced at a coupon that is 80 bps higher (5.87% to 5.07%) the increase has not been enough to match the NIM of the loans rolling off the books. (2.06% to 2.16%).

Roll-off vs. New/Repriced: Coupon

Got questions?

Our banking consultants and data scientists are combing through Q2 PrecisionLender pricing data every day. If there is anything you’d like to know about what they’re seeing, please send your questions to insights@q2.com.

Equip Teams to Fulfill Treasury Requests Faster

Q2 — Tue, 28 Apr 2026 10:00:00 GMT

Q2 Treasury Fulfillment helps financial institutions simplify and speed up treasury service implementation. Watch this short demo to see how front-office teams can capture client requests in one intuitive service order, route work to the right back-office team, track progress, and automate setup across source systems and Q2 Commercial Digital Banking, reducing manual effort and creating a smoother experience for both financial institution employees and commercial clients.

Q2's Continuous Account Takeover Protection: FAQ

ben.cash@q2.com (Ben Cash) — Mon, 27 Apr 2026 13:33:50 GMT

As part of Q2's ongoing efforts to help banks and credit unions and the account holders against sophisticated fraud attempts, we announced two new solutions that help institutions provide continuous account takeover protection, User Activity Monitoring and Restricted Entitlements Mode.

Watch this video to learn about Q2's approach to account takeover protection. Our FAQ then provides more information on continuous account takeover protection, the problem it is designed to address, and why a more connected approach to fraud prevention matters.

Q: What is continuous account takeover protection?

A: Continuous account takeover protection is not a single standalone product. It is a coordinated approach that brings together multiple Q2 fraud capabilities to help financial institutions detect and respond to account takeover risk across the digital banking journey.

It includes two new products, User Activity Monitoring and Restricted Entitlements Mode, in addition to existing Q2 fraud products Sentinel and Patrol. Together, these products help support continuous protection across the entire user journey.

The goal is to go beyond flagging suspicious activity at one point in time and instead help financial institutions connect what is happening across the session then respond before fraud can escalate.

Q: What problem does continuous account takeover protection solve?

A: Account takeover has become one of the most damaging fraud challenges facing financial institutions because it often serves as the front door to everything that follows.
Once fraudsters steal usernames and passwords and gain access to legitimate accounts, they can change credentials, add payees, link external accounts, and move money quickly through real-time payment rails. Because they have those valid credentials, fraudsters’ activity within a digital banking session can be extremely difficult to detect.

Meanwhile, fraud teams at banks and credit unions are already stretched thin from high alert volumes, chasing after false positives, and conducting manual reviews in multiple systems. And the rapid increase in payment speed has narrowed the window in which institutions can spot and stop fraudsters.

Banks and credit unions need a better way to identify and stop account takeover attempts, before they do real damage to their account holder and the institution.

Q: Why do traditional fraud controls struggle to stop account takeover?

A: Primarily because account takeover is a journey problem.

It does not always show up at a single moment. A suspicious event may begin before login, continue during the session, and only become visible when a high-risk action or transaction takes place. That means financial institutions are often dealing with a sequence of behaviors, not one isolated alert.

Traditional fraud controls are often built around separate checkpoints, such as login authentication or transaction monitoring. Those tools can still play an important role, but when they operate in silos, they can leave gaps between signals and workflows. That makes it harder to see the full picture while the attack is unfolding.

Q: How is Q2’s approach different from traditional fraud tools?

A: Q2’s approach is designed to connect signals across the digital banking journey rather than treat fraud as a series of disconnected moments.

Instead of focusing only on login risk or only on transaction activity, continuous account takeover protection helps financial institutions look at behavior during the session, evaluate high-risk account actions, monitor transactions, and take action when risk is detected.

It is also embedded within digital banking to give financial institutions better visibility into what is happening and helps reduce the gaps that attackers often exploit.

The benefit is a more connected view of risk, earlier opportunities to intervene, and a path from detection to interruption.

Q: How does continuous account takeover protection work across the digital banking journey?

A: The approach is built around four coordinated capabilities.

User Activity Monitoring helps identify early account takeover signals during the digital banking session. That can include unusual behavior, interaction timing, navigation patterns, and other signals that suggest something may be wrong.
Patrol focuses on high-risk account actions. It helps evaluate sensitive events such as changes to account details, or other actions that may signal account takeover activity.
Sentinel monitors transactions for anomalies. It adds another layer of visibility when money movement or payment behavior looks unusual.
Restricted Entitlements Mode supports response and containment. When suspicious activity is detected, it can help financial institutions apply controls such as restricting access, adjusting permissions, or limiting certain actions while the situation is reviewed.

Taken together, these capabilities form a more continuous system for detecting, interrupting, and containing account takeover activity across the user journey.

Q: What role does AI play in this approach?

A: AI plays a critical role by helping connect the dots between various signals in real-time so financial institutions can make more informed decisions. When those signals are pulled together and analyzed, they can help identify suspicious activity amongst what might otherwise look like an isolated or low-priority alert.

AI also powers two important capabilities within User Activity Monitoring. A fraud pattern discovery agent reviews confirmed fraud cases to identify repeatable attack patterns and help propose new detectors that can be deployed more quickly as threats evolve. A case agent generates clear, natural-language explanations of why a session was flagged, along with the most relevant timeline of events, so fraud analysts can investigate and respond faster.

It’s about making more effective fraud decisions by turning large volumes of in-session activity into actionable fraud intelligence. Rather than simply generating more alerts, AI helps connect the dots across user behavior, device signals, session activity, and transaction context so financial institutions can better understand when behavior aligns to a real fraud pattern.

That matters because fraud teams don’t benefit from just receiving more alerts. They need better context. They need a clearer understanding of whether a digital interaction makes sense based on what is known about the user, the device, the session, and the transaction.

In that way, AI helps support more contextual decision making and faster response across the digital banking journey.

Q: What happens when suspicious activity is detected?

A: In the past, when suspicious activity was detected many banks and credit unions faced a binary decision: Either let the activity continue or shut out the account holder completely.

With Restricted Entitlements Mode, financial institutions can apply varying levels of friction, restrict access, adjust permissions, or limit certain actions. The right response depends on the situation and on how the institution wants to manage risk.

Sometimes what the institution needs is just more time to determine whether something suspicious truly is fraud. Restricted Entitlements mode gives them that freedom, without having to choose between angering an account holder or incurring a loss.

Q: Why should banks and credit unions care about this now?

A: The pressure on fraud teams is growing.

Digital adoption continues to rise. Faster payment experiences have raised the stakes. At the same time, many fraud teams are dealing with alert fatigue, disconnected tools, and limited time to investigate what matters most.

Financial institutions need earlier detection, faster containment, and a more connected way to evaluate risk across the digital banking experience.

Q2’s continuous account takeover protection products meet those needs.

Click here to learn more, or if you’d like to talk directly with us, reach out and let us know.

Fast Laps, Tight Guardrails

Cheryl.brown@q2.com (Cheryl Brown) — Thu, 23 Apr 2026 12:12:14 GMT

In this episode of the podcast, CTO Adam Blue talks with Q2 COO Hima Mukkamala about how to move quickly with AI without getting swept up in the market’s hype cycle. They explore what responsible speed looks like in banking, why vibe coding changes who gets to build, and how financial institutions can innovate faster without losing sight of trust, compliance, or real customer value.

Watch

Transcript

Adam Blue

Hey everyone, welcome to Cut to Context. Joining me today, Hima Mukkamala. I'm Adam Blue. We're both here from Q2 and today we're going to talk about the AI hype cycle. This is a big topic, so let's just get right into it, Hima. Where do you think we are? Where do you think we are in the hype cycle?

Hima Mukkamala

You know, every hype cycle, I think about it, starts with lot of innovation triggers or one innovation trigger. With the AI hype cycle, it feels like a bunch of hype cycles coming, happening like with a small sequence in between. But there seem to be a lot of innovation triggers starting with the LLM trigger, the Cloud Code trigger, and I'm sure there's a few more to come.

But if I aggregate all of them, I feel like we are starting to taper down from that hyperinflated expectation and getting closer to starting to taper down to that trough of disillusionment before they start like the standard adoption curve. That's what's unique about this cycle.

Maybe it happened even with that internet wave, but I felt like Mosaic as a browser sort of was a peak and the internet just combined and became that trigger in the ’94 to ‘96 timeframe. Here, and that took like five, six years to get through the cycle before being productive usage.

Here I feel like there's more triggers, but I do feel like in a much more compressed way, we quickly come to that peak of people recognizing, resetting their expectations of what is it really going to give them compared to the early, you know, really hyper-inflated expectations.

Adam Blue

Yeah, I think that's an interesting way to think about it. So I remember sitting in a conference room and a guy telling me that his data centers are the best because they had guys with machine guns at the data centers. And I thought, this is probably the end of this. This is probably where it's getting a little crazy. I'm not sure we've hit the guys with machine guns in the data centers moment with AI yet. But it does feel like there's a lot more anti-momentum kind of press right now. Not, “Give up. This is dumb. It's pointless.” But there's just a lot more, “This may not be as easy as we thought it was going to be. It may be more challenging to pull things out, maybe more challenging to get to real value.”

But I agree with you. I think there's an overlap of a bunch of smaller cycles happening. So on any given day, you can go find evidence that AI will be the most fundamental technology ever to impact humankind or that it's a total fraud. And it's unclear, like, which one is really true. So that's been really fun. Super great.

Hima Mukkamala

Yeah, yeah, and especially trying to deliver that software for our industry day in and day out. It's been super fun trying to sort of keep those expectations close, but still operate in that environment: regulated, compliance, your risk and so on. But it is interesting, like I was telling someone, you know, having come from like early ‘96 at a SQL Server kernel company writing assembly C++, how excited I was when the internet wave was starting. I feel that sort of an excitement right now with the opportunities. Like you said, it is a big shift that no one, I don't think we still understand the spectrum of impact it's going to happen.

I do feel like it's an interesting dichotomy. I don't know, Adam, how you think about it. One part of it is like the hype cycle and how it's been overhyped, but the other part of it is we just don't know the end of how much impact it's going to have. And that part of me feels like we probably don't know how big it is.

Adam Blue

I agree. I think the things we have not yet discovered will outpace everything we know already in terms of impact. So it's just we're just so early still. Yeah. So that brings us to the next thought, which is: fast, safe, or can you have both? Where do you come down on that dichotomy?

Hima Mukkamala

It is that innovation challenge, right? How fast you go, but it depends on, I think that not just the industry you play in, but the team you are in. Like it's always a reflection of who you're trying to serve.

Like today I came out of an hour and a half session with a bunch of engineers and product managers who were able to innovate and show that extending an existing feature took an hour and 15 minutes. I don't know how they got that specific, but they were like, man, this is a game changer.

And so I think the cycles that we go through have to be fast so that we understand what's the best way to bring that technology, make our jobs easier, make it give that value to the customer, but also learn how to make it safe, right? We cannot go too slow to try to make it safe. So we’ve got to rev, do those revisions internally as fast as we can. And we're seeing that, right? The technology, like how much, how easy it is.

I just enabled, at last year, and Jira MCP within my cloud code. And it was so straightforward, right? How hard it would have been before MCP came out, OAuth in MCP came out. It would have been so much harder even four weeks back, right? So we have to go fast internally so that we can sort of put those guardrails in place so that we can deliver the safe outcomes. Safety cannot be compromised in ...

And not just our industry. There's a lot of industries that matter: industrial, financial, pharma, medical, and so on. So the opportunity I see is the teams to go fast, but protect the end customers, whether it's the consumers or the businesses to be sold to. And I think that's where some of these … when I say we are still not at that productive in the hype cycle, we're still not there with all the tools to get us that very seamless, high utilization from a production standpoint, because the tools are more on going fast. The environment is not there yet to go make it like, ship it to 28 million consumers. So that is where it takes a little bit more time.

But I think it's just a matter of time when we get there to get that truly safe deployment sort of environment in place. So it is, and I'm curious to what you think about it, having seen this industry for a long time, this is probably one of those moments where we are having to go fast, faster than what we thought. And so then how do the customers react to the pace at which the market is asking. I think they probably have the same challenges versus the longer cycles that were there in the past. So I'm just curious what you think, but it's a place for someone operating a software stack to be in this combination of fast and safe. But that's where I feel like great companies do well.

Adam Blue

Yeah. I think you can operate at one velocity internally and then you can really curate and gate what you ship. And as it gets easier to build things, it's not getting easier to ship them effectively yet. I think it probably will. I think it will. Agree with you on that.

But what I would say is it used to be, and we talked about this in another episode of this podcast. It used to be everything we built had to work and had to land because it was expensive to build. So we'd spend a lot of time figuring out what's exactly the right thing to build. Now we can build three or four things, figure out which one works, is secure, is safe, and then focus on getting that shipped. And then the other things, you retool them, you rethink them, maybe you discard them.

But as it gets cheaper to produce, it becomes more about curation and more about a creative portfolio and less about, man, every feature we deliver has to hit because we can only deliver five of them. What if I can deliver a lot of features and so I can actually pick and choose the ones I really want to ship?

That brings us to the next thing I want to talk about with you a little bit today, which is there's a big difference between using AI and feeling like a super developer, like all of a sudden you're this hero, right, and actually having an impact and getting stuff shipped. And I think some of the tools, and even the LLMs themselves, they're very good at making you feel very smart, and then you find out maybe what you've built is not as impactful. It doesn't deliver as much. And so how are you and the team working on, let's make sure these outcomes are real and we're not just running faster on a treadmill that doesn't go anywhere. That's the sense I get sometimes.

Hima Mukkamala

Yeah. Yeah. And I think what fundamentally has changed, like you've said earlier, we can ship five, we can ship 10, that part of it has become easier. But are these the five that we said are what the customers wanted? Like that they've claimed as, if I could find a better way to do a money transfer or a wire and setting different controls for outbound transfer versus inbound transfer. So the specification of that requirement, have we validated that’s the code that we have shipped?

And if you think back how validation has happened, you have a bunch of maybe an engineer or a quality engineer or a developer writing those acceptance tests and validation tests and so on. So that challenge between the top of the funnel where someone's capturing what that customer’s needs are and translating to something that can be validated. And if you look at the pipeline, that stage of that requirement to some feature that quote unquote implements it, that is the acceleration that has happened. But then has it really, is it really doing that part of what the requirement said, again, has not accelerated as much in a deterministic or mostly deterministic fashion, right?

And so that is where, you know, what we are trying to do is not just … and this is where I feel like the tools still need to be built at the front end of the pipeline. When I say pipeline, there's some of requirements at the tail end of it. You and I have talked a little bit about in the past conversation, how the software engineering pyramid is going to get inverted in terms of there's probably fewer coders and more validators to actually, especially in fields like ours, financial industry, where there's a lot more determinism needed and the models still are not accurate to enough of precision that we need.

And so if the industry needs to get a little bit lopsided in terms of who writes code or agents write code and validation. And so what we are seeing more and more is this middle of the pipeline. It's like, when you field a 4 x 400 meter relay, right? You’ve got to make some intelligent choices on the anchor leg versus the middle legs. And that's the place where we are in. How do we get enough of a speed across all of the legs of the relay?

But, and so some of the things we are thinking about is how do we invest more in sort of the model risk management? How do we accelerate the validation cycle of it? And this is where the human in the loop is still turning out to be as important, especially on the validation side of it, right? Obviously, the tools are giving us a lot more of these, you know, you could do 100% unit testing with Cloud Code, but is that giving us the functional validation that our customers expect to be a safe? It's not yet, right?

And so that tool chain is where I think the production readiness of this entire end-to-end pipeline still needs to come in being able to ship as fast as what we can deliver. I think on the requirement stage, I think that's probably one of the areas where we got to figure out from a customer input standpoint, something we've always done, right? Should we do focus groups every week with customers to get the requirements pipeline fine-tuned?

It's going to take a lot of cycles for that validation from the end customer standpoint. Earlier on, we had a three-month pipeline or roadmap or a six-month roadmap, and there was a longer planning cycle, and it was more easy for the customers to engage. So how do we change the top-of-the-funnel validation of requirements or the bottom of the production or preproduction early access validation?

We're starting to build more tools that actually help the end-to-end life cycle, although the middle is the one that got accelerated over the past few months. And I think that's where, and I don't think it's isolated just for how we deliver the code. If you think about it, any software that's shipped, doesn't matter whether humans write it, whether agents write it, it's gonna have issues, defects. How does it support the supporting ecosystem, customer support deal with the initial increased number of issues that show up, right? Because they can't take a human approach to it.

And so we’ve got to figure out more an agentic approach to, and we are doing some tools internally to go agentically solve the customer support sort of pipeline. So those are the steps that still need to be crystallized more, if you think about the overall software pipeline beyond purely build, define, deliver the code to implementation and the support life cycle. I think that is where, but it'll happen much faster than what we have done in the past. And that's where we are focusing on trying to bridge between these other roles that exist in a software pipeline.

Adam Blue

Yeah, yeah. So as we get better at using agentic approaches to generate code and as the actual typing of the code and debugging it and then validating it in and getting it checked in becomes less and less expensive, right? The whole software development life cycle is built around that thing being really expensive. The way we gather requirements, the way we test, the way we ship, whatever we do, all presupposes that the coding of the thing is the hard part. And we all kind of know it's not. We pretend like it is, but it never really has been.

I wonder, maybe, instead of having one set of people go ask customers what the requirements are and then statically committing them to a document, having another set of people interpret what those are and communicate them to an engineer and then having an engineer translate those, what if an engineer and a customer just got on a Zoom call and just vibe coded a feature? What if you cut out that whole nonsense process loop that's basically designed to slow the process down so that you can control what, you know, developers are working on?

And so I like this idea, why don't we just have a focus group once a week where we sit with customers and build features? And I'm wondering, maybe we get even more radical. Like I'll just throw this out. I, it was probably not possible, but I'll throw it out there. What if we just have two engineers get on the phone with two customers and build the feature that the customer most wants on that day? Do it like doing it maybe faster than talking about doing it. And if you can vibe code it, you know, or agentically code it or whatever the word is this week, why not just do it? And then it was inexpensive. So if you don't like the way it turns out, you just don't use it. You throw it away. It's OK.

Hima Mukkamala

It's funny you mentioned this. You and I are old enough to know paid programming and all the techniques that were used and they were all, they had their time. They went away, but you are describing exactly what we thought, you know, two people sitting together. But the problem was there were two people sitting next to each other for like days at a time to do a small feature. That's no good. But now ...

Adam Blue

Yeah, that's no good.

Hima Mukkamala

Exactly to your point, the time it might take a customer to write down a requirement of what they want from the platform, they could just sit with a pair program or pair agent vibe coding, don't know. We've got to come up with a new term for it and actually do it and show it. I mean, we may not ship it to production, that's, I think at least we could get 90% of the way to make sure it meets the requirement that the customer is looking for. I think that needs that, you know, close conversation with the customers on how do we get those pair focus groups going?

But I think even if you don't get the customer in place, I think something which we're trying to do internally is this life cycle of a product manager and an engineer and a quality person. I think that at least we are trying to do it internally where, you know, how you take a requirement to how you write the code to how do you test it, short-circuiting that probably bridges even if you don't get the customer. But to your point, if you can get the customer to sit on a call with a product lead manager and an engineer and just the three of them, three in a pod, ideate and create the first PRD and that's just generated and show it, man, that would be incredible for the customer and for us. Yeah.

I don't know, Adam, we've got to come up with a name, maybe trademark it. Yeah.

Adam Blue

Yeah, something. Yeah, none of the names for this new thing are any good. I think nobody's really hit on something we like yet.

Hima Mukkamala

I heard that vibe coding is no longer the fun name because I thought I was being cool and kept saying vibe coding and someone said don't use that word and it was just like a month ago.

Adam Blue

I know that's the problem. It's all moving, it's just moving too fast to stay ahead of it. So, yeah, one of the things I've heard you say that I really like is sometimes close enough is good enough. You know, there's this, there's this notion around like perfection or, really polishing something. And I think there's times when that's fantastic, but I also think there's times where I feel like getting the feedback on something incomplete and it takes some courage to do that because you're going to hear about stuff you don't want to hear about. But having the bravery to show something unfinished so that someone can have input into it before you finish feels like it could be really powerful. Do you think that gets easier or more common as we move to more, you know, AI-enabled software engineering?

Hima Mukkamala

Yeah. Yeah. You know, I've also said this, right? Whatever you say works, make it work right. Right? So if you show and if you look back about why customers were hesitant to take 80% of it was because it took them a lot of cycles to get it in place, try it, deal with all the issues, change it. So that life cycle was just a long life cycle.

But I feel like now going back to what you brought up, if the customer and an engineer or a customer product manager and an engineer are sitting together and just getting to 80% of it and showing how it works, customers are going to say it to me now as with the safety and others put in place, which is what the platform brings. And then they'll say, it's not going to take me one more year to get the other 20%, right?

That is the biggest shift that agentic architecture, agentic engineering is bringing to this equation is that, right? The other 20% is not going to take six more months or a year. It's going to come fast follow. I think that is why I believe that shift in how fast customers are going to accept it. But we’ve got to do a lot of education, right? The industry is used to this long software cycle and the risk that comes with faster.

So I think there's some more, and this is probably where that the downward slope on the adoption curve or the hype cycle is going to help us is building that muscle with the customers, especially the first few customers to get that 80%. We're seeing that proof point, and I don't know how much you are surprised, but I'm surprised with the early adopters for like some of the new Q2 Code or the Q2 Assistant we are getting in terms of their willingness to take that 85% of it because they know they're getting that face time with the team and being able to talk to them maybe on a weekly basis or a biweekly basis and giving them that feedback and just in the next week getting an update to it, right?

And so I think we prove it out, but this is what I like a lot about what the agentic world is bringing us in those frequent cycles, but still protected by that safety lens that we have. You know, what do we care as technologists, right? You want to put stuff out as quickly as you can, get customer feedback, get them to use it, real adoption and not just put it on the shelf. And I think this agentic world is just a big accelerator in that. And I'm excited. I'm really excited. Yeah.

Adam Blue

But you know, it's scary too. If you base some significant part of your identity on, like, being good at your job, which as Americans it feels like it's kind of written into the Constitution a little bit. And then you find out the thing that maybe was really important to you or you thought was really good at is a thing other people have access to now, right, in a meaningful way without going through the same training that you did or the same woodshedding, whatever it is. So I can understand some of the challenges people have with it from a, you know, just from the capacity and perspective sort of thing.

It's a little like, you know in “The Matrix” when Neo and Morpheus are going to fight and they download Kung Fu into Neo's brain and Morpheus tells them, “You know in this place the fact that I can beat you has nothing to do with your muscles or how fast you are, how strong you are. It's all just about your will now.” And so when I think about people vibe coding or using these tools to do things it's like, it's very liberating, right? But it's also terrifying because it's so close to kind of the core of the problem and what you do. You can feel very exposed when somebody brings you this new way to work. And so I think the impact on the work and the impact on the employees doing the work is maybe bigger than we're giving it credit for a little bit.

Hima Mukkamala

Yeah.

Adam Blue

And so, like, what are you hearing from people when you kind of push them, like, hey, use more AI, make use of these tools, move faster? What are the kind of things you hear back from people where they maybe don't feel great about it?

Hima Mukkamala

The rush of solving a memory pointer problem in C, like when I went to Java, I lost it. Right? So I was, you know, what am I doing? I don't need to debug that anymore. And so I went through some identity crisis moving through that layer. And then when all the fancy, WYSIWYG editors came in and so on.

But if I look at the trajectory of software engineering as a principle, as a philosophy, it keeps growing because the problems that are there in the world to solve, and this is my fundamental belief, are not shrinking. I think we create as many problems—when I say we, the whole human we, and maybe soon extraterrestrial we—create as many problems as we can solve. So first and foremost, that's my personal view of it.

And just a plug, I think we are hiring a lot of new grads because they are going to have to deal with all these issues. I want them to be ready with the tools and then understand the problems we are trying to solve. To your point, if you asked me the question six weeks back, I mean, there was a lot more concern. What I've seen, and I think late December, something changed in the efficacy of the model, especially Cloud Code.

Adam Blue

OK.

Hima Mukkamala

And I think Codex has come a lot long, that change for Codex maybe in the last four weeks. And so what I hear from engineers is it is actually making my life so much better, right? The challenge is, the concern I hear from them is, I think it depends a lot on the organization, different organizations do differently, how they provide their comfort in terms of what they're going to continue to do as they are not having to write code and showing that our customers rely on us to create that safe, compliant platform that is continuing to grow in the requirements and the needs and so on.

And so what we talk about, and so maybe the first part of it is they didn't see that value come out of it until the tools got rich enough, right? So once they cross that chasm, now they're sort of at a place where, yes, it's adding a lot of value to me, but then now they're wondering about what am I going to do to not so much to fill that time that I'm getting to do more stuff, right?

And as you and I know, I mean, the financial industry, our space, banking has so much to do, right? From a requirement standpoint, we're just getting started on the real-time payments. Just as an example, right? The number of people who are developers, who are extending the platform is not that big. So there is an opportunity when someone can customize.

And what we hear from our customers is equip us to compete with quote unquote, the bigger banks. And now this is, I think you said this, this is truly democratizing and giving the financial institutions that we support the ability to compete with the bigger ones with the technology that they have at their hands, right? They have incredible technology that's neutralizing the advantage that the bigger ones may have had.

And so now we're sort of crossing that chasm of we have the time, what are all the features that need to show up in my pipeline to go make our customers’ journey much better or give them more requirements. So we haven't crossed that. That is the challenge we are currently looking at on how do we, to go back to the beginning of the conversation, we have accelerated the middle of the pipeline. We need to accelerate the front of the pipeline and the later part of the tail end of the pipeline from an SDLC standpoint.

I see the energy within the organization, that they feel like the other thing that I hear and I'm curious to what you're hearing, I mean, I feel like my learning cannot keep up to pace with everything that's coming through now. So that's one big challenge I am hearing from the organization, because we haven't redefined what SDLC is. Like what are the tools that are going to be used? Because there are still new things coming out every day.

And so that's the other challenge, to sum up maybe, how do we get more requirements into the backlog so we could actually iterate faster, to go back to your point. And then the second one is, when are we going to get stable in how we do stuff? And that is probably not there yet, it'll take a little bit more time. I don't have a crystal ball on that one in terms of when the tool chain is going to standardize, stabilize that we have a new way of SDLC.

Adam Blue

Yeah, that may end up being, at least for a couple of years, the strongest differentiator is how well can you evolve your SDLC to take the maximum advantage of the AI tools that are available and the new ones that become available.

Hima Mukkamala

Yeah.

Adam Blue

Because what end users care about is what's the use value of the software, right? I remember once I was going to buy a guitar amplifier so I could play electric guitar badly, but more loudly. And so the guy showed me a guitar amp, and it was very expensive. And he's like, so he showed me underneath and he's like, look, this is all hand wired. That's why this costs so much. And I was like, it's beautiful and it's fantastic. And I'm sure it's very high quality, but when I play it, I don't hear the hand wiring. Like, yeah, it's there, but nobody cares. What they care about is does it sound good? Like, how do I feel when I play it? What does it feel like?

And so at some level I don't know that end users really care whether software is hand coded by humans artisanally in small batches up in Portland, you know, on a farm full of fluffy sheeps. Or if they just, they want the experience what they want. They want you to solve their problem. They want software to feel good to use. Whatever gets you closer to that end user problem, that's the valuable part, right? And so ...

Hima Mukkamala

Yeah. Yeah. Sorry, on that note, I was imagining a world where going back to this world of get on a call for an hour and ideate. I'm like, you don't even need us. Ideate with the prompt and our agentic world will generate what you want, that 80%, because you don't even need to talk to an engineer, right? So if you inject them, and maybe that's what you were saying.

Adam Blue

Yeah.

Hima Mukkamala

They want to be, I think they want to feel part of that, like what they ideate and get it in their hands quicker. And so that's what I was imagining, a world where they talk to the platform. You know, Whisperflow or one of those fancy, you know, voiceover things. And then, you know, if you're writing code by talking to your agent, maybe they can do the same thing with requirements and just generate 80% of the app and show it to them and say, are you good? And then we jump in, right? The safeguards at the end of the pipeline, because they don't really care how we write code. You are absolutely right.

You know, as software engineers, like you said, we put a lot of emphasis on, I mean, it is a craft, but the craft people assume I think it's in the code writing. The craft is in systems thinking, right? That is how, that is the essence of, in my mind, software engineering. And people just think, code is part of it. How systems talk to each other? How are they put together? How do you tell the AI to bind these things together? That is where the craft lies and that is not going to go away.

Adam Blue

I'll take someone who's great at systems thinking and therefore troubleshooting and debugging over somebody who's great at architecture and design any day. Some of it's just my bias to be fair. I'm not advocating for that. I'm just saying that's where my heart lies, is in that piece.

All right. Well, thanks very much, Hima. This was fantastic. Really appreciate you being on the podcast today.

One of the things we do here is we leave everybody with a reference to something they can consume, a piece of art or media or music. so today I'm going to recommend, there is a band called Neutral Milk Hotel who did a fantastic album called “In the Aeroplane Over the Sea” on a label called Elephant Six Records. And it was like this really fascinating distillation of what sounds could be considered music. It's like a very raw album by a fantastic artist. And it changed … like I listened to it and I hated it. And then I listened to it again and I liked it a little bit. And now it's maybe one of my favorite albums.

But it changed what I thought about what could be music in the same way that I think, you know, that AI has changed what I thought software development could ever be. And it was kind of, it's kind of liberating. It's kind of exhilarating to just throw away all the shit I was sure I knew because it's not true anymore. It maybe never was true, but now it's really not true. So “In the Aeroplane Over the Sea” by Neutral Milk Hotel is today's recommended listening to go with the podcast.

And thanks again, Hima Mukkamala for joining, and thanks for joining us on Cut to Context, available wherever your fine, high-quality podcasts can be found.

Hima Mukkamala

Thanks Adam.

The Future of SMB Banking

Q2 — Wed, 22 Apr 2026 23:53:20 GMT

Small and midsize businesses (SMBs) sit at the center of economic growth, innovation, and job creation. As a result, the way SMBs interact with banking services and broader financial services is rapidly changing.

The future of SMB banking is shaped by shifting economic conditions, rising digital expectations, and growing competition from nontraditional providers. For banks and credit unions, this moment represents both pressure and opportunity.

SMB banking is entering a period of structural change. Small business owners expect the same speed, convenience, and personalization in business banking that they experience in their daily digital lives. At the same time, they still value trusted relationships and expert guidance, especially when navigating volatility.

Meeting SMB needs requires a new approach to digital banking, one built for flexibility, integration, and insight.

Understanding the modern SMB experience

The modern SMB experience reflects the realities of running a business in an increasingly complex environment. Economic uncertainty, margin pressure, and fluctuating demand affect nearly every small business today. Many SMB owners manage lean teams, juggle multiple roles, and make decisions that directly impact payroll, inventory, and growth plans.

Competition among financial services providers has intensified. Fintechs offer targeted tools for payments, lending, and expense management, often with streamlined onboarding and intuitive interfaces. These offerings have raised SMB expectations, pushing traditional financial institutions to rethink the traditional banking model and how services are delivered to small business clients.

Small businesses now operate digitally by default. From e-commerce platforms to cloud accounting tools, digital workflows sit at the center of daily operations. As a result, small business banking must fit naturally into these workflows rather than function as separate destinations.

Relationship banking still matters, but the definition is evolving. Business owners want access to knowledgeable advisors when it counts, paired with self-service tools that work around the clock. Traditional banking approaches that rely heavily on branches and manual processes struggle to deliver this balance at scale.

Key trends shaping the future of SMB banking

The future of SMB banking is not defined by a single innovation. It is shaped by several interconnected trends that together redefine how small businesses engage with financial institutions.

1. Digital first, not digital-only

Digital-first SMB banking prioritizes seamless digital experiences while preserving human support. For small businesses, this means fast online onboarding, intuitive account setup, and easy access to core services without sacrificing personal connection.

Digital-first institutions integrate digital and relationship banking rather than treating them as separate channels. Omnichannel support allows SMB customers to move between digital tools and human assistance as needed. Physical branches increasingly serve as advisory hubs rather than transaction centers, supporting strategic conversations around growth, treasury, and lending.

2. Real-time payments and cash flow visibility

Cash flow remains one of the most critical concerns for small businesses. Delays in payments or limited visibility into incoming and outgoing funds can disrupt operations and planning.

Instant payments and faster settlement give SMB owners greater control over liquidity. Instant access to funds improves working capital management, reduces reliance on short-term credit, and supports timely decision-making. Use cases range from supplier payments to payroll funding, all benefiting from improved speed and transparency.

With real-time data, banks and credit unions can provide clearer cash flow insights, which helps business owners anticipate needs rather than react to surprises.

3. Embedded financial tools for daily operations

SMB owners increasingly want financial tools embedded directly into their daily workflows. Embedded financial tools allow banking capabilities to appear where work already happens, reducing friction and saving time.

Integrated invoicing, payments, payroll, and expense management help small businesses manage operations from a single environment. Connections to accounting platforms and automated AP/AR processes reduce manual effort and errors.

For financial institutions, embedded services strengthen engagement and reinforce the financial brand by becoming part of everyday business activity rather than an occasional touchpoint.

4. Data-driven insights and predictive analytics

Data has become a powerful asset in SMB banking. When used effectively, it helps banks and credit unions support better decisions without overwhelming users.

Cash flow forecasting, spending insights, and proactive alerts allow businesses to spot trends early and plan with greater awareness. Predictive analytics can highlight potential risks, such as upcoming shortfalls or unusual spending patterns, and surface opportunities aligned with business behavior.

Actionable recommendations, delivered at the right moment, strengthen relationships and position the financial institution as a strategic partner rather than a transactional provider.

5. Personalization at scale

One-size-fits-all approaches no longer meet the needs of diverse small businesses. An SMB owner in retail faces different challenges than one in professional services or manufacturing.

Personalization at scale allows banks and credit unions to tailor experiences based on industry, business life cycle, and usage patterns. This includes customized dashboards, targeted product offerings, and tailored credit and treasury tools.

When personalization aligns with real business needs, it drives loyalty and long-term engagement while supporting sustainable growth across the SMB portfolio.

The growing role of AI and automation in SMB banking

AI and automation are changing SMB banking across the front, middle, and back office. Automated onboarding and KYC processes reduce friction for small business customers while improving efficiency across banking operations.

Smart chat tools and virtual assistants deliver timely support for common questions, allowing relationship managers to focus on more complex, higher-value interactions. Fraud detection and risk management also benefit from machine learning models that evolve alongside emerging threats and shifting behavior patterns.

Behind the scenes, automation streamlines back-office workflows, improves accuracy, and speeds product deployment. These gains help banks and credit unions expand SMB offerings while maintaining consistent service quality as demand grows.

 How financial institutions can prepare for the future of SMB banking

Preparing for the future of SMB banking requires focused action across technology, delivery models, and operations. Financial institutions can take several practical steps to stay responsive as SMB expectations continue to evolve:

Adopt modular, API-driven platforms that support rapid innovation and allow new capabilities to be introduced without large-scale system replacements. This flexibility makes it easier to respond to market shifts and emerging SMB needs.
Enable faster product development and deployment through architectures designed for testing, iteration, and continuous improvement. Shorter development cycles allow institutions to introduce new features and services with greater speed and relevance.
Expand ecosystem integrations by connecting with fintech partners and third-party tools. Broader integrations allow an SMB customer to access banking services within the workflows they rely on already.
Invest in secure, scalable digital infrastructure that supports growth while aligning with regulatory expectations. Scalable platforms help institutions support more SMB relationships without sacrificing performance or reliability.
Build adaptability into operating models so teams can respond quickly as business needs, technologies, and customer expectations change over time.

The role of modern digital banking platforms

Modern digital banking platforms play a central role in enabling next-generation SMB banking. Platform flexibility allows financial institutions to configure experiences that align with specific SMB segments rather than forcing uniform journeys.

Embedded services enablement allows financial institutions to incorporate payments, lending, and operational tools directly into digital experiences. Strong data and analytics capabilities support insight delivery, personalization, and performance measurement.

Compliance-ready innovation allows institutions to move forward with new offerings while maintaining governance and oversight, a critical requirement in commercial banking and SMB banking alike.

Building the next generation of SMB banking

The stakes are high for banks and credit unions serving small businesses. SMB relationships offer long-term value through deposits, lending, and fee-based services. Cross-sell and upsell opportunities grow when institutions understand and support evolving needs.

Small businesses remain a powerful growth engine for the broader economy. Financial institutions that invest in modern SMB banking experiences strengthen loyalty, attract new clients, and differentiate themselves in a competitive market.

Key takeaways are clear. SMB banking is becoming more digital, more integrated, and more insight-driven. Institutions that modernize platforms and embrace embedded finance will be better positioned to support business owners through every stage of growth. The future belongs to banks and credit unions that combine advanced technology with trusted relationships to serve the next generation of customers.

At Q2, we help financial institutions reimagine SMB banking through flexible platforms designed for scale, integration, and innovation. As the future of SMB banking continues to unfold, the institutions that adapt today will shape lasting relationships tomorrow.

Beyond Binary: A Smarter Way To Respond to Account Takeover Risk

Kristina.Wingers@q2.com (Kristina Wingers) — Tue, 21 Apr 2026 15:03:00 GMT

Fraud teams rarely struggle when a case is obvious. The harder moments are the ones in between. A login looks unusual. A profile change follows. Maybe there is odd session behavior, or a third-party signal that suggests something is wrong. Nothing on its own confirms account takeover, but taken together, the pattern does not feel right.

That is where many fraud defense approaches still run into a familiar problem: The response options are too binary. For many banks and credit unions, account takeover defense still comes down to a blunt choice: Let the activity continue or shut the user down completely. That made more sense when fraud patterns were simpler and user behavior was easier to predict. It makes less sense now.

Fraud decisions have become more sophisticated, but not always more flexible

Financial institutions have made real progress in fraud controls. Step-up authentication, multifactor authentication, and event-based decision making all add useful protection. Those tools help institutions respond to risky moments in real time.

But many of those decisions still happen one event at a time. An account holder fails one login attempt, passes the next challenge, and gets through. Later, that same user changes a password, updates settings, or behaves strangely in session. In many environments, each action is judged largely on its own. The broader pattern can get lost.

That leaves fraud teams asking the wrong question: Is this action fraudulent? The more useful question is, how confident am I in this user right now?

That distinction matters in account takeover scenarios, where the danger often builds gradually. Fraudsters may log in, wait, change settings, test behavior, and move carefully before attempting higher-risk transactions. They are not always making one obvious move. They are creating a pattern.

Why account takeover requires a more nuanced response now

This issue is more urgent because both fraud and normal account holder behavior have changed. Fraudsters have become more sophisticated, but legitimate users have also become harder to model. People use multiple devices. VPN usage is more common. Remote work has changed location patterns. Digital behavior is simply less predictable than it was a few years ago.

At the same time, money moves faster. When higher-risk transactions happen through faster payment rails, institutions may have less time to intervene and less chance of recovering funds once they are gone. That creates a real operational dilemma for fraud leaders and administrators. They may see enough risk to feel uncomfortable, but not enough certainty to justify a full shutdown.

That tension is especially important for commercial relationships, where institutions may be even less willing to create unnecessary friction for legitimate users trying to move money.

The better option is not less security. It is more proportional control.

A better response to possible account takeover is not to lower standards. It is to add flexibility. That means giving institutions the ability to temporarily limit what a user can do instead of forcing an immediate all-or-nothing decision.

Put simply: You let them in, but then you maintain control of what they can do.

In practice, that could mean restricting high-risk actions such as password changes, profile updates, or other sensitive settings. It could mean reducing transaction limits temporarily. It could also mean blocking access to specific high-risk transaction types, such as instant payments or domestic wires, while allowing lower-risk activity to continue.

That kind of response does two things at once. It reduces the institution’s exposure, and it avoids treating every uncertain case like a confirmed fraud event. For fraud teams, that is powerful because it creates room to respond proportionally to uncertainty.

Where a flexible response model can help most

This kind of approach is especially useful when signals are meaningful but not definitive.

Let’s say you have data from a third-party, like Plaid for example , [JY1] [KW2] [JY3] that suggests compromise. If an outside signal indicates that an account may have been linked or used in a way the customer did not authorize, that may warrant immediate caution, even if the institution does not yet have full in-session evidence.

Another example is suspicious but explainable session behavior: two active sessions at once, activity from different locations, or excessive navigation. Those patterns may indicate account takeover, but they may also reflect legitimate behavior. A fraud team may not want to ignore them, but it may not want to fully disable access either.

This kind of flexibility may also be useful for newer users, when institutions have limited historical context. During the first 30, 60, or 90 days, clear guardrails[JY4] [KW5] [KW6] [JY7] —for example, stricter initial caps on wires and external transfer amounts—may create less friction than repeated step-ups and transaction holds.

Flexibility can help the back office

It is easy to view this as a customer experience issue, but the operational impact may be just as important. When institutions fully block users, they often generate a wave of support calls. Account holders want to know why they cannot log in, what happened to their access, and how to fix it. That creates extra work for service teams and pulls attention away from investigation.

A more limited response can reduce that burden by allowing some access while the fraud team works the case. It also buys time.

That may be the most practical way to think about flexible fraud decision making in account takeover defense. It is not a permanent state. It is a temporary one that gives institutions space to investigate, validate, and decide what should happen next.

Over time, that process can become more refined. Teams can learn which signals truly justify a temporary restriction, which ones usually lead to confirmed fraud, and where full shutdown is still the right call.

Account takeover is not a binary problem

That is the larger point. Account takeover rarely unfolds in a clean, obvious line. It often develops through sequences, ambiguity, and incomplete information. Fraud teams need detection tools, of course. But they also need response models that reflect the reality of what they are seeing.

Sometimes the right answer is to allow the activity. Sometimes it is to block it. But increasingly, the strongest answer may be the one in between.

For banks and credit unions looking to strengthen account takeover defenses, this is a real opportunity. They can not only get better at spotting potential fraud, they can also get better at responding to uncertainty.

Your Q2 News for April 2026

sam.armstrong@q2.com (Sam Armstrong) — Mon, 20 Apr 2026 15:33:06 GMT

Your Q2 News for April

Welcome to the Q2 Chronicle, your monthly newsletter for the latest updates, insights, and resources from Q2. Stay informed about key topics this month and explore the full edition below.

INDUSTRY PERSPECTIVE

New Podcast Features Real Talk About AI at Q2

Q2’s new podcast, Cut to Context, debuts with a timely conversation about how AI is moving from hype to real-world impact. In the inaugural episode, Q2 CTO Adam Blue explores how AI can support stronger, more human banking experiences when it is grounded in context, responsibility, and practical use. Watch the first episode now and subscribe to Cut to Context for future conversations on AI in banking.

Watch / Listen Now ›

A Playbook for M&A Conversion Success

When: Wednesday, April 29 | 2 p.m. CT

M&A activity is accelerating, and execution matters more than ever. Join Q2 and financial institution leaders for a practical discussion on the decisions that shape successful conversion initiatives, including how to reduce integration risk, protect account holder experience, and prepare for execution.

Celebrate Small Business Week by Unlocking Hidden SMB Growth Opportunities

When: Tuesday, May 5 | 1 p.m. CT

This Small Business Week, join Q2, Monit, and First State Community Bank for a strategic panel on activating growth within existing SMB clients. Learn how peers move beyond static segmentation, prioritize outreach with behavioral insights, and apply fintech-driven strategies to uncover opportunities and scale relationship-driven growth across portfolios without adding headcount.

Save Your Seat ›

DIGITAL INNOVATION

April Q2 Customer Innovation Series: AI Built for Progress

When: Friday, April 24 | 11 a.m. CT

Artificial intelligence is rapidly reshaping how financial institutions operate, innovate, and serve their customers. At Q2, we believe the real value of AI comes when intelligence is embedded directly into the workflows and platforms financial institutions rely on every day. This episode covers our latest AI strategy and how it's coming to life across the digital banking platform.

Q2 Innovation Studio Go-To-Market Resources and Webinars

The Innovation Studio End User Adoption team has launched a webinar series highlighting new Go-To-Market Onboarding resources on the Q2 Customer Portal and partner-specific adoption strategies.

Next Live Webinar: Innovation Studio: Banking for the Whole Family May 6, 2026

Today’s families expect financial solutions that grow with them. Join this webinar to explore how financial institutions can serve every generation — from youth banking solutions that build lifelong relationships to tools that protect and empower elderly account holders.

On-Demand Webinars: Topics include building an effective go-to-market strategy, launching a successful tax season, and more.

Watch Now ›

Q2 NEWS

CONNECT 26 Check Out the Agenda

The full agenda for CONNECT 26, Q2’s annual customer conference, is available. Start planning your time at CONNECT now by exploring the agenda.

Check Out the Agenda ›

Q2 Code: Practical AI for Financial Institutions

Abeer Thomson — Thu, 16 Apr 2026 13:48:36 GMT

Banks and credit unions are under pressure to deliver new digital capabilities faster, but without increasing risk, headcount, or complexity.

Q2 Code is designed for that exact challenge. It’s a governed, AI-powered development environment that helps Q2 customers generate Q2-native code using natural language, accelerating development while staying aligned with platform, security, and compliance requirements.

As AI becomes a priority across financial services, the real opportunity isn’t experimentation, it’s applying AI in practical ways that help teams move from idea to execution faster.

Why this matters right now

Financial institutions need to deliver better digital experiences and innovate faster while operating with limited technical resources, long development cycles, and strict security and oversight requirements.

These constraints create a gap between what teams plan to build and what they can deliver. Even with strong platforms, development remains time-intensive and dependent on specialized resources.

AI is gaining traction as a way to improve development efficiency and operational performance.

The need is bigger than speed

Speed alone is not enough. Financial institutions must build efficiently within regulated, platform-dependent environments.

Generic AI tools often lack the context to meet these requirements. Financial institutions need solutions that align with platform standards, support governance, and produce usable output.
The objective is more efficient delivery of production-ready, platform-aligned solutions with less rework and complexity.

How Q2 Code expands what’s possible

Q2 Code is designed to help financial institutions innovate more efficiently within the Q2 ecosystem. It offers a more direct path to building within the Q2 Digital Banking Platform. Rather than relying on general-purpose AI tools that lack Q2 context, teams can work with a solution built around Q2 APIs, configurations, development patterns, and SDK requirements. This helps reduce the time spent navigating documentation, setting up tooling, and manually piecing together development workflows.

Q2 Code expands what is possible with existing resources. It helps teams move from concept to prototype more quickly and supports a broader set of contributors in the innovation process, including product leaders, platform managers, and semi-technical stakeholders who may not have deep SDK expertise.

That broader participation matters. One of the biggest barriers to digital transformation in banking is that innovation often bottlenecks around a limited number of technical specialists. By making it easier to generate Q2-native code within a structured environment, Q2 Code helps institutions increase innovation capacity without treating headcount growth as the only path forward.

AI that is governed and secure

For FIs, secure AI adoption is not optional. It is central to whether a tool can be useful at scale.

That’s why Q2 Code is built around the idea that AI for banking development should operate inside a governed environment, with security, compliance, and platform alignment built in from the start. Powered by Anthropic models through AWS Bedrock and supported by Q2 guardrails and compliance standards, Q2 Code is positioned to give FIs a way to pursue AI-driven development without stepping outside the controls banking requires.

In many industries, the conversations around AI center on experimentation. We have a different standard in financial services. FIs require AI tools that are not only useful, but trustworthy, supportable, and compatible with the realities of highly regulated operations.

That makes the environment around the AI just as important as the model itself.

A more practical model for banking innovation

The strongest case for Q2 Code is not that it adds AI to the development process. It’s that it applies AI to one of the most immediate and persistent challenges facing banks and credit unions: how to innovate faster without adding complexity or losing control.

Q2 Code helps compress development cycles from weeks to days. It supports moving concepts into working prototypes in minutes. It helps teams go from idea to working solution in hours rather than weeks. Those gains matter because they can change how FIs approach the entire innovation pipeline, from experimentation and planning to delivery and iteration.

Just as important, Q2 Code is built to do that within the context of the Q2 Digital Banking Platform. It helps Q2 customers build faster, more natively, and with greater confidence inside the environment, where much of their digital banking innovation already happens.

The conversation is moving beyond whether AI belongs in financial services. It absolutely does. The more pressing question now is where AI can create practical value without compromising governance, security, or platform integrity. For banks and credit unions working to improve customer and member experience, accelerate delivery, and operate more efficiently, that question is increasingly tied to how software gets built.

Q2 Code is built for that moment.

Learn more about AI at Q2

Q2 Code

Q2 Code product overview

AI for Everyone

Cut to Context podcast

A Closer Look at Q2 Code

Q2 — Thu, 16 Apr 2026 13:48:19 GMT

Q2 Code is an AI-powered development platform built specifically for the Q2 Digital Banking Platform to help teams move faster through the complexity of SDKs, compliance requirements, and security standards. By combining leading AI models with Q2-specific context, tools, guardrails, and platform intelligence, Q2 Code enables developers to build, refine, and ship digital banking extensions in minutes instead of hours.

Watch this demo video to see Q2 Code in action.

Learn more about AI at Q2

Q2 Code

Q2 Code product overview

AI for Everyone

Cut to Context podcast

Webster Bank: Balancing Growth, Risk, and Relationships

Carly Baker — Mon, 13 Apr 2026 20:22:05 GMT

Strategic growth in banking isn’t just about expanding portfolios; it’s about making the right decisions at the right time while keeping customer relationships at the center. By combining deep market understanding with the right technology, financial institutions can confidently balance risk, pricing, and opportunity in an increasingly volatile environment.

Webster Bank is focused on doing exactly that—leveraging Q2’s solutions to bring together pricing, profitability, and relationship insights into a single, cohesive view. This approach empowers teams to make faster, more informed decisions, strengthen treasury relationships, and deliver consistent, reliable experiences customers can count on.

Watch the video to learn more about how Webster Bank is driving strategic, profitable growth.

Welcome to Cut to Context

Cheryl.brown@q2.com (Cheryl Brown) — Thu, 09 Apr 2026 13:45:00 GMT

In the first episode of Cut to Context, a new podcast focused on AI, Q2 CTO Adam Blue sets the table for the conversations ahead about how Q2 is thinking about AI in a way that stays grounded in people, trust, and real work. It's an introduction and an invitation to think about AI not as spectacle, but as a tool for better judgment, better systems, and better banking.

Watch

Transcript

Adam Blue

Hey everybody, I'm Adam Blue and welcome to the first episode of Cut to Context. This is a new podcast we're doing here at Q2 to talk about AI, more specifically AI in the real world as it relates to our business of building strong and diverse communities by strengthening community financial institutions.

So why start this podcast now? I think it's actually kind of interesting at the place we are in the hype cycle today, as the benefits of AI become more clear and the way we use AI becomes a little more concrete than it was maybe in the last year or two. To start talking about real things that we're doing with AI across our business and with our customers, and the real impact that that's having on driving the mission that we've had for 20 years here at Q2.

So why call it Cut to Context? Well, it's a little bit like cut to the chase, you know, which you can imagine a producer flinging during a test screening of a slow movie, you know, to a director that's gotten a little too in love with their framing or their long, long takes. The idea is that for us, AI is going to really center on the context within which the AI is deployed and making sure that we retain the human elements and the key characteristics that are so important in our industry about the way people need to do their banking to drive their financial lives.

So Cut to Context is our reminder that our core value here is talking about the things around AI that make it valuable. And we'll talk about a lot of different aspects of that. But again, the context of it in the business, in the way we change people's lives, that's the part that's going to be the most compelling for us as a topic for the podcast.

Also, we're going to focus on AI as an amplification of human potential, not as a replacement story around taking away the kinds of things people do today. And so the focus will be on how we can get more humanity, more discretion, more taste, more design, more talent in play by using AI and not just a story about reduction of headcount or cost minimization. And there may be cases where that's a really valid use of the technology so that resources can be shifted and deployed elsewhere. But I think what we're really going to be interested in in this context is thinking through how do we make people more effective and more human in the workflows that we supported in the business that we do, as opposed to kind of an arbitrage on labor banking?

I think that is a really interesting place to talk about AI and AI technology, because there are some challenges in being in a regulated industry around repeatability and traceability. You would not think of your average community banker as a riverboat gambler, as our CEO Matt Flake is fond of saying. And so the places where we use AI, we have to get the best of it. And we can't just deliver innovation and then claim that we don't have to be responsible for some of the downside of driving that innovation at a rapid pace.

So the idea around banking and AI coming together, I think, is a really interesting one, because it really focuses on some of the areas where the nondeterministic nature of AI or the newness of the technology can be a real challenge. And so for us, that's going to be an area that we really dig deep into with a lot of the topics that we cover.

We're also going to talk about AI a lot in the context of other things. I find it really valuable in my own thought process, and when I'm working with other people on new concepts, to relate them to things that already exist. And there's so many aspects of the way that generative AI, in particular, works that I find really strong parallels in the creative process or some of the elements that are outside of core banking. So I think you can also look forward to some interesting kind of off axis discussions around concepts and the way that the technologies can have impact that don't just focus on straight down the middle kind of technology and it delivery and change narratives in the same vein as that.

One of the things I'm starting to see that's really interesting that we'll spend some time on is thinking through the coordination improvements that you can get from AI. There's a great article, I think, in the Harvard Business Review in the last couple of weeks that talked about maybe some of the value of AI is not cognitive as much as it's in coordinating the efforts of lots of different people, a lot of organizations, you know, as they grow larger, struggle with how to keep people aligned and face everybody in the same direction. And part of the promise of AI is by speeding and making more efficient communication and the communication of ideas, not just the underlying information, we could be more aligned in a way that creates more value and higher impact over a shorter period of time. And so the coordination burden of a decent sized business is pretty significant. And if you think through AI generating a new way to collaborate, that's pretty valuable. I think that's an interesting topic.

The other side of that also is there is a certain amount of AI slop that circulates. And I can't tell you how many times I've gotten an email with something that could have been two paragraphs and ends up being six pages because I know somebody ran it through ChatGPT. And so that's something we'll probably talk about a little bit as well.

And so in terms of what you can expect from the series, I think it's going to be really grounded. Topics around how do you work with AI in a regulated industry? How do you intersect security concerns and concerns about privacy with AI? What does it mean for talent in a software business that works in an industry like the financial services industry? And, you know, what does it mean for people as employees in terms of how they think about themselves, their identity in the workplace and how to manage your way through that? These are kind of the breadth of some of the things we'll really want to really want to work our way through.

And then at the end, I think at least partially, just for my own amusement, we'll have a recommendation of a piece of human-created art from somewhere in history that is parallel to kind of some of the topics we discussed that you can also enjoy and review. And so coming out of today's episode, for instance, my recommendation would be go listen to the first Pixies album, excuse me, the second Pixies album, which is “Doolittle.” It has an extraordinary dichotomy of sound on the album. It draws from a wide range of influences, from surrealist cinema to, you know, real kind of punch in the face musical dynamics. And it was an extraordinarily influential piece of art at the time when it dropped—artists that are much more popular and much more widely known than the Pixies frequently cite their work and that album in particular as being really formative for them. So “Doolittle” by the Pixies is today's recommendation as a companion to the podcast. Listen to it, enjoy it, maybe even let us know what you think.

And then thanks for joining today on this inaugural introductory episode of Cut to Context with me, Adam Blue. I appreciate your time. Thanks for joining, and I look forward to really digging into this over the next few weeks and months.

Account Takeover 101: What to Look For and How to Respond

Jim Young — Fri, 03 Apr 2026 19:50:40 GMT

Account takeover is big, big business in the fraud world, and fraudsters treat it that way. This isn’t the domain of lone-wolf, hoodie-wearing hackers typing away on keyboards in their basement. It’s much more corporate now, with an organized, systemic approach and end-to-end ecosystems that exploit human trust, digital access, and the financial system itself.

To combat it, banks and credit unions need to understand the threat and adopt strategies that match and exceed the speed and sophistication of the fraudsters.

Account Takeover: When Identity Becomes the Entry Point

First, a little background.

Account Takeover (ATO) occurs when a fraudster gains unauthorized access to a legitimate user’s account, often by stealing login credentials through phishing, malware, credential stuffing, or SIM swapping. Once inside, attackers can quietly update contact details, disable alerts, and move funds without immediate detection.

What makes ATO so dangerous is that it mimics legitimate user behavior. Because these transactions come from familiar devices or trusted logins, they often pass traditional authentication checks.

Mule Accounts: The Hidden Engine of the Fraud Economy

No fraud scheme succeeds without a mechanism to move and disguise the stolen funds. This is where mule accounts come in.

A mule account is either a legitimate or fraudulent account used to receive and launder stolen money. Some mules knowingly participate in return for a commission. Others are deceived through fake job offers or scams into unknowingly becoming part of the laundering process. Think of these like the international traveler who’s asked to carry a bag on the plane for a stranger, not realizing they’re helping them smuggle drugs.

These mule networks are what make ATO schemes financially viable. Hundreds of accounts across banks and jurisdictions are used to layer transactions and obscure the money trail.

Account Takeover in Action

Here’s a step-by-step example of how an ATO attempt can be carried out, countless times, every day.

Step 1: Social engineering setup

The fraudster contacts the account holder (via email, text, phone call, social media DM), pretending to be someone else. Popular choices include: a trusted merchant; tech support for one of their software applications; or most insidiously, the fraud department at the account holder’s bank.

Step 2: Creating urgency

The target receives a message urging them to take immediate action to, ironically, protect themselves from fraud. “We detected suspicious activity and need to verify your account immediately.” If the account holder takes the bait, they end up handing over their login credentials to the fraudster

Step 3: The legitimate login attempt by the fraudster

The fraudster enters the user’s real username and password. The bank then sends a secure access code, to the user’s phone or email.

Step 4: Account holder provides the SAC

The fraudster, still posing as a helpful bank employee/merchant/IT person, asks the account holder to “forward the code we just sent you,” acting as if they’re verifying the account holder when in reality they’re stealing the SAC.

Step 5: Fraudster completes multi-factor authentication (MFA)

The fraudsters enters in the SAC to pass through the bank’s traditional authentication controls and access the victim’s accounts.

That’s just one of many ways fraudsters perpetrate account takeover, but when successful it creates two massive conundrums for financial institutions in the digital age.

1) How do we stop fraudsters when all the required information they’re submitting (username, password, SAC code, etc.) indicates they’re a legitimate user?

2) Even if we’re not certain they’re legitimate, how do we make that determination quickly enough to stop them from moving money rapidly out of the account?

Building a better account takeover detection strategy

It’s about knowing what to look for and then knowing what to do when you see it ... or think you’re seeing it.

While it would be nice to find that one “smoking gun,” a lot of times you’ll need to comb through multiple signals at multiple points in the user journey to determine whether you have an account takeover on your hands.

Here are just a few:

• Did the user log in and then quickly change their account settings?

• Are there multiple login accounts from different locations, at the same time?

• Are there overlapping sessions on the same account from different geographic locations that are far apart from each other?

• Did the user add a new number for the SAC code and then conduct multiple transactions in quick succession?

• Is a single user rapidly switching between IP addresses?

• Is the user now using remote deposit capture with no previous history of doing this on their device? Is this happening during overlapping sessions from different locations? (This is a telltale sign of mule account activity)

Taking a holistic approach

Again, those are just a few of the potential signals. To compete with and surpass the fraudsters, you need to pull in dozens of these signals, at various steps along the journey, from before the log-in occurs, through to the moment of transaction.

You also need to be able to get this information and detect these potential anomalies in real-time. And you need to pull it into a centralized location for investigation and reporting.

It’s Not Always Black and White

When reading through those potential ATO signals, a few “innocent misunderstanding” situations may have sprung to mind. Maybe you and your spouse were both trying to access your joint account, from different parts of the country, at the same time. Or maybe you started up a side hustle and took in a few remote deposit captures quickly after having never previously used that technology.

In those situations, or also in situations where you’re fairly certainly it’s an ATO attempt but you need to do a bit more investigation, you need a middle path, between “Let the user operate fully” and “Lock the user out of the account.” This third option should give legitimate users access to base functionality they would need while keeping fraudsters out of the areas where they can do damage and gives you the time you need to make a final determination on the user’s true status.

A significant but surmountable challenge

Fraud prevention today is not about stopping one scheme. It’s about anticipating the next move in a highly connected web of threats. Account takeover schemes illustrate the coordinated, adaptive, and identity-driven nature of today’s financial crime landscape. Institutions that treat these events as isolated will always be reacting to threats rather than preventing them.

That may seem a little scary and perhaps a bit overwhelming, but creating comprehensive, continuous account takeover protection for your account holders is doable. It requires a shift in mindset, a thoughtful strategy that accounts for your institution’s goals and your account holder’s needs, and then, the right technology to make it all happen.

How to Fight Modern Fraud

Jim Young — Mon, 30 Mar 2026 17:36:39 GMT

Jeff Scott, VP of Fraud Intelligence, recently spoke with BankDirector and shared Q2's approach to identify and combating modern fraud.

Fraud's impact at your financial institution goes well beyond financial losses. It damages your account holder relationships, increases your operational burdens, and make it harder for you to focus on growth and innovation.

When faced with fighting everything from sophisticated account takeover tactics to old-school check fraud, legacy approaches are no longer enough. You need a strategy that can detect suspicious behavior earlier, respond faster, and adapt as fraud tactics evolve.

In a recent video interview with BankDirector (posted below), Jeff Scott, VP of Fraud Intelligence at Q2, broke down what modern fraud defense should look like. You’ll hear why behavioral signals matter, how AI-powered risk models can improve detection, and why real-time interdiction is becoming essential. Jeff also explains how better visibility and smarter workflows can help teams investigate incidents and strengthen defenses over time.

If you're interested in learning more about Fraud Intelligence, click here for more resources, including our e-book.

4 Keys to Making the Case for Positive Pay

Jim Young — Tue, 24 Mar 2026 07:45:00 GMT

When it comes to combatting commercial check and ACH fraud, financial institutions are still balancing two related challenges: offering effective protection with positive pay but also getting business account holders to actually use the solution.

The latter is the focus of our on-demand webinar Closing the Positive Pay Adoption Gap. It’s a conversation between Q2’s Tim Kindschuh and Jessica Salerno and Christine Held of Bank of Ann Arbor about how banks and credit unions can move beyond simply offering Positive Pay and start driving stronger, more consistent adoption.

Below are four key takeaways from their discussion. Interested in going deeper? Click this link to watch the webinar.

1: It’s not about whether positive pay works

That’s because banks and credit union already know it does. The market doesn’t need more proof.

What is needed is for more business account holders to take advantage of this proven form of protection from check and ACH fraud. Unfortunately, the most vulnerable group-small and medium size businesses are the ones most likely to view positive pay as too complex and time-consuming.

2: Education can move adoption forward

Jessica Salerno put it succinctly:

“I don’t think of positive pay as selling. It’s educating.”

Throughout the discussion, Salerno and Christine Held shared examples of how they used to overcome challenges such as: low awareness, perceived complexity, and a belief that fraud is unlikely to happen. Salerno said Bank of Ann Arbor's positive pay messaging is similar to how a customer might think of an insurance policy: some some setup, some cost, and protection when it is needed.

3: Internal alignment makes external adoption easier

Adoption starts inside the institution.

Bank of Ann Arbor has built broad internal buy-in around positive pay, with teams across the bank aligned on its value for both the customer and the institution. That shared commitment helps employees speak more confidently and consistently about fraud prevention.

Bank of Ann Arbor's internal education is also an ongoing process that includes regular meetings with branch staff to review fraud trends, answer questions, and ensure employees are prepared to discuss positive pay with account holders.

4: Process can help close the gap

Customer education alone is not always enough. Process matters.

Bank of Ann Arbor shared how they build Positive Pay into onboarding and follow-up in ways that create clearer expectations. That approach reduces the chance that a customer agrees in principle but never fully implements the service. It also recognizes a common reality: adoption often breaks down in the space between initial interest and daily use.

Learn more

Closing the adoption gap is not a marketing exercise alone. It is a fraud strategy, a customer experience strategy, and a relationship strategy. Banks and credit unions that pair strong Positive Pay capabilities with thoughtful education and lower-friction onboarding are better positioned to help commercial account holders protect themselves.

To hear the full discussion and explore these lessons in more depth, click here to watch the webinar on demand.

Commercial Loan and Deposit Pricing Market Update: March 2026

Anna-Fay Lohn — Mon, 23 Mar 2026 16:30:00 GMT

Our March analysis of the Q2 PrecisionLender commercial loan and deposit pricing database looks at a February market that remained active, even as fixed-rate pricing weakened materially.

Bankers gave up meaningful fixed-rate coupon and spread during the month, despite relatively stable funding costs and deposit costs.

We also take a look at the new PrecisionLender all-in marginal funding curve, which shows that the modest inversion seen at the end of February had largely disappeared by a March 10 snapshot.

Read on for more details.

Data Notes:

When we discuss the cost of funds (COF) on loan pricing activity, we refer to the marginal duration matched funding cost employed in pricing, not the bank’s actual average (historical) cost of funds.
We define Regional+ as institutions with $8B+ in assets, while Community are <$8B.

Volume: Pricing activity remains strong

February pricing activity continued to build on the strong start to 2026. February volume was well above the July 2025 baseline of 100, at 121, and above the average of 110 over the past eight months. Most of the increase was driven from Regional+ institutions than from Community banks.

Priced Commercial Loan Volume
Indexed to July 2025 = 100

Fixed-rate spreads: Performance drops sharply

The clearest story in February was the drop in fixed-rate spread. The fixed-rate coupon over cost of funds fell to 165 basis points (bps) from 176 in January, the lowest reading since March 2023.

Fixed Rate Coupon Over COF

Floating-rate spreads: Stable month-over-month

Meanwhile, floating-rate spread performance was more stable. SOFR slipped to 2.15%, while Prime added 4 basis points to 8 basis points over the index. The February story was not a broad-based deterioration across every loan structure. Instead, the sharpest movement showed up in fixed-rate pricing, where bankers gave up materially more coupon and spread than in floating-rate structures.

Weighted Average Spread to SOFR

Funding curve: Early March reverses the February dip

This month we’re using an all-in marginal funding curve. With FHLB advance rate information no longer publicly available,[JY2.1][AW2.2][AW2.3][AW2.4][JY2.5] this all-in marginal funding curve curve is based on U.S. Treasury plus estimated, historical, average borrowing spreads across the term structure.

We’ve posted the January 31 data points for the last FHLB curve, along with the approximated all-in marginal funding curve: Note the consistency between the two.

PL All-In Marginal Funding Curve

At February month-end, the curve showed a modest inversion. By the March 10 snapshot, that inversion had largely disappeared, and the 60-month point had moved about 20 bps higher. That shift means that in our next market update we will be looking to see whether bankers are able to recover any of the ground they gave up on fixed-rate pricing in February.

Curve Carry Between Common Tenors

All-in COF: Funding costs remain steady

Despite the movement in the PrecisionLender curve, all-in funding costs remained stable overall during February, as SOFR COF added 3 bps to reach 4.29% while Fixed COF fell 4 bps to 4.06%. The change in SOFR COF is the smallest since July to August of last year and fits with the context of no rate cuts and with no rate cuts and overall little change in short-term interest rates.

All-In COF by Month
Rolling Trends

Liquidity costs stayed in a narrow range, as the costs applied to lending have been nearly unchanged thus far in 2026. As we’ll show later, deposit costs were also nearly unchanged month over month. That steadiness appears to undercut the idea that the fixed-rate spread decline was forced by funding pressure.

Note: We also added the current weighted maturity measure to this chart.

Approximate Liquidity Cost
Rolling Trend

Coupons: Fixed and SOFR diverge

Coupon performance is where February down shift in fixed-rate spreads shows up. SOFR coupons moved slightly lower, by 3 bps to 5.81%, while fixed-rate coupons dropped 15 bps to 5.71%. Again, it seems fixed coupons dropped without any noticeable pressure to do so.

Coupon Rate by Month
Rolling Trend

NIM: Fixed-rate profitability softens further

Not surprisingly, the lower fixed-rate coupon translated into lower fixed-rate profitability. Fixed-rate NIM moved lower on the fall in coupon, while SOFR NIM changed very little.

NIM by Month
Rolling Trend

Deposit rates paid: Quiet overall, but still divergent by segment

There was no major deposit story in February at the aggregate level. Deposit rates paid showed no material change from January to February.

Still the segment divergence remains worth noting. Community rates on interest-bearing non-time deposits ticked up again slightly (from 2.02% to 2.03%) while Regional+ rates dropped from 2.67% to 2.66% remained flat.

Interest Bearing Non-Time (MMDA, CWI, Savings)
Rate Paid

Roll-off 2026: A bigger story still ahead

Looking ahead at the new/repriced vs. roll-off comparison for 2026, the expected roll-off coupon rate averages 4.78% for the year, which implies a required rate lift of ~120 bps on fixed-rate deals priced in 2026 to maintain NIM.

Expected Roll-off Rate

The coupon gap to current levels is larger in quarters 2-4 of 2026 than what we observed in 2025. In terms of the timing of the roll-offs, each quarter in 2026 represents about 25% of balances expected to roll off during the year. Finally, the implied coupon lift needed to maintain profitability levels rises above 130 basis points in the final three quarters of 2026.

Expected Implied Rate Change to Maintain NIM

Any questions?

Designing the Operating Rhythm of a Relationship-Focused Bank

Nicholas Koutouras — Fri, 20 Mar 2026 16:51:49 GMT

When I became a business unit CFO of a large bank, my team made early attempts to integrate relationship economics. We had the pieces in place. Reporting had improved, pricing had tightened, Asset Liability Committee (ALCO) discussions were sharper. Yet behavior would still drift when reinforcement wasn’t predictable.

Good quarters would pass and the edges would soften, not dramatically, just enough to notice the next review wasn’t quite as tight as the last one. The lesson was straightforward. Discipline has to be scheduled because announced intentions don’t survive contact with a busy calendar.

Stakeholder readout and account planning

The first stage was quarterly stakeholder readouts where executive management reviewed progress to plan, pricing behavior, relationship depth, balance sheet movement, and emerging risk patterns.

The tone was diagnostic. We weren’t celebrating or defending; we were trying to figure out which banking season was dominant and what it meant for the next 90 days. Was the underperformance a training gap? An operating bottleneck? A product capability issue? Misaligned incentives? The readout identified the pressure point, and the subsequent stages went after the root cause.

From there, priorities flowed into account planning, where portfolio observation had to translate into relationship-level action. Underperforming or maturing relationships were flagged, and teams presented plans grounded in both client need and economic contribution.

In our first year applying this discipline, some long-standing relationships looked different under integrated review. I remember a few of those conversations being genuinely tense, not because anyone was questioning the client, but because the capital allocation picture had changed once we stopped evaluating deals in isolation.

Those were hard meetings. They were also the ones making the most difference because they reconciled economics and client strategy before new commitments were made rather than after. Getting the integrated view before approval was the whole point.

Pricing and measurement

Previously, pricing review had been episodic. Deals got elevated when exceptions were visible. Over time, we refined triggers so roughly 90% of decisions stayed in the line, with a minority escalated for broader review.

The ratio was intentional. You can’t centralize your way to discipline. The forum challenged assumptions when risk, capital, or structural complexity warranted it, and concessions were debated explicitly with deposit expectations clarified and expected trajectory documented. Early on, we allowed a well-defended exception without formalizing the economic expectation attached to it. It seemed practical at the time, but it later complicated enforcement because we’d blurred the standard and the next conversation became harder to hold.

After decisions were made, measurement closed the loop. Utilization, deposit behavior, capital intensity, and return trajectory were compared to assumptions embedded at approval. Drift surfaced quickly. We also discovered operational bottlenecks having nothing to do with pricing: staffing gaps, training needs previously invisible, officers who were consistently overly optimistic in their account plans. Before the rhythm stabilized, forecast variance required narrative defense late in the quarter, but afterward dispersion tightened before averages improved and the explanation cycle shortened.

I should be upfront about something. The whole four-stage cycle was cobbled together outside core systems while the bank modernized its CRM and loan origination infrastructure. Bankers complained about redundancy, and they weren’t wrong because data entry was clunky and the friction was real.

But the rhythm mattered more than the tooling. As systems improved and eventually integrated into Q2 PrecisionLender, the mechanics got smoother, but the principle stayed the same.

Adapted from “Beyond Pricing: Disciplined Performance. Real Impact.”

Your Q2 News for March 2026

sam.armstrong@q2.com (Sam Armstrong) — Fri, 13 Mar 2026 18:28:14 GMT

Your Q2 News for March

Welcome to the Q2 Chronicle, your monthly newsletter for the latest updates, insights, and resources from Q2. Stay informed about key topics this month and explore the full edition below.

INDUSTRY PERSPECTIVE

New Podcast: The Math That Breaks Bank Silos

Nick Koutouras, leader of Q2’s Relationship Pricing and Profitability team, joins The Purposeful Banker to discuss why bank silos persist, even when teams are aligned, because the “shared math” arrives too late. Learn how relationship-level economics, the four seasons of banking, and delivery-to-promise reviews help leaders prevent drift and make better decisions.

Listen now ›

Webinar: Screen Scraping vs Secure Data Aggregation Access: What You're Risking

Join Q2 Chief Technology Officer Adam Blue to learn why financial institutions must move beyond screen scraping. Understand the security, operational, and regulatory risks, how Financial Data Exchange (FDX) APIs enable secure, permission-based data aggregation, and what steps your FI should take now to prepare for safer, open-data access.

DIGITAL INNOVATION

Q2 Innovation Studio Go-To-Market Resources and Webinars

The Q2 Innovation Studio End User Adoption team has launched an on-demand webinar series highlighting new Go-To-Market onboarding resources available on the Q2 Customer Portal, along with partner-specific adoption strategies. Topics include driving adoption of Innovation Studio solutions for Small Business Month, financial wellness, tax season, and more.

Watch now ›

CUSTOMER SUCCESS

How Stanford FCU Delivers Digital Banking at Global Scale

Serving members across 96 countries takes a digital platform built for innovation. See how Stanford FCU uses Q2 to power seamless experiences, deeper engagement, and scalable self-service for a global, tech-savvy membership.
Learn more ›

How Gulf Coast Bank Stays Ahead of Fraud

Protecting customers starts with staying one step ahead of fraud. See how Gulf Coast Bank uses Q2 to proactively detect threats, expand fraud safeguards, and strengthen trust across their community.
Read more ›

Q2 NEWS

The CONNECT 26 Agenda Is Live

The full agenda for CONNECT 26, Q2’s annual customer conference, is live, featuring keynotes, breakout sessions, and hands-on workshops designed to help financial institutions drive growth, improve efficiency, and strengthen fraud strategies. Attendees will get an inside look at where Q2 is investing next through exclusive roadmap sessions covering consumer and commercial digital banking, the Q2 Digital Banking Platform, fraud intelligence, and relationship pricing and profitability.

Arrive early on Monday, June 1 for limited-seat workshops focused on practical execution, from designing personalized digital journeys to accelerating Positive Pay adoption and unlocking the operational power of Q2 Console.

Protect Your Business Customers With Centrix Positive Pay

Jim Young — Tue, 10 Mar 2026 14:00:00 GMT

Watch this short video to find out why more than 600 banks and credit unions use Q2 Centrix Positive Pay to fight commercial check and ACH fraud, and why their business customers find it so easy to adopt and use.

The Four Seasons of Banking

Nicholas Koutouras — Mon, 09 Mar 2026 20:56:48 GMT

For as long as I’ve been in banking, emphasis rotates among four dominant forces. I think of them as seasons, not because they follow a calendar, but because they’re inevitable. One is always arriving while another recedes—capital and return intensity, liquidity management, net interest margin, and relationship depth most often revealed through fee income.

The financial institutions navigating cycles well tend to recognize which season they’re entering before it’s obvious. The ones struggling react after the pressure is already reshaping behavior on the ground.

Capital, liquidity, margin

Capital constraint sharpens everything. Return dispersion gets scrutinized more directly, and account plans previously emphasizing growth get reexamined through the lens of how much capital each relationship is actually consuming relative to its depth. Discipline tightens naturally during these periods because the constraint is visible and nobody needs convincing. The harder test comes later, and this is where most institutions quietly give back what they gained, maintaining the same rigor once capital turns plentiful again.

Liquidity stress works differently. I’ve watched pricing conversations shift almost overnight when funding costs move, and the institutions handling it well were already modeling deposit behavior dynamically. The ones caught flat-footed had been treating deposits as a static input, reliable until suddenly they weren’t. Assumptions around operating balances received more scrutiny than spread alone, and relationships appearing stable turned out to rely on lending concessions never assessed across duration.

Margin compression creates its own gravitational pull. Teams start asking questions about every basis point in ways they hadn’t when margin was comfortable. Portfolios embedding strong structure at commitment weather margin pressure differently than those built on the assumption favorable conditions would continue indefinitely. This is where the quality of your origination discipline shows up in ways you can’t paper over.

Relationship depth

The fourth season gets the least consistent attention, which is part of the problem. Cross-sell penetration, fee generation, share of wallet—these matter, and everyone says so, but fee income doesn’t respond to quarter-end urgency. It reflects sustained account planning and client engagement compounded over time.

I’ll be honest. This is the season where I’ve seen the most wasted opportunity. Banks acknowledge relationship depth matters and then fund it last, staff it last, measure it last. The financial institutions generating durable fee income invested in depth before they needed it, usually during periods where it would have been easy to redirect energy toward something more immediately measurable.

There’s a reason I keep coming back to this. It’s the one area where I’ve watched organizations repeatedly identify the gap, talk about closing it, and then let it slide once the next capital or margin cycle demanded attention.

The season dominating your stakeholder readout guides the rest of your operating cycle: what account planning scrutinizes, what pricing forums emphasize, what measurement tracks most closely. Leadership doesn’t choose the season, but it does choose how early to recognize the shift. And the underlying standard—that relationships earn their capital and funding footprint—has to hold regardless of which season is dominant.

That’s easy to say. Sustaining it when conditions feel comfortable is where most institutions quietly lose ground.

Hear more about the four seasons of banking on an episode of The Purposeful Banker podcast, “The Math That Breaks Bank Silos.”

Adapted from “Beyond Pricing: Disciplined Performance. Real Impact."

The Value of Digital Assets in Commercial Banking

Todd Klapprodt — Fri, 06 Mar 2026 16:24:13 GMT

If you work in commercial banking, you’ve probably noticed the conversation shifting. Digital assets, especially stablecoins, are showing up less as “crypto talk” and more as a serious discussion about payments infrastructure, settlement, and what modern corporate clients will expect next.

Over the past 12 to 18 months, three forces have pushed stablecoins and related technologies into more serious conversations: growing regulatory engagement, meaningful transaction volume, and a rising expectation that money should move 24/7 in the same way data does.

That shift matters for commercial banking because when new rails become “real,” client expectations evolve, and financial institutions (FIs) have to decide how to stay central to money movement as the rails change.

Why the digital asset discussion matters right now

For a long time, stablecoins were thought of primarily as tools inside the crypto market. What’s changed is the framing: Stablecoins are being discussed more actively in the context of payment systems, settlement, and even dollar competitiveness.

One driver is the direction of regulatory dialogue. For example, the GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins Act) is one effort to establish federal guidelines and a framework for issuance, backing, auditing, and supervision—clarity that institutions typically need before they’re comfortable engaging or building on emerging payment infrastructure.

The second driver is scale. Stablecoin volumes are no longer niche. 2025 stablecoin volume was about $33 trillion (roughly a 72% year-over-year increase) with activity concentrated largely in USDC and USDT. Predictions are that volume could reach $56 trillion by 2030. This puts stablecoins in the neighborhood of settlement volume associated with major payment networks, making it harder for financial institutions to ignore.

Third is the customer experience reality: Commercial clients are increasingly sophisticated and expect their money to move instantly and continuously around the clock, particularly as business becomes more digital and global. That expectation is a wake-up call for any incumbent payment rail that primarily assumes business hours.

The strategic question for financial institutions, then, isn’t whether to chase a trend. It’s how to remain central to money movement as new rails mature.

Not all digital assets are the same

A big reason this topic gets muddled is that “crypto” has become a catchall term. But when FIs talk about digital assets in a payments context, we’re often referring to three distinct categories that get lumped together too often.

Cryptocurrencies: Crypto assets like Bitcoin and Ethereum are digitally native assets. They are not dollars, not issued by a bank, and they fluctuate in value, which is a major part of what they’re known for. They’re primarily viewed as investment or speculative assets.

Stablecoins: Stablecoins are digital tokens pegged to a currency, such as the U.S. dollar (and in other countries, pegged to local currency). But they are not bank deposits. They are liabilities of the issuer.

Tokenized deposits: Tokenized deposits are a different concept. They are not just a representation of money; they are the money: a real bank deposit moving on modern rails (such as blockchain infrastructure).

These distinctions matter because they influence everything from risk posture to customer disclosures to how an FI integrates new rails into existing treasury services.

The use cases gaining traction in commercial banking

When you set aside speculation and focus on utility, the most practical early use cases tend to cluster around speed, availability, transparency, and automation. There are three use cases that are helping shift this conversation from “experimental” to “strategic” for FIs.

Cross-border payments and treasury

Cross-border payments can be slow, expensive, and opaque, especially when something goes wrong and it’s hard to see where a payment is in the chain. Stablecoin rails can enable near real-time settlement (24/7) with improved transparency, which can be compelling for commercial clients managing global treasury operations, particularly when liquidity timing matters.

From an FI perspective, this is more than a “nice-to-have.” Commercial clients are asking for faster global money movement, and it becomes a competitiveness issue. If one institution doesn’t offer modern rails, another might. It’s also a fee and relationship retention opportunity, where improved capabilities can help deepen relationships.

24/7 settlement and liquidity management

Traditional banking infrastructure largely operates on business hours, while blockchain-based rails operate continuously. As businesses become more digital and global, they increasingly expect money to move instantly and around the clock, similar to how data moves.

For FIs, that expectation shows up in client demands for modern settlement capabilities, especially as fintech competitors increasingly market 24/7 capabilities.

Programmability and embedded finance

This is where the conversation starts to extend beyond speed. Programmable money creates the possibility for things like conditional payments, automated escrow, and real-time reconciliation. For certain industries, this can be more valuable than speed because it drives operational efficiency. In practical terms, it has the potential to reduce reconciliation friction and support working capital optimization while enabling more industry-specific automation over time.

“Is this only for the biggest FIs?” What to watch downstream

Today, much of the stablecoin volume skews toward larger corporate customers, but the rationale can move downstream. If a small business finds a supplier across the globe that can deliver goods or services more cheaply, competitiveness matters. And that business may want their community bank to support modern cross-border capabilities.

That’s why the practical question isn’t only “who should do this,” but “how do you integrate these rails into existing digital and compliance workflows,” especially in treasury services.

Optionality, orchestration, and risk-managed innovation

A responsible approach starts with a simple mindset: “dipping your toes in” does not mean launching stablecoin tomorrow. It means building optionality, understanding where digital asset capabilities could plug into existing treasury management, payments, and liquidity services.

Some practical entry points that can help FIs learn and modernize without committing to a binary bet include:

Enable clients to view digital asset balances within the digital banking experience, including pulling in ledger balances
Prepare infrastructure for 24/7 settlement since much settlement today assumes business hours
Partner with regulated providers rather than building everything in-house to help get to market and learn while keeping initial investment lower

Crucially, this is a platform and orchestration approach, not a one-partner bet. The role of the digital banking platform provider is to help FIs integrate new capabilities into trusted experiences. Where an FI chooses to work with a regulated provider, the key is orchestration: secure integration, consistent UX, and compliance alignment within existing channels to minimize change management.

That “optionality first” mindset also supports gradual scaling. A modern digital banking platform can allow institutions to pilot, learn, and expand responsibly rather than making a binary decision.

The guardrails that make a first pilot viable

The technology may be interesting, but guardrails are what make it viable for regulated institutions. For an initial pilot, especially send/receive and cross-border flows, there are several non-negotiables:

Full AML and sanctions controls
Clear issuer and counterparty risk assessment
Integrated transaction monitoring
Defined exposure limits
Transparent customer disclosures

If those guardrails aren’t in place, it isn’t a pilot. It’s a risk event.

And those guardrails can’t live in side systems; they need to be integrated into the digital experience and workflows for approvals, monitoring, and reporting. Innovation can’t outrun governance. A successful pilot isn’t about moving the most volume. It’s about proving digital asset rails can operate within the same risk, compliance, and consumer protection frameworks FIs already uphold.

Staying central as the rails evolve

Digital assets are a broad category, but some parts of the landscape are increasingly being treated as serious infrastructure. That’s why the right posture for commercial banking isn’t hype-chasing. It’s building optionality, modernizing responsibly, and ensuring your FI remains central as the rails of money movement evolve.

Evolving SMB Deposit Strategy in a Shifting Liquidity Environment

ModernFi — Thu, 05 Mar 2026 22:06:10 GMT

Q2 occasionally shares our blog space with fintech partners to highlight their perspectives, spotlight joint innovation, and provide a closer look at how collaboration across the ecosystem is shaping the future of digital financial services.

Small and medium-sized businesses (SMBs) are managing liquidity entirely differently than even a few years ago.

Higher rate sensitivity, increased awareness of deposit insurance limits, and access to digital financial tools have changed how SMBs think about cash. Many businesses now actively monitor yield, diversify accounts, and adjust balances more frequently than in the past.

For financial institutions, this shift raises important strategic questions:

How should deposit strategy evolve to reflect changing SMB expectations?
What does stability look like in an environment where funds move more fluidly?
How can institutions support liquidity flexibility while maintaining strong client relationships?

A changing deposit landscape

Today, SMBs operate with tighter margins and greater operational complexity. Cash is not idle. It is working capital, and business owners increasingly treat it that way.

At the same time, public awareness around deposit protection and risk management has grown. Businesses are more informed about FDIC and NCUA insurance limits and increasingly attentive to where and how their funds are held.

As a result, some financial institutions (FIs) are reassessing the structure of their deposit products for SMB account holders, how they communicate protection and coverage, and even whether existing tools meet their modern liquidity expectations.

This reassessment is less about chasing rate and more about aligning services with account holders’ behavior.

Expanding the liquidity conversation

Rather than viewing deposits solely as a static balance sheet component, financial institutions should broaden the conversation to include flexible deposit placement structure, simplified liquidity management processes, and options for extended FDIC and NCUA coverage.

This expanded view enables FIs to remain central to the relationship while acknowledging that SMBs may want diversification and yield optimization. By offering more, FIs deepen their relationships with SMB account holders, giving them the diverse offerings that have a winning edge.

The goal is not to replace the primary banking relationship. It is to support it with greater transparency and optionality.

The role of external partners

In evaluating new approaches, FIs are inclined to work with platforms that focus on deposit placement networks or liquidity tools.

Many Q2 customers look to ModernFi for support of deposit management strategies and for help in expanding insurance coverage through their network of financial institutions. ModernFi enables FIs to protect large business deposits beyond the normal $250,000 insurance cap by spreading the money across multiple insured institutions while making it feel like one relationship to the business customer.

ModernFi, which is a partner in the Q2 Innovation Studio, integrates into the Q2 Digital Banking Platform, which reduces friction for both the FI and its SMB account holders. Institutions that choose to work and contract directly with ModernFi retain ownership of all their SMB relationships.

Looking ahead

As SMB banking continues to evolve, deposit behavior is more dynamic, liquidity expectations are higher, and business account holders are more informed than ever.

For FIs, the focus may be less about reacting to rate competition and more about designing deposit strategies that reflect how businesses actually manage cash today.

As the landscape continues to shift, clarity around deposit structure, coverage, and liquidity options will likely remain an important part of serving the SMB segment effectively.

Relationship Pricing Breaks Down Silos

Nicholas Koutouras — Mon, 02 Mar 2026 18:55:10 GMT

When I stepped into a business unit CFO role overseeing more than $50 billion in combined exposure, the first thing I heard from corporate was blunt: “It’s the Wild West.” The line had a different take. They felt corporate didn’t understand the business. Both sides were partially right, which was the whole problem. Nobody was looking at the same numbers at the same time, and without a shared view, every conversation turned into a negotiation about whose version of reality was more credible.

I came to believe banks don’t fragment because people refuse to work together. They fragment because the economics governing decisions are incomplete at the moment those decisions get made.

Parallel math

Every major function inside a bank runs its own legitimate financial discipline. The Lending Department protects spread and structure while the Treasury Department is focused on liquidity and funding cost. The Risk Department owns capital while the Finance Department holds the line on return stability and forecast credibility. All of them are rational, necessary, and internally consistent.

The trouble starts when those logics never get reconciled into one system before commitments are made. Instead they’re sequenced: Pricing clears a hurdle, credit confirms risk tolerance in a separate room, funding gets reviewed in a different forum, and capital intensity surfaces in portfolio analytics weeks later. No policy is violated, but the enterprise absorbs trade-offs nobody explicitly debated, and those trade-offs accumulate in the balance sheet long before anyone names them.

One reason the pattern persists is because isolated accuracy creates a false sense of control. Pricing looks disciplined relative to market, risk grading is conservative, and capital models are technically sound. Every slice withstands scrutiny on its own terms.

I remember sitting in a review where a deal cleared every hurdle we tracked at origination. Clean. Six months later, when capital intensity and deposit behavior were layered in, the enterprise return told a completely different story. The system had never evaluated the full equation at once, not because anyone failed, but because nobody owned the composite view. Those disconnects accumulate as modest forecast adjustments and pockets of unexpected capital consumption. Over a few quarters, variance becomes a recurring feature rather than something you explain away.

Making the relationship the unit of value

The shift with the most impact was reframing the relationship, not the deal, as the unit of economic value. Once we did this, loans, deposits, fees, capital consumption, and risk stopped living as parallel metrics. A lower-spread loan could be rational when anchored to durable operating balances, and a pricing concession might be justified by long-term relationship expansion. But the reverse kept showing up, too: Relationships that appeared profitable at origination sometimes revealed structural inefficiency once you layered in funding behavior and capital usage over time.

Linking all of this to the financial plan was uncomfortable. Some relationships that looked strong transactionally didn’t hold up in aggregate, and people who’d championed those relationships weren’t thrilled to see the numbers reframed. The tension was productive, though. It gave us something concrete to discuss instead of trading anecdotes about client potential.

What changed in the room

The first time we brought relationship-level economics into the Asset Liability Committee (ALCO) in a fully integrated way, the questions got sharper. The nature of debate shifted. We stopped arguing about whose numbers were correct and started examining the same numbers from different angles. Over time, this changed how people prepared. Leaders showed up expecting prior assumptions to be surfaced, and relationship managers anticipated questions about duration and capital intensity before walking in the door.

Early in the repair effort, we’d spoken openly about collaboration and shared accountability. The words were right, but the measurement systems weren’t aligned yet, and behavior followed the math. Culture shifted later—without a town hall, without a reorg—once relationship economics began governing decisions consistently. People responded to what was measured and revisited, and the walls came down because the economics finally gave them a reason to.

Adapted from “Beyond Pricing: Disciplined Performance. Real Impact."

Commercial Loan and Deposit Pricing Market Update: February 2026

Anna-Fay Lohn — Tue, 24 Feb 2026 20:05:00 GMT

Our February analysis of the Q2 PrecisionLender commercial loan and deposit pricing database (based on January 2026 activity) take a look and the recent shifts in the funding curves, as fixed-rate pricing appears to be adjusting to the new normal.

We also looked at the high level of pricing activity to start 2026, as well as an interesting divergence in deposit pricing between the Community and Regional+ segments.

Read on for more details.

Data Notes

When we discuss the cost of funds (COF) on loan pricing activity, we refer to the marginal, duration-matched funding cost employed in pricing, not the bank’s actual average (historical) cost of funds.
We define Regional+ as institutions with $8B+ in assets, while Community are <$8B.

Volume: Strong finish to 2025, firm start to 2026

Pricing activity posted a strong finish to 2025 and a strong start to 20265, with December 2025 and January 2026 two of the most active months start the start of 2025.

Commercial Loan Pricing Volume
Indexed to January 2025 = 100

This time of year, it’s also important to call out the indexing convention. We shift the baseline forward to July 2025 so the next six months remain comparable without over-weighting new population changes. December 2025 and January 2026 pricing activity was above the average for this new 7-month period.

Commercial Loan Pricing Volume
Indexed to July 2025 = 100

Higher activity likely indicates greater competition for deals. We'll check next month to see what impact that may have had.

Spreads: lack of resilience continues

Turning to the key revenue indicator, we continue to observe a familiar theme: lack of resilience.

SOFR spreads are flat at 2.16% month over month, after December showed a comparatively large decrease of 8 bps. Prime spreads slipped 5 bps to +4 bps to the index. Both remain below their levels before the Fall rate cuts.

In our recently released State of Commercial Banking report, we noted that the Federal Reserve Survey of Senior Loan Officer reported expectations for declining margins, and spreads to index are a contributing factor. Our data shows that spreads have continued to trend lower since the start of 2025.

Weighted Average Spread to SOFR

On the fixed-rate side, spreads have been in the ~175 bps range for several months. They remain down since the start of 2025, though up from the low of 169 bps in June and July.

Fixed Rate Coupon Over COF

That overall drop may be an indication that bankers aren’t fighting to maintain coupon rate levels. Note that during the past 12 months, the gap between the coupon and the 60-month rate on the FHLB curve has shrunk by nearly 30 bps.

FHLB 60 Month vs. Fixed-Rate Coupon

Taken together, the spread picture still reads like a market with ample liquidity and plenty of competition.

Funding curve: positive carry returns

The curve setup has changed materially since we las reported it on in our December 2025 update. With the exception of a small trough between the 3 and 60-month tenures, very little inversion remains. Since year end, the 1-month rate was virtually unchanged at 3.82% and the 60-month rose 13 bps (3.80% to 3.93%) during that span.

FHLB Curve
Selected Dates

As a result, there is a positive carry of 11 bps from the 1-month tenure to the 60-month tenure, the two key points for pricing. That’s the first time that metric has been positive since it was +2 bps in the December 31, 2024 snapshot.

FHLB Curve Carry
Between Common Tenures

Cost of funds: SOFR and fixed-rate costs converging

SOFR funding costs largely reflect the trio of rate cuts since September 2025, as they have dropped 78 bps from August 2025 (5.04%) through January 2026 (4.26%). Meanwhile though, fixed-rate COF All In have remained steady during that span, dropping just 5 bps (4.15% to 4.10%) The 89-bps gap between SOFR COF and fixed COF in August has thus closed to just 16 bps in January.

All in COF by Month
Rolling Trend

Note: Beginning next month, we will transition to a Treasury based funding curve proxy in response to changes in the availability of FHLB curve data.

Coupons: fixed and SOFR move toward parity

Not surprisingly, as the funding inputs have shifted, so too has the coupon story. Fixed and SOFR coupons are reaching parity again, with the SOFR coupon (5.84%) dropping just below the fixed-rate coupon (5.86%) in January.

Coupon Rate by Month
Rolling Trend

When coupons converge, the fixed-vs-floating choice becomes less about “rate gap” and more about structure, term preference, and optionality. We will continue to monitor structure preferences and potential shifts in mix.

Liquidity costs remain range-bound

Liquidity costs remain in the same tight range they’ve been in since before the rate cuts. Floating-rate (SOFR) liquidity costs are at 55 bps, at the low end of their 6-month range (55-60 bps). Fixed-rate liquidity costs are at 29 bps, also at the low end of their 6-month range (29-34 bps).

Approximate Liquidity Cost
Rolling Trend

NIM improves on SOFR

The drop in funding costs helped boost SOFR NIM by 7 bps in January (1.81% to 1.88%). Fixed-rate NIM stayed steady, mirroring the lack of recent movement in funding costs and the coupon.

NIM by Month
Rolling Trend

Deposits: Divergence at the segment level

Since we last checked in on deposit rates, they have continued to drop, which was expected given the December rate cut occurred during that span. During the recent SOCB webinar, many participants reported that deposit liquidity would be a cornerstone of many 2026 business plans, due to both its increased availability and lower trending cost.

What caught our eye though was that the rate of decrease differed between the Regional+ and Community segments in their interest-bearing non-time portfolios—a proxy for management-set rate decisions Our data shows that Regional+ institutions have lowered rates in those portfolios by 24 bps since November (mirroring the quarter-point rate cut), but the Community counterparts have only dropped rates by 5 bps during that period.

Interest Bearing Non-Time (MMDA, CWI, Savings) Rate Paid

Roll-Off Watch series: 2025 wrap-up

We’ll finish up by returning to Roll-Off Watch to see what happened in Q4 2025 and what that means for 2025 overall.

A reminder this was a look at how coupon rates and NIM for pandemic-era loans rolling off the books in 2025 compared to loans that were being newly priced/repriced in 2025. Below are our rules of the road for this analysis.

The KPI will be the degree (+/-) to which original NIM compares with NIM for new and renewed loans. It is not a record-for-record match of matured loans and their replacement attributes.
Using the December 2024 portfolio snapshot as the basis, we’ve aggregated 2025 roll off activity by quarter and presented static coupon measures associated with each quarter.

These values may change as 2025 progresses due to early payoffs, curtailments, or other activity.

For the year, the new coupon lift was ~104 bps over the rates on loans rolling off. However, that gain eroded over the course of 2025, from a +120 bps coupon gain Q1 down to 67 bps in Q4.

Roll-off vs. New/Repriced: Coupon

Meanwhile, NIM measures fell short by about 30 bps for the year from the roll-off level to the new (replacement) level.

Roll-off vs. New/Repriced: NIM

What we’ll be watching for in future updates

With pricing activity still firm, it will be interesting to see if bankers use these tactics to protect performance in the coming months.

Using guardrails. Actively acknowledging key revenue measures such as contractual spread, fee income and cross-sell adders.
Being intentional about structure. Coupon parity changes borrower conversations; it could be a catalyst for more structure-driven negotiations.
Tracking sources of funds and their costs. Overall, deposit repricing trends vary across institutions. Budgets in 2026 may hinge on execution cadence as much as strategy.

Got questions?

Your Q2 News for February 2026

sam.armstrong@q2.com (Sam Armstrong) — Tue, 17 Feb 2026 20:34:30 GMT

Your Q2 News for February

Welcome to the Q2 Chronicle, your monthly newsletter for the latest updates, insights, and resources from Q2. Stay informed about key topics this month and click below to explore the full edition.

Q2 NEWS

Register for CONNECT 26, June 1–3, 2026, in Austin

Q2’s annual client conference brings together leaders, insights, and innovations shaping the future of digital banking.

Explore the CONNECT 26 tracks: Six focused learning paths designed to help institutions navigate change, modernize digital experiences, strengthen trust, and drive sustainable growth.
Meet the keynote speaker: Suneel Gupta, best-selling author and leadership expert, shares insights on well-being, resilience, and sustaining high performance in times of change.

DIGITAL INNOVATION

Quarterly Q2 Customer Technology & Experience Update

The Quarterly Q2 Customer Technology & Experience Update webinar series is designed to keep customers informed on Q2’s progress, priorities, and what’s ahead across technology and the overall Q2 customer experience. Each session provides a clear, practical view of recent milestones, active initiatives, and learnings that can help inform planning and partnership.

The March webinar will focus on Digital Banking and cover key technology and experience updates, progress as cloud migration work closes out, a preview of what’s coming next, and more.

Q2 Innovation Studio Go-To-Market Resources and Webinars

The Innovation Studio End User Adoption team has launched a webinar series highlighting new Go-To-Market Onboarding and partner-specific adoption strategies. Watch previous sessions on-demand and register for the webinar next Wednesday, February 25.

Live Webinar: February 25, 2026: Innovation Studio: Maximize Small Business Month with Strategies to Drive Adoption. Register now ›
On-Demand Webinars—Watch Now: Topics include building an effective go-to-market strategy, launching a successful tax season, and more. Watch now ›

INDUSTRY PERSPECTIVE

What Digital Dollars Mean for Treasury and Payments

Stablecoins, tokenized deposits, crypto. Understanding and differentiating the various forms of digital assets is becoming more important as more businesses look to them for faster payments. Todd Klapprodt, Q2 senior product manager focused on payments innovation, joins the podcast to provide a practical primer on digital assets—what they are, why commercial banking is paying attention, and how financial institutions can explore use cases safely.

Listen now ›

2026 State of Commercial Banking

Liquidity has recovered, and it’s changing the tone of 2026. If deposits were the story of the past cycle, this is the chapter on what comes next: pricing pressure, strategy reset, and what “normal” could look like again.

The 2026 State of Commercial Banking report, based on the proprietary data in Q2 PrecisionLender along with other published industry data, outlines how commercial banking fared in 2025 and what we can expect moving into 2026. It also covers the top-of-mind industry topics of fraud, mergers and acquisitions, and the continued drive for efficiency.

Download the report, and tune in for the full on-demand State of Commercial Banking Webinar.

Watch now ›

CUSTOMER SUCCESS

Leaders Bank On Q2: Celebrating Innovative, Community-Driven Institutions Leading the Way

Read this blog for an inside look at the ideas, leadership, and customer-first mindset driving meaningful innovation across digital banking, and how Q2 is growing with institutions that are reimagining what’s possible.

Read the blog ›

Developing An Institutionwide Fraud Prevention Strategy

Jim Young — Tue, 17 Feb 2026 20:02:18 GMT

From our daily conversations with banks and credit unions,we know that institutions are yearning for a different approach to fraudmanagement. They're tired of trying to execute countless point-in-time tacticsvia a myriad of solutions. They want something comprehensive andtransformative, that’s both agile and scalable.

That may sound daunting, but the technologies are improvingand the mindsets are shifting. The key is to have a guide to help yourinstitution along the way.

Our recent e-book: "Fraud Intelligence: Build Trust.Not Friction" lays out a step-by-step roadmap to follow.

One of the key steps is to elevate fraud prevention to an institutionwiide strategy.

The Old Siloed Approach

Historically, fraud has been managed at the line-of-business(LOB) level at banks and credit unions, with each team buying its own tools andhandling its own alerts. But this fragmented model no longer works. Frauddoesn’t respect org charts. It moves across payment rails, channels, andcustomer segments, often in quick succession

Likely every institution has some version of a story inwhich a fraud attempt was flagged in multiple channels but couldn’t be stoppedin time because those channels weren’t communicating with each other.

Siloed fraud prevention results in:

Gaps where handoffs break down
Duplication where multiple teams solve the same problem in parallel
Inconsistent friction where different customers experience different “rules,” depending on channel or product

And the business impact goes well beyond the dollars stolen. One industry estimate puts the total cost at $5.75 for every $1 stolen once you account for investigation, recovery, servicing, and downstream effects. That’s why fraud strategy can’t just be “owned” only where the loss posts. The ripple effects hit operations, reputation, and growth.

Going Institutionwide: Three Key Steps

“Make fraud a institution-wide strategy” can turn into anempty slogan unless you're prepared to take these three steps:

1) Ensure there is one clear point of accountability

When you’re implementing a fraud strategy, it helps to have“one head cook in the kitchen," a single owner of results from start tofinish. You may want to consider assigning a C-level executive to this, a"Chief Fraud Officer," if you will. If you're not ready for thatlevel of consolidation, then conisder a small working group of LOB leaders,with a mandate to implement a policy across the institution and the power tomake it happen.

With a fraud leader/leadership group setting priorities andresolving conflicts across lines of business, you avoid having fraud programscompeting with each other for attention, budget, or authority.

2) Unify fraud policies across departments and channels

Like a symphony, fraud prevention works best when all partsof the organization respond in sync, Treat fraud as a shared institutional riskinstead of a collection of separate departmental issues. Developing a unifiedpolicy takes "institution-wide" from theoretical to reality: shareddefinitions of fraudulent activity; standardized response protocols topotential threats; shared objectives aligned with leadership priorities; andintegrated training so every team speaks the same fraud prevention language.

When policies are unified, an alert in one channel cantrigger coordinated action across others, closing the gaps and limiting therisk.

3) Consolidate tools and data under a single platform

Disconnected tools mean disconnected data, which prevents atruly accurate risk picture. In a recent Datos Insights study, when fraudprevention leaders were asked to identify their biggest pain point, nearly allof them (94.7%) selected “Critical customer data stuck indisconnected systems.”

It's not surprise then, that in the same study, 63% saidthey struggle with visibility across channels, while 58$ cited poororchestration between their fraud tools and controls. These findingspoint to the dire need need for a centralized hub that compiles signals,applies analytics and pushes decisions back out to to the solutions and systemswhere action is taken.

This centralized approach reduces duplication, acceleratesdecision-making, and positions the institution to adapt quickly to newthreats. Having this in place opens all sorts of new possibilities, likeCommercial and Consumer teams leveraging one orchestration system, or SmallBusiness and Commercial using the same Positive Pay solution.

Download the E-book

Click here to learn more about Fraud Intelligence. It's an identity-centric, real-time approach that harnesses advanced technologies to customize security measures dynamically for each account holder. Fraud Intelligence doesn't just stop losses. It builds trust, unlocks growth, and positions your institution to outpace fraudsters, not chase.

Beating the Attention Economy in Financial Services: A New Model for Digital Banking Engagement

Array — Fri, 06 Feb 2026 19:21:17 GMT

Across the financial services landscape, banks and credit unions are navigating a familiar tension: Account holders expect more from their digital banking experience while traditional revenue leaders continue to face pressure. Beneath both challenges sits a deeper issue. Financial institutions (FIs) are being pulled into an attention economy they were never designed to win.

In an environment where account holders manage their financial lives across a growing patchwork of fintech apps, marketplaces, and point solutions, attention is fragmented by default. Every time an account holder leaves the banking app to check a credit score, monitor identity risk, or explore loan options elsewhere, the institution loses engagement and relevance.

Recent industry research reinforces this tension. According to the 2026 Retail Banking Trends and Priorities report, financial institutions widely acknowledge the importance of digital experience with 57% listing it as their first priority, yet many continue to struggle with execution as investment and attention remains divided across competing priorities.

In our conversations with financial institutions, two “engagement” priorities consistently rise to the top: keeping account holders engaged inside their own digital platforms and creating new revenue streams that complement core banking products without compromising trust. Increasingly, these priorities are inseparable. Both are shaped by the same reality. Attention cannot be demanded; it has to be earned.

The engagement challenge: keeping account holders “in-platform”

Today’s account holders rarely think of their financial lives as belonging to one institution. Credit scores, budgeting tools, identity protection, and loan shopping are spread across a fragmented ecosystem of providers, each competing for mindshare. For financial institutions, this fragmentation comes at a cost. When account holders manage their financial health elsewhere, engagement erodes quietly, relationships weaken, and attrition grows.

As a result, many institutions are rethinking how to craft meaningful digital engagement. The goal is no longer to drive more clicks, notifications, or campaigns; that’s a losing game. It is to make the banking experience useful between traditional moments like transactions, statements, or loan applications.

Tools that encourage repeat visits on a monthly or even weekly basis help shift digital banking from a utility to a habit. Credit awareness, timely financial insights, and alerts tied to real consumer needs are increasingly viewed as table stakes. When delivered inside the banking experience, these tools reduce the need for account holders to seek value elsewhere and help anchor engagement to the institution’s own platform.

This is why capabilities like credit monitoring and insights are becoming central to digital engagement strategies. When account holders can access information they already value without leaving the banking app, financial institutions can reclaim relevance in moments that matter.

The revenue challenge: beyond interest and fees

At the same time, financial institutions are under pressure to diversify revenue. Overdraft fees, interchange, and traditional lending margins alone are no longer sufficient growth engines, and on top of that, these income sources can be erosional to relationships. Furthermore, competition from fintechs has reshaped consumer expectations around what “value” looks like in a financial relationship.

Rather than relying on aggressive cross-sell tactics, many institutions are exploring revenue models that align more closely with consumer needs. Optional premium tools that consumers already pay for elsewhere, including identity protection, privacy tools, and subscription management, are gaining traction when they are offered transparently and embedded within digital banking. Account holders already trust their financial institution; the next step is providing the services they need.

For financial institutions, the appeal is generating revenue while giving account holders control over which tools they choose to adopt. When account holders opt into services that feel helpful, monetization reinforces trust instead of undermining it. Revenue becomes a byproduct of relevance, not pressure.

This thinking has driven interest in modular solutions like Array+, a Q2 partner solution that gives account holders access to platform features, enabling the financial institution to decide which features are free and which are premium. That way, when account holders upgrade to unlock premium tools, the FI shares in the revenue. The value for institutions is not just monetization; it is flexibility. Tools offered broadly to drive engagement, positioned as premium where appropriate, and aligned to the FI’s broader digital strategy without conforming to a one-size-fits-all model will win in the long run.

A shift in mindset

What’s changing is not how financial institutions think about engagement or revenue independently but how they view the role of attention altogether. In a landscape defined by fragmented experiences and rising expectations, winning does not mean competing louder for attention. It means earning repeat visits through sustained usefulness.

Deeper engagement creates the conditions for consumer-aligned revenue, while well-designed premium tools reinforce loyalty rather than erode trust. This is not about adding more features or copying fintech playbooks. It is about designing digital banking experiences that account holders actively choose and enjoy.

The broader takeaway is less about any single product and more about strategy. Financial institutions that succeed in the next phase of digital banking will be those that stop competing inside the attention economy and instead build experiences that feel indispensable within it.

By meeting account holders inside the banking experience with tools that are genuinely helpful across the financial journey, FIs can turn attention from a scarce resource into a durable advantage.

Your Q2 News for January

sam.armstrong@q2.com (Sam Armstrong) — Tue, 27 Jan 2026 21:56:49 GMT

Your Q2 News for January

Welcome to the Q2 Chronicle, your monthly newsletter for the latest updates, insights, and resources from Q2. Stay informed about key topics this month and click below to explore the full edition.

CUSTOMER SUCCESS

Powered by Q2, 4Front Credit Union pairs leading-edge digital innovation with relationship banking to help members stay ahead of the curve and invest in stronger Michigan communities.
Driven by a people-first mission and powered by Q2’s digital banking platform, United Federal Credit Union scales innovation, deepens member relationships, and competes nationally without losing sight of community.
Rooted in purpose and powered by Q2, First United Bank brings its “Spend Life Wisely” mission to life by delivering personalized digital banking that strengthens financial wellness and relationships across every community it serves.

INDUSTRY PERSPECTIVE

Can You Fight Fraud and Improve Customer Experience at the Same Time?

The latest episode of The Purposeful Banker podcast features a Q2 webinar replay on using connected fraud intelligence to spot risk earlier, move faster than attackers, and protect account holders in real time.

Listen now ›

See What Live Deal Data Reveals About Commercial Banking’s Future

Join Q2’s 2026 State of Commercial Banking webinar for a data-driven look at pricing, margins, deal structures, and borrower behavior. Insights come directly from active Q2 PrecisionLender deals, offering a real-time view of market dynamics to help your institution plan, compete, and grow with confidence.

When: Tuesday, February 10 at 1 p.m. CT
Register today ›

Q2 NEWS

CONNECT 26: Winter Rate Ends February 28

Join Q2 and leaders across financial services June 1–3 for CONNECT 26. CONNECT is Q2’s annual customer conference in Austin, offering insight, connection, and inspiration.

Take advantage of the $1,795 Winter Registration Rate by February 28 to save $200.

DIGITAL INNOVATION

Explore Important Q2 Updates With the Latest Innovation Index Report

The 2H25 Digital Banking Innovation Index is now available to download, featuring new platform improvements that support your financial institution’s growth and operational needs. In it, you’ll learn more about the changes and advancements Q2 has made across the Q2 platform. Most innovations in this release are available to Q2 customers at no additional cost.

Download the report ›

Q2 Innovation Studio Go-To-Market Resources & Webinars

The Innovation Studio End User Adoption team has launched a webinar series highlighting new Go-To-Market Onboarding resources on the Q2 Customer Portal and partner-specific adoption strategies. Watch previous sessions on-demand and register for the 02/25/2026 webinar.

Live webinar: Feb 25, 2026 – Register now: Innovation Studio: Maximize Small Business Month with Strategies to Drive Adoption .
On-demand webinars – Watch now: topics include building an effective go-to-market strategy, launching a successful tax season, and more.

Leaders Bank On Q2: Celebrating the Innovative, Community-Driven Institutions Leading the Way

Carly Baker — Wed, 21 Jan 2026 15:21:14 GMT

If you follow Q2 on social media, you’ve probably noticed the stories we’ve been sharing through our “Leaders Bank on Q2” campaign. Today, we wanted to take a moment to share with you what the campaign is about and why we were inspired to bring it to life.

“Bank On” is a storytelling platform that celebrates the future-minded banks and credit unions pushing the boundaries of what’s possible—propelled by brave leaders who champion technology, experiment with bold ideas, and embrace digital transformation as a responsibility to their customers and communities.

For years, our internal rallying cry has been “The Customer Is the Way.” This mantra not only reflects our commitment to serving banks and credit unions but also recognizes that our solutions and services ultimately impact their account holders. Whether it’s a small business owner trying to make payroll or a hardworking family depending on a deposit, we never lose sight of the role we play in making these moments possible.

And as our customers’ needs have evolved, this mantra has taken on a deeper meaning for us as their strategic partner. Today’s financial institutions are navigating rapid change with agility and ambition, and they need partners who can match that pace. The “Bank On” campaign was largely inspired by the wish to document not only how they have evolved, but how we have grown alongside them—expanding our platform, deepening our capabilities, and continually broadening our portfolio to meet their digital challenges and opportunities. It’s a reflection of how Q2 has transformed with—and because of—our customers.

For example, you’ll see how:

👉 First Financial Bank in Abilene, Texas has put powerful safeguards in place to stop fraudulent attempts while removing friction from their end-user experience—helping customers make secure, seamless transactions every day.

👉 HFS Federal Credit Union in Hilo, Hawai'i is thoughtfully harnessing digital banking to foster financial growth in a uniquely multigenerational community.

👉 Dacotah Bank in Aberdeen, South Dakota is providing local small businesses with digital offerings on par with what large, national banks provide.

These financial institutions share something fundamental: a willingness to think differently, to embrace technology not as a project, but as a pathway, and to reimagine what’s possible for the people and businesses that rely on them.

Our goal in sharing these stories is to spotlight the leaders at banks and credit unions who are pushing boundaries and transforming the financial lives of their communities. By elevating their vision, their grit, and the real impact they create, we hope to inspire other financial institutions to pursue bold innovation of their own.

As we share more “Bank On” stories, we’d love to have you along for the ride. To keep up with our latest spotlights, be sure to follow us on LinkedIn, X, Facebook, and Instagram (everywhere we share, our posts will include the hashtag, #LeadersBankOnQ2).

Thanks for reading!

Want to learn more about the financial institutions involved in the Leaders Bank on Q2 campaign? Click here.

Fraud Intelligence: A Quick Introduction

Jim Young — Fri, 09 Jan 2026 17:04:46 GMT

Fraud Intelligence is a term we've been using a lot lately at Q2, but it's one you may not yet be familiar with. The video below takes just 90 seconds to walk you through the concept of Fraud Intelligence and how it can help your financial institution use fraud prevention to build trust with your account holders, not friction.

Want to learn more about Fraud Intelligence? Dive deeper with our e-book.

Commercial Loan and Deposit Pricing Market Update: December 2025

Anna-Fay Lohn — Tue, 16 Dec 2025 17:18:09 GMT

Our December analysis of Q2 PrecisionLender commercial loan pricing focused on November activity in the wake of the late-October Fed rate cut. There were signs of a typical seasonal slowdown, while spreads posted mixed results and deposit rates continued to fall.

The story got a bit more interesting though, when we drilled down another level and looked at what was happening in the community banking segment. Pricing volumes stepped down from October in a way that looks very similar to the typical seasonal slowdown we see as the holidays approach. Even so, the second half of 2025 remains stronger than the first half from a pricing-volume standpoint.

Read on for more details.

Data Notes:

• We define Regional+ as institutions with $8B+ in assets, while Community are <$8B.

Season slowdown, but 2H volume still outpaces 1H

November loan pricing activity stepped down from October, but it did so in a very familiar way. Total pricing volume declined by 18% month over month, a decrease that closely mirrors last year’s October-to-November drop as the market slows heading into year-end.

Despite that pullback, overall activity remains elevated when compared to the start of the year. Through November, second-half 2025 pricing volume is running roughly 10% above the first half, consistent with a pattern we often see: a relatively quiet Q1, followed by stronger activity in the middle of the year, and then a seasonal slowdown toward the holidays.

Commercial Loan Pricing Volume
Indexed to January 2025 = 100

SOFR-based loans make NIM gains

While NIM on fixed-rate loans remained essentially flat for the third straight month, it rose by eight basis points (bps) on SOFR-based loans (1.82% to 1.90%). This was the largest single-month increase in SOFR NIM in the past 12 months, ahead of the 7-point increase from December 2024 to January 2025.

Both SOFR and fixed-rate NIM remain at lower levels than Q1 2025, a drop that's been driven by the downward slide in revenue.

NIM by Month
Rolling Trend

Spreads produce mixed results

The NIM improvement for SOFR-based floating-rate loans was driven primarily by spread as this metric improved by 5 bps from October (2.20%) to November (2.25%).

Weighted Average Spread to SOFR

It was a different story for the fixed-rate spreads, which fell by 5 bps month over month. (1.76% to 1.71%).

Fixed Rate Coupon Over COF

Spreads to Prime also fell, dropping from 0.15% down to 0.03%, near the bottom of the range in 2025 for this metric.

Weighted Average Spread to Prime

The spread story shifts at the segment level

When we drilled a bit deeper on the spread data, we found some interesting developments in the Community segment.

Community bankers slightly outperformed the rest of the market when it came to SOFR spreads, adding 10 bps month over month (2.65% to 2.75%) compared to the overall increase of 5 bps. Over the past three months, SOFR spreads have increased by 20 bps (2.55 to 2.75%) while remaining essentially flat overall (2.23% in September vs 2.25% in November).

Weight Average Spread to SOFR
Community vs. Overall

It was a different story though, for fixed-rate spreads. They fell by 20 basis points in November (2.29% to 2.09%) in the Community segment, compared to the 5 bps drop in the overall market. Cumulatively the fixed-rate coupon over COF has fallen by 39 bps over the past three months in the Community segment (2.48% to 2.09%), compared to just a 2 bps drop (1.73% to 1.71%) in the overall market. The slip in community spreads is curious as it’s unclear what the driving force is behind it.

Fixed-Rate Coupon Over COF
Community vs. Overall

All in funding costs contrast with FHLB curve

With that drop in fixed-rate spreads in mind, we looked next at the FHLB curve. While it was relatively stable month over month at the 1-month point (the basis for floating-rate loans), the inversion deepened from there, with rates dropping across the board. The bottom of the trough was at ~ the 36-month point, which was 55 points below the 1-month mark for the Nov. 29 snapshot.

FHLB Curve
Selected Dates

The movement of the FHLB curve was in contrast to all in funding costs in November. SOFR COF fell by 11 bps (4.73% to 4.62%). Note the difference here is explained in part because many institutions use a SOFR curve to assign COF, instead of the FHLB curve.

It was different sort of contrast when it came to fixed-rate COF. Though the 60-month mark on the FHLB curve (the typical proxy for fixed-rate funding costs) fell by 17 bps from Oct. 31 to the Nov. 29 snapshot, the funding costs that bankers used in their pricing in November actually rose by 2 bps, from 4.09% to 4.11%.

All in COF by Month
Rolling Trend

Coupons are steady, but not in the Community segment

SOFR coupons fell 3 bps (6.24% to 6.21%) as the drop in index values was only partially offset by the increase in spreads.

The drop in the Prime index and the drop in spreads combined to pull Prime coupons down 34 bps in November (7.37% to 7.03%).

With the spread for fixed-rate loans down by 5 bps in November and funding costs up by 2 bps during that period, it followed that the fixed-rate coupon dropped by 3 bps as well (from 5.85% to 5.82%

Coupon Rate by Month
Rolling Trend

As with spreads, the fixed-rate coupon story shifted considerably when we looked at the Community segment.

There, the fixed-rate coupon fell by 22 bps in November, compared to the 3 bps drop in the overall market. Over the past three months, the fixed-rate coupon has dropped by 40 bps (6.39% to 6.09%), while it has risen by 7 bps (5.75% to 5.82%) in the overall market.

Fixed-Rate Coupon
Community vs. Overall

Deposit rates continue to drop

Finally, we checked in again on deposits. To measure the cumulative rate change and monthly incremental changes, we looked at interest-bearing non-time portfolios as a proxy for bank management set rates. Interest-bearing non-time rates have dropped by 26 bps since August in the Regional+ segment (3.13% to 2.87%) and by 17 bps in that same three-month period in the Community segment (2.24% to 2.07%).

That’s expected on the heels of the September and October Fed rate cuts that totaled 50 bps. What’s worth noting though, is that these deposit rates are falling slower, down 17 bps, than the revenue measures for fixed-rate loans in the Community segment. Since August, coupons in that segment have dropped by 40 bps.

Interest Bearing Non-Time (MMDA, CWI, Savings) Rate Paid

Got questions?

Your Q2 News for December

sam.armstrong@q2.com (Sam Armstrong) — Wed, 10 Dec 2025 16:01:24 GMT

Your Q2 News for December

Welcome to the Q2 Chronicle, your monthly newsletter for the latest updates, insights and resources from Q2. Stay informed about key topics this month and click below to explore the full edition.

DIGITAL INNOVATION

Q2 Innovation Studio Go-To-Market Resources and Webinars

The Innovation Studio End User Adoption team has launched a webinar series introducing new Go-To-Market onboarding resources available in the Q2 Customer Portal and highlighting partner-specific strategies to drive engagement.

Upcoming Webinar

February 25, 2026 — Innovation Studio: Maximize Small Business Month with Strategies to Drive Adoption
Register Now

On-Demand Sessions

Drive Engagement with Financial Wellness Solutions — Featuring Greenlight and SavvyMoney
Watch on Demand
Build Your Go-To-Market Strategy
Watch on Demand
Promote Tax Season Resources — Featuring TurboTax
Watch on Demand

TurboTax Marketing Reminder
If you offer end users the 10% TurboTax discount and haven’t launched your marketing yet, be sure to activate as soon as possible to maximize revenue potential.

TurboTax Discount Details
Not yet contracted for TurboTax? You can still get started. Connect with your Innovation Studio sales specialist or visit Intuit TurboTax in the Q2 Partner Catalog.

CUSTOMER SUCCESS

Read how Bank of Tennessee partners with Q2 to fuel a top-rated digital branch, seamless fintech integrations, and competitive strategies.
See how Amplify Credit Union uses Q2’s unified digital banking platform to deliver personalized, fee-free experiences that save members millions.
Discover how Chesapeake Bank leverages Q2’s agile, fintech-powered platform to provide the right technology at every stage of customer growth.
Learn how UCCU and Q2 help students build strong financial foundations and continue supporting them with seamless digital banking long after graduation.

Q2 NEWS

Join us at CONNECT 2026!

We are excited to invite you and your team to CONNECT 26, Q2’s annual customer conference! Join us to hear from industry experts, build lasting relationships, and explore Q2’s latest innovations. Take advantage of early bird pricing and save $500 by registering today!

Explore CONNECT ›

Q2 Named a Leader in IDC MarketScape: North America Retail Digital Banking Solutions 2025–2026

Q2 has been named a Leader in the IDC MarketScape’s latest North America Retail Digital Banking Solutions assessment. Read why our platform, innovation strategy, and customer focus set us apart.

Learn More ›

Austin FC and Q2 Announce the 2025 “Q-mmunity Gives” Grant Recipients

Q2 and Austin FC have announced the 2025 Q-mmunity Gives grant recipients, awarding $150,000 to local nonprofits making a meaningful impact across Central Texas. This year’s honorees represent a diverse group of organizations driving community development, equity, and support.

Commercial Loan and Deposit Pricing Market Update: November 2025

Anna-Fay Lohn — Mon, 17 Nov 2025 16:27:53 GMT

Our November analysis of the Q2 PrecisionLender commercial loan and deposit pricing database looks at how the market "digested" the September 2025 Fed rate cut, during a period of increased pricing activity before an additional rate cut at the end of October.
Bankers held their ground for both fixed and floating-rate loans. We have those details, as well as updates on shifts in the funding curve and deposit pricing metrics.

Read on for more details.

Data Notes:

When we discuss the cost of funds (COF) on loan pricing activity, we refer to the marginal duration matched funding cost employed in pricing, not the bank’s actual average (historical) cost of funds.
We define Regional+ as institutions with $8B+ in assets, while Community are <$8B.

Volume reaches highest levels for 2025

Regional+ institutions drove increase in October pricing activity, as volume in this segment rose 15%, compared to a 5% uptick in pricing volume among Community institutions month over month.

As noted in the headline, this was the most active pricing month in 2025, 36% higher than the January benchmark (100) and well above the year-to-date average (112).

This sort of increase naturally led us to wonder whether bankers could hold on to revenue and profitability in this context. More on that below.

Commercial Loan Pricing Volume
Indexed to January 2025 = 100

Overall, spreads remain steady

In light of the aforementioned increased volume in October, we found mixed results on the key revenue indicator, spreads. While bankers yielded three basis points (bps) on spreads to SOFR (down from 2.23% in September to 2.20% in October), Prime spreads were down just one basis point month-over-month (0.16% to 0.15%) and fixed-rate coupon over cost-of-funds rose by 3 bps.

Weighted Average Spread to SOFR

This is the third straight month in which bankers have been able to make marginal gains on the fixed-rate coupon over COF.

Fixed Rate Coupon Over COF

FHLB curve inversion drops at key term points

Turning to funding costs, we observed another interesting shift in the FHLB curve in October. Short- and long-term rates both fell ~10-15 bps month-over-month. Meanwhile though, the midsection of the curve (from about 24-84 months) showed minimal change.

FHLB Curve
Selected Dates

These contrasting shifts reduced the inversion from the short end of the curve to the middle (1-60 months) by 13 bps, down to -24 bps for the Oct. 31 snapshot. That’s the lowest level of inversion for this section of the curve since the Jan. 31 snapshot.

FHLB Curve Carry
Between Common Tenors

The FHLB 60-month rate, which typically serves an indicator of fixed-rate loan pricing, had moved in lockstep with the fixed-rate coupon until this month, when the rate fell 2 bps between end of September and end of October (3.91% to 3.89%), while the fixed-rate coupon rose 10 bps during October. More on coupon rates below.

FHLB 60-month Rate vs. Fixed Coupon
2025 Trend

Fixed funding costs rise

That variance between the FHLB 60-month rate and the fixed-rate coupon shows up in all-in COF for fixed-rate loans, which rose by 7 bps in October. In looking for an explanation, we noted that, while fixed liquidity premiums rose slightly in October (+2 bps to 33 bps) that the average maturity on fixed-rate loans rose from 65 to 70 months in October. That shift to the right on the curve came at the point where it began to climb from its mid-range trough.

All in COF by Month
Rolling Trend

Floating-rate coupons fall while fixed-rate coupons rise

That 7-bps increase in fixed-rate funding combined with the 3-bps increase in spread over COF, resulted in a 10-bps increase in the fixed-rate coupon in October (from 5.75% to 5.85%).
Meanwhile, both SOFR and Prime coupons continued their fall after the mid-September rate cut. The SOFR coupon was down 16 more bps in October, to 6.24%, after falling 16 bps in September as well. After holding steady in September, the Prime coupon fell 14 bps in October, to 7.37%.

Coupon Rate by Month
Rolling Trend

NIM holds steady

In the final analysis, bankers held their ground on NIM for both fixed- and floating-rate loans, despite the significant increase in pricing activity in October.

That said, it should still be noted that NIM levels remain below their Q1 2025 marks.

NIM by Month
Rolling Trend

Deposit rates continue to fall

Finally, we checked in again on deposits. We wanted to see whether the rates here would continue to drop in the wake of the Fed rate cut, or whether the increased pricing activity might temper things.

The overall deposit rate fell again and is now down 8 bps since August at Regional+ institutions and 7 bps for the Community segment.

Overall Deposit Rate Paid
Includes NIB Base

The drop was even more significant when looking at interesting-bearing non-time rates. Those are now down 24 bps since August for Regional+ institutions and 12 bps in the Community segment.

It will be interesting to see whether the deposit rate activity is unimpacted by the volume increase, or whether there is a slight lag in pricing here. We’ll continue to monitor it closely.

Interest-Bearing Non-Time (MMDA, CWI, Savings) Rate Paid

Got questions?

Empowering Credit Unions to Compete and Win With Q2

Carly Baker — Wed, 12 Nov 2025 19:47:36 GMT

Credit unions are expanding to rival regional banks. With Q2, they’re moving fast. Hear firsthand how Gesa Credit Union leveraged Q2’s digital banking platform to transform its business banking experience. The results: 100% adoption among commercial members, access to treasury services previously out of reach, and new multimillion-dollar accounts, including large nonprofits and growing businesses. Gesa now has stronger relationships, low-cost deposits, and new revenue streams that fuel sustainable growth.

To learn more about Q2’s partnership with Gesa Credit Union, read the case study.

Turning Partnerships Into a Living AI Ecosystem

Cheryl.brown@q2.com (Cheryl Brown) — Mon, 10 Nov 2025 22:45:40 GMT

At Q2, we’re building a world where AI, data, and open APIs work together to create smarter, more connected banking experiences. A glimpse of that future came to life through a demonstration at Dev Days 2025 that showed how fintech partner data and Q2 data can flow together to power an agentic ecosystem.

It’s a simple concept with massive potential: By securely sharing insights in both directions, financial institutions, partners, and Q2 can all become smarter.

More use cases

Why it matters

Financial institutions sit at the center of extensive data, but much of it remains underused, isolated within systems that don’t communicate. That limits personalization, slows innovation, and prevents institutions from fully understanding account holder needs.

Meanwhile, fintechs collect rich behavioral data—such as engagement signals, invoice details, and travel patterns—that could enhance banking intelligence if combined responsibly with FI data.

By securely connecting these data streams through APIs, Q2 and our fintech partners will break down silos and create a continuous learning loop. The result is a smarter, adaptive ecosystem where every participant benefits.

This shift lays the groundwork for something bigger: an environment where AI agents can act on shared intelligence to create personalized, proactive, and trustworthy banking experiences.

How it works

The Q2 Digital Banking Platform exposes structured account holder data through its Audience API, which defines and segments account holders based on behavioral and transactional attributes. In the prototype, that API is opened to a trusted partner application, allowing that partner to access relevant, permissioned data sets that describe who a financial institution wants to reach. You can imagine examples like customers with a maturing CD or members who recently opened new accounts.

The partner, in turn, uses that data to tune and tailor the functionality and execution of its products. But this connection isn’t one-directional. Using a complementary API, the partner sends new contextual data, such as engagement signals or behavioral insights, back to Q2.

This creates a reinforcement loop where both systems continuously refine their understanding of account holder behavior. Each side of the connection becomes smarter without additional configuration or manual data entry.

The technical backbone of this loop is built on event exchange and metadata mapping. Each time data is exchanged, Q2’s platform records and translates partner-generated signals into audience traits within its personalization engine. For instance, “mobile engagement frequency” or “travel patterns” might become new dynamic traits that can be used to segment audiences or trigger targeted messaging.

Over time, this flow creates a shared intelligence graph—a constantly updating web of traits and actions that reflect how account holders behave across multiple connected experiences .

As more fintechs connect through this API framework, each contributes its own specialized data and functions. Together, these become the ingredients that future AI agents will need to operate effectively: a unified set of APIs, a secure foundation of trusted financial data, and a common context for understanding intent.

In the Dev Days 2025 demo, Q2 CTO Adam Blue shared how this fintech integration illustrates the early steps toward Q2’s agentic ecosystem. “It’s the first time you can see our partners and Q2 literally learning from each other in real time,” he said.

In the future, an AI agent built on this ecosystem wouldn’t have to start from scratch. It would already “know” how the financial institution’s data, partners, and customer relationships fit together. Instead of asking for data, it could act on it—building, suggesting, and optimizing in real time.

Just as important as the technology itself is the governance model behind it. The prototype leverages Q2’s secure data permissions framework, ensuring that all exchanges are fully auditable and that no partner or agent accesses data beyond what’s authorized. Every interaction is logged, controlled, and attributable, which is an essential safeguard for responsible AI enablement in financial services.

See it in action

The bigger picture

What begins with one fintech and the Audience API is the first step toward something transformative. As more partners join this shared data ecosystem, Q2’s platform becomes the connective tissue of an entire financial intelligence network.

For financial institutions, that means:

• Smarter personalization for every account holder
• Richer insights without additional complexity
• A foundation for future AI agents that can act safely and autonomously

And for Q2’s partners and developers, it means a growing marketplace of interoperable APIs, data, and capabilities all working together through trust, transparency, and shared value.

As Blue put it, “When you give agents access to a shared foundation of secure, auditable data and APIs, they can do remarkable things—personalize every experience, anticipate needs, and connect people to the right products at the right time.”

Ready to explore more AI innovation?

An agentic ecosystem is a critical part of the larger story of how Q2 is using AI, data, and openness to push the boundaries of what’s possible in digital banking.

See more of what we’re building for the future of AI in financial services. Learn more.

What If You Could Code Without Coding?

Cheryl.brown@q2.com (Cheryl Brown) — Tue, 04 Nov 2025 21:11:34 GMT

Earlier this year, computer scientist Andrej Karpathy coined a term that challenged developers everywhere to think differently about how far they can go with AI and large language models (LLMs). Simply defined, vibe coding is describing project requirements in plain language and letting the LLM generate the code. It’s meant to encourage iterative experimentation, where the code is refined through a natural conversation.

At Q2, vibe coding challenged us to think differently, as well. At our recent Dev Days 2025, we showcased a demonstration of vibe coding in action within the Q2 SDK, proving how AI can accelerate development, amplify creativity, and lower the barrier to innovation across digital banking.

More use cases

Why it matters

Developers are the creative engine of financial innovation, but building in today’s complex digital ecosystems often requires navigating countless lines of code, documentation, and debugging. Vibe coding changes that paradigm.

By letting developers “talk” to an AI assistant that generates working code in real time, vibe coding would help financial institutions and fintech partners move from concept to prototype in minutes—empowering teams of any size to deliver more, faster.

How it works

Vibe coding is built on a simple but transformative idea that building software can be as natural as having a conversation. Instead of hunting through documentation, writing syntax, or debugging code line by line, developers describe what they want to build in plain language, and the system does the heavy lifting.

At the core of our vibe coding use case is the model context protocol (MCP) server, a secure bridge that connects the AI assistant directly to the Q2 SDK’s documentation, design standards, and data models. When a developer types a request like, “Create a travel notification form with fields for destination, dates, and a submit button,” the AI immediately interprets the intent, retrieves the right SDK components, and begins writing the code in real time.

Behind the scenes, the MCP enables the AI to access live context about the SDK environment, including information that traditional AI models can’t “see” on their own, such as technical documentation and standardization components.

As the AI generates the form, developers can switch between plan mode—where it explains the steps it intends to take—and vibe mode, where the code simply flows. It’s a back-and-forth process that feels less like writing software and more like collaborating with a skilled teammate. Developers can prompt the system to fix bugs, adjust layouts, or add new features, and it responds instantly with updated code.

That conversational loop is where the magic happens. Rather than waiting for a compile-test-debug cycle, developers iterate in minutes. The AI remembers the conversation’s context, learning from feedback and evolving the code on the fly. The result is a workflow that combines the speed of automation with the judgment of human creativity, a synergy that redefines what’s possible in digital banking development.

Ryan Hollister, Q2 VP of Engineering, described it as “bridging the gap between idea and execution. By reducing the cycle time of the developer feedback loop, vibe coding gives developers more time to focus on architecture, usability, and business logic—the work that truly differentiates a product.”

See it in action

The bigger picture

For financial institutions and fintech partners, the impact would be immediate. Developers could produce working prototypes in hours instead of weeks. Smaller teams could ship faster. More junior engineers could contribute meaningfully without years of SDK experience. And for banks and credit unions that rely on the Q2 SDK to customize experiences, vibe coding would mean an unprecedented ability to respond to market shifts and account holder needs with speed and precision.

Vibe coding is not just an incremental improvement. It’s a fundamental change in how creation happens inside the Q2 ecosystem. It would bring AI into the development loop as a true collaborator, not just a copilot, empowering every developer to move faster, think bigger, and build smarter.

This technology also sets the stage for a future where anyone with a great idea—not just trained engineers—can build within Q2’s digital banking environment. It embodies Q2’s vision of democratizing innovation and fueling a new generation of AI-enabled creativity.

Ready to explore more AI innovation?

Q2’s commitment to experiment boldly and deliver responsibly means we’re embedding AI where it matters most to help financial institutions, developers, and account holders move faster and smarter. Learn more

How Monit Helps Financial Institutions Win With SMBs

Drew Norman — Mon, 03 Nov 2025 23:06:23 GMT

Small to medium-sized businesses (SMBs) may be called “small,” but for most financial institutions, they represent an enormous growth opportunity.

SMBs are often the cornerstone of community and regional bank growth strategies, driving deposits, loans, and long-term relationships. In fact, Accenture predicted in 2023 that SMB banking revenue would reach $100 billion by the end of this year. As a result, thoughtful financial institutions are always seeking ways to make those small business experiences stronger and more profitable for all involved.

That’s why Q2 is partnering with Monit, a fintech company that helps banks and credit unions deliver clarity for small business owners and intelligence for bankers. Through Monit’s integrated solutions, including MoniCore and Business Insights, financial institutions can unlock the full potential of their SMB portfolios.

Why is SMB banking an essential part of Q2’s strategy?

Let’s be honest, bankers are busy. They only have so much time in the day and so many resources to go around, and as a result, SMB account holders often don’t receive the same level of attention paid to larger commercial clients. Recent research from Accenture shows only 9% of SMBs felt their financial institution was fully meeting their needs.

We view this as an opportunity.

By enabling tailored digital experiences and access to embedded fintech capabilities, we help financial institutions become the business hub for their SMB account holders, which strengthens relationships and builds long-term loyalty. We provide digital banking designed with you and your account holders in mind.

Monit builds on this foundation, augmenting our existing SMB capabilities with deeper intelligence and seamless digital experiences that provide SMBs with unprecedented insight into the financial operations of their small business account holders.

Who is Monit?

Monit is a Boston-based fintech focused on strengthening the connection between business bankers and business owners. Their mission is simple: to help banks deliver clarity for small business owners and actionable intelligence for bankers.

As a Q2 Innovation Studio partner, Monit integrates seamlessly with Q2’s digital banking platform to deliver actionable financial intelligence across your entire business portfolio. The Monit suite includes:

MoniCore: A powerful insights engine that continuously analyzes 100% of business account data, automatically identifying cross-sell opportunities and portfolio trends
Business Insights: A digital “CFO” experience for small businesses that syncs with accounting systems like QuickBooks, Xero, and FreshBooks, helping owners forecast cash flow, benchmark performance, and understand valuation

Combined with Q2’s Composable Dashboard for Small Business, Monit’s solutions provide a single-pane-of-glass experience for businesses to manage all their finances. As a result, they can simplify their workload and compete in an industry where nearly 82% of businesses fail due to mismanaged cash flow as cited by a recent Forbes report.

How does it help your institution?

For financial institutions, Monit transforms small business data into measurable ROI through its powerful set of tools, analytics, and targeting capabilities that enable deeper, more profitable relationships and more effective bankers.

MoniCore is the recommended first product when using Monit. This quick installation integrates into a financial institution’s digital banking experience, allowing Monit’s insights engine to continuously analyze 100% of business account data and automatically generate cross-sell opportunities. These insights are delivered through the Banker Portal or integrated directly into the FI’s CRM system, such as Salesforce.

Business Insights by Monit complements MoniCore by connecting accounting data from platforms like QuickBooks, Xero, and FreshBooks. Together, they give bankers and business owners a complete, real-time view of financial health, turning data into opportunities within the Q2 digital experience.

“Monit and Q2 together enable us to deliver tools our small business clients truly value while making it simple for our teams to identify opportunities and run impactful campaigns.”

— Thomas Eorgan, SVP of Sales Enablement at Bank of Tennessee

Additionally, MoniCore eliminates manual reporting and data analysis by automatically creating sales and marketing lists based on key financial characteristics. It requires no opt-in from the business owners, covers the entire business portfolio, and includes built-in campaign tools to quickly launch targeted offers.

Fintech partnership made easy

Monit is available for Q2 customers to deploy simply thanks to its pre-integration with the Q2 platform via Innovation Studio. Innovation Studio is an ecosystem of more than 190 partners, enabled by the Q2 SDK to build single points of integration with Q2's software. We built it on the philosophy that we can't build everything, but we want to be able to offer anything our customers need to compete.

Monit is a perfect example. Monit elevates our SMB strategy by giving financial institutions powerful new ways to serve their business customers in fresh ways.

Through this expanded partnership, Monit’s solutions are now part of the Q2 product portfolio, having been fully vetted through Q2’s Critical Vendor Assessment process. This gives financial institutions confidence that Monit meets Q2’s high standards for security, reliability, and performance. In addition, Monit offerings are now available through Q2’s standard contracting process. This makes it faster, easier, and safer for institutions to add these capabilities while reducing the complexity of ongoing vendor management.

Get a head start

Learn more about Q2’s fintech partner ecosystem and explore a partnership with Monit.

This post is part of our content series dedicated to exploring the value of our platform ecosystem and our fintech partners, who help Q2 customers solve a wide array of everyday challenges. Check back on the Q2 blog for more Fintech Features in the coming weeks.

Your Q2 News for November

sam.armstrong@q2.com (Sam Armstrong) — Mon, 03 Nov 2025 20:44:53 GMT

Welcome to the Q2 Chronicle, your monthly newsletter for the latest updates, insights and resources from Q2. Stay informed about key topics this month and click below to explore the full edition.

DIGITAL INNOVATION

AI for Everyone

At Q2, AI isn’t a buzzword. It’s how we deliver progress. We’re thoughtfully applying it to use cases where it would create the most benefit: reducing fraud, improving access to information, and using data to enhance every digital banking experience.

See how Q2 CTO Adam Blue and our team are reimagining what’s possible in digital banking.
Explore Q2’s AI vision

Discover the possibilities for turning that vision into action:

Smarter support starts with AI—Large language models that surface answers faster and connect knowledge across systems
Watch the demo
Going beyond chat to bring a human touch—A conversational banking demo powered by APIs and model context protocol.
Watch the demo

Q2 Innovation Studio go-to-market webinars

The Innovation Studio End User Adoption team is launching a new webinar series to help financial institutions promote Innovation Studio partners and solutions. The series kicks off with an overview of new go-to-market onboarding resources on the Q2 Customer Portal, followed by partner strategies tied to consumer adoption cycles.

Nov. 12—Drive engagement with financial wellness solutions
Featuring Greenlight and SavvyMoney
Register today

Webinar: Building trust, not friction—the future of fraud prevention

Join us for an inside look at an identity-centric, adaptive approach to fraud prevention that unifies detection, prevention, and resolution across digital banking and payments, strengthening defenses without slowing account holders.

Nov. 13 | 1 p.m. CST
Register today

CUSTOMER SUCCESS

HFS Federal Credit Union banks on Q2

On Hawai‘i’s Big Island, HFS Federal Credit Union is helping members lead financially empowered lives through simple, accessible digital tools.
See what’s growing

Synovus banks on Q2

For more than 140 years, Synovus has supported families and businesses across the Southeast. Now, with Q2’s platform, they’re helping customers grow securely and efficiently.
See what’s growing

nbkc banks on Q2 for digital innovation

With a digital-first mindset, nbkc Bank is scaling nationally and driving impact through Helix by Q2.
See how they do it

Commercial Loan and Deposit Pricing Market Update: October 2025

Anna-Fay Lohn — Mon, 27 Oct 2025 05:00:00 GMT

Our October analysis of the Q2 PrecisionLender commercial loan and deposit pricing database takes a look at the immediate period following the mid-September 25 bps Fed rate cut. We examined shifts in borrowing costs and deposit costs in comparison to shifts around the September 2024 Fed rate cut.

We also took a closer look at pricing performance at the segment level for community institutions.

Read on for more details.

Data Notes:
• When we discuss the cost of funds (COF) on loan pricing activity, we refer to the marginal duration matched funding cost employed in pricing, not the bank’s actual average (historical) cost of funds.
• We define Regional+ as institutions with $8B+ in assets, while Community are <$8B.

Volume reaches new high mark

Commercial loan pricing volume in September reached a new high mark for 2025, with an indexed value of 122. The growth came more from the regional+ segment than the community sector. (We’ll have more regional+ and community comparisons later in this update.)

Commercial Loan Pricing Volume
Indexed to January 2025 = 100

FHLB curve inversion drops at key term points

During September, short- and long-term end of the FHLB curve dropped by about 20 basis points (bps) month over month, as shown in the 1- and 3-month points and the long end 240- and 360-month points.

However, the downward shift was not universal throughout the curve. Instead, the mid-section of the curve, which serves as the base funding costs reference for fixed-rate loans, increased ~5 bps in the 24–60-month range (circled in red in the chart below).

FHLB Curve
Selected Dates

Though the 60-month rate did increase in September, the overall trend in 2025 remains a clear downward slope.

FHLB 60-Month Rate
2025 Trend

The drop in the 1-month point along with the increase at the 60-month point combined to decrease the inversion trough by 24 bps in September, to -37.

FHLB Curve Carry
Between Common Tenors

Funding costs drop

Funding costs fell for both SOFR and fixed-rate structures. As noted above, the 1-month point on the FHLB curve dropped 20 bps from the Aug. 30 snapshot (4.47%) to Sep. 30 (4.27%). This drop was partially offset by a 4-bps increase in SOFR liquidity costs, up to 0.60%.

Though the FHLB curve 60-month point rose 5 bps from the Aug. 30 snapshot (3.86%) to Sept. 30 (3.91%). But during the month in between, the average 60-month point was 11 bps lower than the Sept. 30 snapshot. This move, along with a slight dop in fixed liquidity costs (down 1 bps to .31%) explained the 13-bps drop in all-in COF for fixed structures in September (from 4.15% to 4.02%).

All-in COF by Month
Rolling Trend

SOFR liquidity costs for September (0.60%) were at the high end of their 12-month range of 50-64 bps. In contrast, fixed liquidity costs (0.31%) are toward the low end of their 12-month range (28-44 bps).

Approximate Liquidity Cost
Rolling Trend

Deposit rates finally drop

Overall deposit costs fell month-over-month by 5 bps in the regional+ segment and 6 bps in the community segment. This change compares similarly to the drop from August to September 2024 of 8 bps (regional+) and 4 bps (community) Aug-Sept change 2024 of 8 and 4 bps. However, the September 2024 rate cut was 50 bps, compared to 25 bps in September 2025. We will continue to monitor how responsive institutions are to this movement.

Overall Deposit Rate Paid
Includes NIB Base

Next, we turned to CD portfolios and found a month-over-month decrease of 4 bps for both segments, matching the Aug.-Sept. 2024 change.

CD Portfolio Rate Paid

Finally, interest-bearing non-time deposits, which includes many management-set rates, dropped 11 bps month-over-month for regional+ and 8 bps for community. These drops are similar to the 10 bps (regional+) and 11 bps (community) drops a year ago.

Within this group, which is a bellwether for rate elasticity, we found about 25% of the financial institutions moved downward by 15 bps or more, with 2/3 of those coming from the regional+ segment.

Interest-Bearing Non-Time (MMDA, CWI, Savings) Rate Paid

Spreads held steady to expanded in September

Underlying market index rates moved lower, due to the Fed rate cut, contributing to reductions in revenue, but bankers held on to spreads in September compared to August.

Spreads to SOFR were unchanged, at 223 bps. This level was held both before and after the mid-September rate cut.

Weighted Average Spread to SOFR

Prime rate spreads gained ground for the first time since March. The regional+ segment led the increase, to 16 bps. Previously prime spreads had trended lower in 2025, so we’ll continue to watch this metric to see if the September shift stabilizes.

Weighted Average Spread to Prime

Finally, fixed-rate spreads showed a modest improvement of 1 bps, up to 1.73% in September.

Fixed Rate Coupon Over COF

Fixed and SOFR coupons fall; Prime coupon remains stable

The combination of lower funding costs and stable spreads resulted in lower coupon rates for both SOFR and fixed-rate structures. SOFR coupons fell by 16 bps, while fixed-rate coupons dropped by 13 bps, tracking the COF drop from August to September.

Coupon Rate by Month
Rolling Trend

NIM stable in short-term, down for the year

Despite stable spreads, fixed-rate NIM dropped 4 bps in September due to lower fee income. SOFR NIM was essentially static, as the lower coupon tracked lower funding costs.

Looking back to the beginning of this round of rate cuts in September 2024, fixed-rate NIM is down 31 bps (2.35% to 2.04%), while SOFR NIM is down 13 bps (1.95% to 1.82%). Bankers have not expanded performance beyond market spreads, funding costs, and liquidity costs.

NIM by Month
Rolling Trend

Community segment analysis: Varied performance on fixed and floating spreads

Returning to our regular check-in on key revenue drivers within the community segment, we found some interesting developments.

After normally performing well above the rest of the overall market in July and August, spreads to prime in the community segment fell below the average in September (0.14% to 0.16%) as regional+ institutions drove the previously noted increase in the overall metric.

Spread to Prime
Community vs. Overall

Community institutions lost spread on SOFR-based loans in September (down 11 bps to 2.55%) while the overall metric was static month-over-month.

Spread to SOFR
Community vs. Overall

It was a different story with fixed-rate spreads over COF, where the community segment pushed up its performance by 18 bps in September (from 2.30% to 2.48%) while the overall metric was static month-over-month.

Fixed Rate Spread Over COF
Community vs. Overall

Roll-off watch: NIM gap widens; coupon gap narrows

As we continue to monitor how coupon rates and NIM for pandemic-era loans rolling off the books in 2025 compare to loans that are being newly priced/repriced now, it’s worth returning to our rules of the road for the analysis.

• The KPI will be the degree (+/-) to which original NIM compares with NIM for new and renewed loans. It is not a record-for-record match of matured loans and their replacement attributes.
• Using the December 2024 portfolio snapshot as the basis, we’ve aggregated 2025 roll off activity by quarter and presented static coupon measures associated with each quarter. These values may change as 2025 progresses due to early payoffs, curtailments, or other activity.

As noted at the beginning, September featured a high volume of new/repriced fixed-rate loans. The NIM gap between those loans (1.72%) and the roll-off loans in Q3 (1.99%) grew by 5 bps from August to September. Meanwhile, the gap between the coupon rates on the new/repriced fixed-rate loans (6.16%) and the roll-off loans in Q3 (5.24%) fell by 14 bps from August to September (1.06% to 0.92%). For the nine months in 2025, replacement NIM has fallen short of the roll off NIM by ~25 bps.

Roll-off vs. New/Repriced: NIM and Coupons

Got questions?

More Than a Ranking: What Javelin's Best in Class Designation Means for Q2 Customers

Cheryl.brown@q2.com (Cheryl Brown) — Mon, 27 Oct 2025 05:00:00 GMT

We’re proud that Javelin Strategy & Research has, for the second time in a row, named Q2 overall Best in Class in its 2025 Small Business Digital Banking Vendor Scorecard.

For us, this recognition isn’t just about being first on a list. It’s about what that means for the financial institutions (FIs) we serve. It means our customers have the tools and flexibility to build digital experiences that truly meet the needs of small businesses.

This year, Javelin ranked Q2 first overall and first in the categories of Functionality & UX and Strategic Vision & Delivery, citing our configurable tools that let banks and credit unions tailor digital banking experiences for small businesses from startup to scale. Javelin also called out our track record of successfully delivering feature improvements, which help our customers stay competitive in a fast-changing market.

Here’s how we’re helping our FI customers lead in small business banking.

Account management that builds confidence and habit

Javelin recognized Q2’s modular homepage as an industry benchmark, enabling FIs to tailor the digital banking and payment experience by segment, role, or vertical.

We designed that experience so SMB owners can start each day with clarity, seeing their balances, approvals, and tasks in one place and moving easily from insight to action. It’s what Javelin calls the “15 minutes over coffee” habit: digital engagement that feels natural, not forced.

And that engagement pays off. Thomas Eorgan of Bank of Tennessee told us, “The way that people use the online banking platform has dramatically changed. It went from … checking balances and moving money around, and it became more of a financial operating system. They run their business organizationally and operationally within the platform.”

For the FI, that means deeper insight. For the business owner, it means daily confidence.

Payments that fit every workflow

Payments are where digital banking becomes tangible for small business owners. Javelin ranked Q2 first in Payments, noting that we “streamlined and demystified business payments” through a unified, recipient-centric hub.

Our design lets business owners send ACH, wires, Zelle^® for Business, and instant payments through one consistent workflow. Whether it’s payroll, vendor payments, or an urgent transfer, they can move money in just a few clicks.

Fairwinds Credit Union’s Myriam Towsley said Q2’s design helps the credit union make it easier for businesses to do business. “Q2 has really helped us with that. Whether it’s payroll, vendor payments, or payments from your customers, that offering through our treasury helps tremendously for our business.”

That ease is what turns complex financial operations into everyday efficiency.

Onboarding that starts relationships strong

Opening a business account should be fast and easy so SMBs can get their businesses going quickly. That’s why we connect seamlessly with onboarding partners like MANTL and Amount, creating a smooth end-to-end experience—from application and identity verification to funding and digital enrollment.

Javelin gave Q2 the highest possible score of 100% in Account Origination and Onboarding for enabling FIs to get new business customers up and running quickly. And through Q2 Treasury Fulfillment, we’re extending that speed to the back office. By automating treasury setup, our customers are reducing onboarding time from weeks to minutes, freeing staff to focus on relationships, not paperwork.

Personalization that’s real, not reactive

At Q2, personalization is about relevance. Using Q2 Audience Builder and Experience Builder, FIs can segment by traits like business type, size, or behavior and deliver experiences tailored to each audience. Javelin called this configurability a core differentiator for Q2. With our tools, FIs can provide dynamic dashboards that change based on what matters most to each user. These tools also help FIs identify and target small business account holders through campaign orchestration and behavior-triggered onboarding.

Krista Snelling, CEO and president of West Coast Community Bank, said the flexibility gives the bank the ability to deliver a truly personalized experience for SMB account holders. “The fact that the mobile and online banking experiences are exactly the same—and our ability to customize them—is super helpful. Because we know our client base so well, we can say, ‘They’re going to like this particular thing, on this page, and we want it to be labeled that.’ The optionality brings flexibility.”

Katrina Leach of United Federal Credit Union agrees, adding that personalization also helps the credit union see the true value of products and offerings, such as positive pay. “With dynamic personalization and starter experiences, we’ve taken the positive pay module and we’ve been able to put that in front of our businesses, and it’s able to tell them the dollar amount of potential fraud exposure that they have and how this service is able to help protect them so that they can focus on other things.”

A fintech ecosystem that extends every FI’s value

Q2 Innovation Studio continues to expand, now with more than 190 integrated fintech partners. Each integration helps FIs offer business owners the digital tools they need most without the cost or complexity of building from scratch. Whether it’s cash flow forecasting, invoicing, accounting, or payroll, these solutions integrate directly into the Q2 platform, creating a one-stop experience that small business owners love.

Fred Lie, chief digital banking officer for Hanmi Bank, put it this way: “What I like most about Q2 is that it is a platform that is versatile. We can engage with other third-party applications. We can customize it. We can integrate it seamlessly with other services.”

By combining trusted banking with curated fintech partnerships, our customers can compete and win against much larger players for SMB relationships.

Innovation that moves the market forward

At Q2, we don’t just innovate once a year; we build innovation into everything we do. Javelin praised our track record of successfully delivering feature improvements and our clear, credible plan for where we’re going and how we’re going to get there.

That innovation comes through in the experiences our customers are delivering today:

Q2 Composable Dashboard that adapts to each business user’s needs in real time
Q2 Interactive Test Drive, giving FIs a hands-on demo to help prospects see and experience small business banking before they sign
AI-driven insights through Q2 Discover and SMART, helping bankers anticipate customer needs and deliver proactive service

As Todd Senger, chief revenue officer for Dacotah Bank, said, “Q2 is a strategic partner for various reasons. Not only is the technology there, but the user-friendliness of the platform itself is something that we absolutely think stands out.”

Built for our customers’ success

Everything we do comes back to our mission: to build strong and diverse communities by strengthening the financial institutions that serve them. Our customers are at the heart of that mission, and their stories remind us why we do what we do.

Being named Best in Class by Javelin is an honor, but what matters most is seeing how our FI customers are using Q2 technology to serve their SMB account holders with confidence, speed, and care.

When small businesses grow, communities grow. And we’re proud to help make that happen together.

Going Beyond Chat to Bring a Human Touch to Digital Banking

Cheryl.brown@q2.com (Cheryl Brown) — Thu, 23 Oct 2025 05:00:00 GMT

At Q2’s 2025 Dev Days, we gave attendees a first look at what the future of conversational banking could look like. Our demo of an AI assistant for account holders and customer service representatives isn’t just an experiment in automation. It’s a proof of concept for how natural, intelligent dialogue can help both account holders and customer or member service representatives work faster, smarter, and more securely.

Built on Q2’s Caliper API layer and powered by model context protocol (MCP), the assistant can pull real account data, provide recommendations, and help account holders resolve issues, all through intuitive conversation.

More use cases

Why it matters

Today’s account holders expect more than self-service. They expect intelligent service. The assistant concept shows how AI can make digital banking more human: It understands intent, provides contextual answers, and even helps protect account holders with the right compliance guardrails in place.

And for financial institution employees, this same capability can act as a powerful job tool, summarizing unread messages, retrieving account details, and even drafting account holder responses automatically. It’s about transforming how people interact with their financial institution, both on the front line and behind the scenes.

How it works

When an account holder interacts naturally with the assistant with questions like, “Show me my accounts,” the AI draws live data from Q2’s digital banking environment through the Caliper API layer, Q2’s secure gateway for financial data and actions. Caliper manages every data request, ensuring the assistant can access only what it’s authorized to—balances, transactions, messages, or entitlements—while maintaining strict privacy and compliance boundaries.

Each prompt triggers a sequence of orchestrated API calls that work together in real time. For example, when an account holder asks the AI to “Group my recent transactions by category,” the assistant dynamically invokes APIs to fetch and classify transaction data, formats it for display, and presents an interactive summary back to the user—all within milliseconds.

This orchestration happens inside Q2’s MCP framework, which defines exactly how large language models (LLMs) interact with the financial institution’s systems. The MCP ensures that the AI can generate contextual and accurate responses without ever accessing data or actions beyond its defined scope. It’s what makes it possible to combine conversational intelligence with financial-grade security and compliance.

On the back-office side, that same MCP foundation powers a Console assistant, where a customer service representative can ask, “What did I miss since I last logged in?” and receive a prioritized summary of unread messages, open disputes, and account activity.

Behind every one of these interactions is a network of intelligent, tightly governed systems—LLM reasoning and API orchestration, all directed by Q2’s MCP layer—working together to make conversational banking real, compliant, and scalable.

See it in action

The bigger picture

This prototype is an early step toward what Q2 calls an agentic AI ecosystem, where digital assistants act with the right context, boundaries, and voice to represent each financial institution’s brand and mission.

By wrapping Q2’s APIs in the MCP, we’re defining how LLMs can safely access, interpret, and act on financial institution data. It’s a vision that goes beyond a chatbot, moving toward copilots, agents, and assistants that will soon power the next generation of digital banking experiences.

Ready to explore more AI innovation?

This is just one of the forward-looking AI developments unveiled at Q2 Dev Days 2025. Each represents a different way we’re applying AI to make digital banking smarter, faster, and more human. Read more about it.

Smarter Support Starts With AI

Cheryl.brown@q2.com (Cheryl Brown) — Mon, 20 Oct 2025 05:00:00 GMT

At Q2, we’re pushing the boundaries of what AI can do for financial institutions, and one area where AI can make a meaningful difference is technical support.

At our recent Dev Days 2025 event, we showcased four use cases that highlight our approach to AI: responsible, ethical, and practical. Among them was an AI-powered assistant that enables Q2 customers to cut through the noise of multiple systems and find fast, trusted answers.

More use cases

Why it matters

Getting technical answers or product support can mean digging through long documentation or waiting for a case response. Applying a large language model (LLM) would change that experience completely. With AI-powered search and source-cited responses, financial institution staff could ask natural-language questions, like, “Does Q2 have a product to help me fight check fraud, and are there any version dependencies to deploy it?” and get instant, reliable results.

How it works

At Dev Days, Q2 Chief Data Scientist Jesse Barbour demonstrated how our internal knowledge platform, Kraglin, is transforming from a smart search tool into an intelligent, evolving system of record. The solution unifies content across Confluence, Salesforce, SharePoint, and Teams into one trusted interface where employees—and soon, financial institution staff—can ask natural-language questions and get answers with precise citations. Within the first few months of use at Q2, Kraglin already has 1,500 active users.

What makes this innovation powerful is the LLM framework beneath it. Rather than simply retrieving documents, the model interprets the intent of a question, retrieves relevant data, and synthesizes an accurate response, complete with source references for transparency. It operates through a retrieval-augmented generation (RAG) pipeline, meaning the model is continuously grounded in verified, domain-specific knowledge, minimizing the risk of hallucinations while improving trust in every interaction.

Over time, the model will also learn and expand through continuous ingestion of new data. Each resolved customer support case, technical update, or knowledge article adds to its corpus, allowing it to detect emerging patterns and respond to similar questions more effectively in the future. The vision: Every financial institution will have its own instance, tailored to its history and context, creating a self-improving ecosystem of knowledge. As the model accumulates new cases and user interactions, its responses become increasingly personalized, relevant, and predictive—turning institutional memory into institutional intelligence

See it in action

The bigger picture

Looking ahead, we envision this tool being trained on millions of historical support cases, learning over time to provide personalized, context-aware help for each institution. But this is more than a search tool. It’s the foundation for a new model of AI-assisted customer service in banking.

As part of Q2’s broader AI strategy, providing Q2 knowledge via LLM represents how we’re putting AI directly in the customer loop to help financial institutions move faster, reduce friction, and focus on human expertise where it’s needed most. It’s a tangible example of what we mean when we say we’re experimenting boldly and delivering responsibly.

Ready to explore more AI innovation?

This is just one of the forward-looking AI prototypes unveiled at Q2 Dev Days 2025. Each represents a different way we’re applying AI to make digital banking smarter, faster, and more human. Read more about it.

Navigating Nacha's Rule Changes: How Q2 Can Help

Jim Young — Thu, 16 Oct 2025 05:00:00 GMT

In an effort to reduce fraud, Nacha is tightening the rules this year for ACH transactions, especially credit-push scams in which criminals trick legitimate account holders into authorizing payments under false pretenses.

These new requirements represent one of the most significant fraud prevention shifts in recent years. They will impact businesses, payment processers and financial institutions.

Q2 is uniquely positioned to help financial institutions prepare, with a multi-layered fraud prevention strategy that combines monitoring, anomaly detection, reporting, and identity verification.

What the new rules require

In March, Nacha will begin phasing in new fraud monitoring expectations for ACH participants. The intent is to strengthen the industry’s ability to detect and respond to suspicious or deceptive activity earlier in the payment lifecycle.

These updates do not require every ACH transaction to be monitored individually or mandate the use of any specific technology. Instead, Nacha expects participants to implement documented, risk-based processes that reflect their size, transaction volume, and risk exposure.

Here’s how that applies across the ACH network:

Origination depository financial institutions (ODFIs) and originators/third-party senders (TPSs)/third-party service providers (TPSPs) should establish processes to identify and respond to unusual or potentially fraudulent activity, such as first-time receivers, abnormal transaction amounts, or unexpected patterns.
Receiving depository financial institutions (RDFIs) should maintain policies and procedures to identify and escalate potentially unauthorized or suspicious entries based on risk.
All participants should regularly review and update their monitoring programs to ensure they remain effective and aligned with evolving fraud trends.
Nacha’s goal is to move from reactive fraud handling to a proactive, risk-based approach. It’s an effort to improve fraud visibility without imposing one-size-fits-all technology mandates.

Understanding “false pretenses” and emerging fraud types

One of the most notable updates in Nacha’s 2026 rules is the expanded definition of fraud, which now include payments made under false pretenses. These are situations in which a legitimate sender is deceived into authorizing a transaction.

Examples of false pretenses include:

Business Email Compromise (BEC): When a fraudster impersonates a trusted vendor, partner, or executive to divert payments
Vendor or payroll redirection scams: When fraudulent actors convince organizations to change payment instructions

These examples illustrate Nacha’s broadened view of fraud risk, but they are not new rule categories or separate compliance mandates. Institutions are expected to incorporate these risk types into their broader fraud management programs through documented, risk-based procedures.

Q2’s fraud prevention solutions, including behavioral analytics, anomaly detection, and transaction monitoring, help financial institutions identify patterns that may indicate deception or false-pretense activity before losses occur.

Who must comply and by when

Date

Who Must Comply

Requirement

March 20, 2026 (Phase 1)

ODFIs and Originators/TPSs/TPSPs with 6M+ originated entries in 2023.

RDFIs with 10M+ received entries in 2023

Establish and document risk-based fraud monitoring processes

June 19, 2026 (Phase 2)

All ODFIs, Originators, TPSs/TPSPs, and RDFIs, regardless of ACH volume

Risk-based fraud monitoring required for all ACH activity

Why these changes matter

Proactive fraud detection: This moves the ACH network toward continuous, risk-based monitoring.

Enhanced recovery potential: Earlier detection increases the likelihood of intercepting fraudulent transactions.

Higher industry standards: This establishes a uniform baseline for fraud prevention expectations across all ACH participants.

How Q2 is helping financial institutions prepare

Q2’s comprehensive fraud monitoring framework is already designed to align with Nacha’s evolving requirements and support institutions in developing their own documented risk-based procedures. Here’s how:

ODFI capabilities

Centrix ACH Processing and Risk Management (PIQs) provides ACH whitelisting, monitoring of return ratios, and planned anomaly detection to identify abnormal origination patterns
Q2 Behavioral Analytics (Sentinel) and Q2 Access Control (Patrol) provide real-time monitoring to detect anomalies or suspicious login activity before initiation. Q2 Sentinel evaluates ACH transactions via Recipient Monitoring. This functionality uses machine learning to identify new recipients and provide an opportunity for the institution to intervene if the transaction looks suspicious

RDFI capabilities

Centrix Positive Pay (ETMS) validates incoming ACH entries against defined rules to prevent unauthorized transactions
Centrix ACH Processing and Risk Management (PIQS) enhancements detect mismatches between recipient and account holder names, flags SEC code inconsistencies, and monitors transaction velocity

Cross-network security layers

Multifactor authentication (MFA) across all Q2 platforms, including online and mobile banking
Event-driven validation with Q2 Access Control (Patrol) uses behavioral analytics to confirm user identities during high-risk actions

Together, these capabilities give institutions flexible tools to support Nacha’s evolving fraud monitoring expectations without prescribing a specific technology path.

Action steps for financial institutions

Here’s what your institution needs to do to make sure you’re prepared for the upcoming Nacha changes.

Determine applicability
Assess whether your ACH volume triggers Phase 1 thresholds (6M originated, 10M received).
Review fraud monitoring procedures
Ensure your policies cover both unauthorized and false-pretense scenarios.
Document governance
Define roles and responsibilities across compliance, operations, and fraud teams.
Plan annual reviews
Maintain a documented process for updating fraud controls.
Leverage technology
Evaluate vendor solutions, like Q2’s suite, to close monitoring or anomaly detection gaps.

Conclusion

As Nacha’s 2026 rules take effect, financial institutions face heightened expectations for proactive, risk-based fraud monitoring.

Q2 is ready to help with layered fraud prevention, behavioral analytics, and monitoring capabilities institutions need to meet Nacha’s standards and strengthen customer trust and security.

Click here to learn more about Q2’s suite of fraud solutions.

If you’re a current Q2 customer, register here to join our Nov. 21 Innovation Series webinar, in which we discuss how Centrix ACH Processing and Risk Management (PIQS) can help you stay ahead of the Nacha rule changes.

Get the Latest News and Updates from Q2

Q2 — Thu, 02 Oct 2025 05:00:00 GMT

Welcome to the Q2 Chronicle, your monthly newsletter for the latest updates, insights, and resources from Q2. Stay informed about key topics this month, and click below to explore the full edition.

Customer Success

VeraBank Banks on Q2 for Commercial Growth

From identifying business challenges to onboarding new clients, VeraBank’s partnership-first approach ensures no customer is navigating their financial journey alone.

This approach has made a difference for businesses like Austin Beerworks, which has grown from an 8,000-square-foot facility to a 40,000-square-foot taproom producing 20,000 barrels annually.

Read the VeraBank case study

Digital Innovation

Q2 Innovation Studio Go-To-Market Webinars

The Innovation Studio End User Adoption team is launching a webinar series to help financial institutions promote Innovation Studio partners and solutions. The series begins with an overview of the new Go-To-Market Onboarding resources on the Q2 Customer Portal, followed by partner-specific strategies tied to consumer adoption cycles.

Explore Q2’s 2025 Product Roadmaps — On Demand

Stay ahead with Q2’s 2025 Product Roadmap. Access on-demand presentations or download slides for Digital Banking, Fraud, Data & AI, Pricing & Profitability, and Innovation Studio. Discover tools to create smarter, safer, and more connected financial experiences—anytime.

View the Product Roadmap Hub

Call for Content Now Open for Q2 CONNECT 2026!

We’re thrilled to announce that session submissions are open for Q2’s annual customer conference in Austin, Texas, June 1–3, 2026!

Share your expertise, success stories, and innovative strategies with peers across the financial services industry. We’re seeking engaging sessions aligned with these key themes:

Ease for Financial Institutions
Amazing Experiences for End Users
Innovation & Intelligence Everywhere
Broaden Digital Banking

Submit your proposal by November 14, 2025.

Commercial Loan and Deposit Pricing Market Update: September 2025

Anna-Fay Lohn — Fri, 19 Sep 2025 05:00:00 GMT

Our September analysis of the Q2 PrecisionLender commercial loan and deposit pricing database takes a look at how pricing metrics have behaved since the end of July, in anticipation of the September 17 Fed rate cut.

We also continued our year-long comparison of new fixed-rate loans versus the Covid Era loans rolling off the books in 2025.

Read on for more details.

Data Notes:

• We define Regional+ as institutions with $8B+ in assets, while Community are <$8B.

Pricing volume is unchanged

Commercial loan pricing volume did not change from July to August, remaining above the January benchmark and slightly above the monthly average in 2025.

Priced Commercial Loan Volume
$ Indexed to January 2025 = 100

FHLB Curve Drops Across the Board

Market participants widely anticipated the Sept. 17 Fed rate cut and recent shifts in the FHLB curve support that expectation, with a universal drop across the length of the curve.

Market rates dropped 33 basis points from the July 31 snapshot to Sept. 13 for the 36-month point (3.99% down to 3.66%) and the 60-month point (4.10% down to 3.77%). This drop may influence bankers’ willingness to reduce coupon rates on fixed-rate loans. (Note that we elected to include the mid-September snapshot to get a better view of activity in the run-up to the Sep. 17 rate cut.)

Since the Aug. 30 snapshot we also saw the first movement of the 1-month rate in 2025, as it dropped from 4.47% down to 4.31%. This could be an indication that floating rate coupons may be moving lower as well.

FHLB Curve
Selected Dates

The curve inversion persists from the 1 to 60-month tenors, as it moved to -61 bps at the end of August before settling at about –54 bps last week. As for the steepness beyond the trough, the 24-120 month carry has remained in the +75 bps range since April.

FLHB Curve Carry
Between Common Tenors

Turning back to the potential significance of the near parallel 15-20 bps drop from the end of August to mid-September, we noted that this overall shift differs from what we saw in the time period around the previous Fed rate cut, in December 2024. From the Nov. 30 snapshot before the cut to the Dec. 31 snapshot in its aftermath, short-term rates dropped, while tenors beyond 12 months increased. Meanwhile, 1-month rates had been virtually unchanged all year, until now.

FHLB Funding Curve Shifts From Nov. 30-Dec. 31 2024
Across Common Tenors

One more data point to note: The 1-month CME SOFR index (not shown) has also dropped, from 4.34% at the end of July, to 4.28% by the end of August and then another 13 bps, to 4.15%, by mid-September. This index change will affect SOFR coupon rates.

Floating-rate spreads drop, while fixed-rate spreads remain steady

In addition to reductions in underlying market index rates, bankers eased up on spreads for both SOFR- and Prime-based loans. SOFR spreads in August (2.23%) were at the low end of the range for 2025, while Prime spreads (.02%) were at their lowest point since November 2024. Fixed rate spreads (not shown) moved up slightly by 3 bps (to 1.72%) but also remained at the low end of their recent range, well below the April mark of 1.92%.

All three spreads have not recovered in 2025 since dropping from the levels they reached in late 2024.

Weighted Average Spread to SOFR

Weighted Average Spread to Prime

SOFR and Prime coupons move in opposite directions

The SOFR coupon gave up 8 bps in August and has dropped another 11 bps thus far in September, as both spreads and the index value have dropped. This is the first time the SOFR coupon has dropped below 6.5% in 2025 after previously remaining in a tight range from 6.52-6.60%.
Meanwhile, the Prime coupon fell 4 bps in August but then bounced back up 16 bps thus far in September, as spreads have rebounded from the previously noted low mark in August.

The fixed coupon dropped 21 bps in August. This was driven by the month-over-month 24 bps drop in funding costs that was only slightly offset by the 3-bps improvement in spreads that month. The fixed coupon has since climbed up 2 bps in September.

Coupon Rate by Month
Rolling Trend

Funding costs drop

SOFR funding costs mirrored the FHLB curve, moving down by 12 bps in September, to 4.92%. Meanwhile, fixed-rate funding costs have dropped 30 bps (4.39% to 4.09%) since July.

All-in COF by Month
Rolling Trend

Fixed NIM steady while SOFR NIM falls

SOFR NIM fell in August (from 1.92% to 1.83%) as funding costs remained unchanged while spreads and the index value were both down. It has been unchanged thus far in September.

Fixed NIM moved up in August thanks to a slight increase in spread but has dropped back 2 bps so far in September.

NIM by Month
Rolling Trend

We use the NIM performance measure to capture the effect of pricing and funding. As we approached mid-September, revenue drivers eased and funding expectations moved consistently lower.

Deposit rates remain steady

Despite the drop in market funding rates, we observed no changes in deposit rates through August.

Interesting-Bearing Non-Time (MDDA, CWI, Savings)
Rate Paid

Roll-off watch: Modest improvements

As part of our continued examination of how bankers are handling the repricing of fixed-rate loans from the COVID era, we noted a slight improvement in performance thus far in Q3. NIM on new and repriced fixed-rate loans in July and August climbed up by 6 bps, closing the gap to the NIM of the roll-off loans to 22 bps (1.99% vs. 1.77%). Meanwhile the coupon rates and new and repriced Q3 fixed-rate loans increased by 7 bps, to 106 bps higher than the rates of the loans rolling off the books.

Roll-Off vs. New: NIM and Rates

Got questions?

Enter content here

Striking the Balance With Fraud Management

Jim Young — Thu, 18 Sep 2025 05:00:00 GMT

It’s no secret to any banker that fraud is a problem. Still, some of the latest numbers have been sobering, to say the least:

60%	$4.36	80%
of FIs reported an increase in fraud in 2025	Cost to FIs for every $1 of fraud loss	of mid-market FIs have experienced fraud via online/mobile channels

Account holders need robust protection from fraud. But they also demand convenient and seamless banking experiences, particularly in their online and mobile channels. Too often though, increased fraud protection has meant increased complexity for end users.

And as today’s banks and credit unions strive to modernize and engage at every turn, they’re left asking an impossible question, “Should I prioritize security or customer experience?”

At CONNECT25, Q2 sat down with fraud prevention partner, Alloy, to discuss why it doesn’t have to be a choice.

Setting the Stage: The Dogsitter Dilemma

Alloy’s Chief Product Officer, Parilee Wang, opened the session with a clear message: fraud prevention and customer experience don’t have to be opposing forces. “We care about both,” she emphasized. “We don’t think in terms of choosing one over the other.”

To bring that tension to life, Wang shared a personal story about paying her dogsitter. The sitter requested payment via Zelle, a service she rarely used. Because of that, her bank flagged the transaction as suspicious.

“The bank was trying to protect me,” she said, “but it ultimately took four phone calls to convince them it was legitimate.”

It was the perfect illustration of the problem at hand. While the intent was right, the customer experience was just plain painful.

The Q2–Alloy Partnership

This is where Q2 and Alloy’s partnership comes in. And as the panelists explained, it’s not a typical vendor relationship. Over the past year, Q2 and Alloy have been co-building a deeply integrated solution designed to function like a “central nervous system” for fraud defense.

Instead of siloed tools, this system unites real-time event data and automated workflows. The goal? Stop bad actors faster while also allowing legitimate transactions to go through without delay. Here’s a hypothetical scenario that demonstrated how the Alloy-Q2 solution works in practice.

Balance in Action

The example centered on something simple but high stakes: updating a phone number on an account.

The Green Path

In the first scenario, a real customer initiated the update. By tapping into Q2’s event stream data and validating against third-party sources, Alloy could instantly verify that the new number belonged to the customer. With multifactor authentication layered in, the request was approved in real time, creating a smooth, secure experience.

The Red Path

The second scenario showed what happens when fraud is attempted. The system quickly flagged that the new number had no real connection to the customer and that the IP address was suspicious. Rather than letting the request slip through, the workflow denied it instantly, stopping the bad actor before any damage was done.

Supporting Front-Line Teams

But while protecting customers will always be a top priority, the panelists stressed that it’s equally vital to support the teams on the front lines of fraud prevention.

As Q2 Senior Product Manager Gabe Norris put it, “Q2 and Alloy isn’t a first-date partnership. It’s deep, transparent, and designed for agility.”

Traditionally, investigating a suspicious transaction has often meant hopping between multiple systems, piecing together fragments of data, and spending hours on manual work. That not only slows down customer resolutions, it also puts significant strain on fraud teams.

By comparison, the Q2–Alloy solution provides what the speakers called a “single-pane-of-glass” experience. Analysts can see every event tied to a transaction and access a full customer profile in one place, enabling them to resolve issues quickly and confidently. The result is greater efficiency, less team burnout, and better outcomes for customers.

“We can’t keep asking teams to miss dinner and fight fraud manually. We need future-proof agility,” Wang added.

With integrated, automated workflows replacing siloed, manual processes, financial institutions are better equipped to handle today’s fraud, and to prepare for what’s coming next.

The Solution Roadmap: Built for Agility

While reviewing a forward-looking roadmap for the Q2–Alloy solution, both oth teams emphasized there is no finish line in fraud prevention. Threats will continue to evolve, and so must the tools designed to stop them. That’s why agility and continuous iteration are built into the very foundation of the partnership.

The roadmap is focused on reducing friction for customers while making fraud defense even more precise. Several priorities currently in development included:

• Enhancing policy agility so institutions can make critical adjustments in minutes, not days.

• Introducing more nuanced step-up methods—such as document verification and device checks—to add layers of protection without creating blanket roadblocks.

• Enabling dynamic entitlements that adjust account access in real time, based on risk signals.

While 93% of financial institutions believe machine learning and generative AI will play a significant role in the future of fraud detection, the roadmap is designed to harness those capabilities in practical, customer-friendly ways.

The Final Word

Financial institutions don’t have to choose between protecting customers and creating seamless digital experiences. With Q2 and Alloy, they can do both. By combining powerful data, flexible workflows, and a commitment to constant evolution, the partnership equips FIs to stay ahead of fraud while giving customers the confidence and freedom they expect from modern digital banking.

Lessons in Loyalty: A Live Q&A With Gen Z Consumers

Catherine DeStasio — Tue, 16 Sep 2025 05:00:00 GMT

Younger generations are critical to the future of banks and credit unions.

To help inform your strategy to build lifetime relationships with them, we invited a panel of Gen Z consumers to answer questions sent to us from financial institutions. Hear the recording of this candid coversation and get practical lessons in what they truly need to become loyal.

Amplify Credit Union Chief Experience Officer Stacy Armijo joins the discussion to provide the added perspective from a leader actively shaping experiences that resonate with younger account holders.

2025 Q2 Philanthropy Fund Recipients Announced

Q2 — Tue, 16 Sep 2025 05:00:00 GMT

2025 Q2 Philanthropy Fund Recipients Announced

Supporting nonprofits driving change worldwide

At Q2, our mission is to build strong and diverse communities by strengthening their financial institutions. One way we support this mission is through the Q2 Philanthropy Fund, which provides grants to nonprofits making a difference in the communities where we live and work, and in those supported by our customers.

Now in its fourth year, the Q2 Philanthropy Fund—powered by Q2 Spark, our corporate social responsibility program—is run in partnership with Austin Community Foundation (ACF). Together, we’re proud to support organizations that are building stronger and more inclusive communities.

Led by Our People

What makes the Philanthropy Fund so special is that it’s driven by employees. Each year, a committee of Q2 team members comes together to review applications, learn about inspiring organizations, and decide where our support can make the greatest impact.

“Serving on the committee reminded me how much heart Q2 team members bring to giving back. It was an honor to help direct support to organizations that truly change lives,” said Bella Pietsch, Marketing Content Writer.

Our Impact in 2025

We’re thrilled to award $150,000 in grants to nonprofits making an impact across the globe. These organizations were nominated and chosen by employees, making every grant a reflection of Q2’s mission to strengthen and uplift the communities we serve.

This year’s recipients include:

Carrying Hope, Austin, TX
Manos de Cristo, Austin, TX
SAFE Alliance, Austin, TX
Economic Growth Business Incubator, Austin, TX
Lirios Pediatrics, Austin, TX
Holly’s Heart, Austin, TX; Charlotte, NC; Des Moines, IA; Lincoln, NE; Minneapolis, MN
Ashray Akruti, Bangalore, India
Wildlife SOS, Bangalore, India
First In Families of North Carolina, Cary, NC
Prosociedad hacer bien el bien AC, Guadalajara, Mexico
BraveBe Child Advocacy Center, Lincoln, NE
Junior Achievement of Lincoln, Inc., Lincoln, NE

Each of these organizations embodies resilience, innovation, and compassion. By supporting them, we’re helping to build stronger, more inclusive communities, which is core to our mission.

Living Our Mission

“We are honored to support the incredible work of this year’s nonprofit organizations that are making a real difference in our communities,” said Kim Rutledge, Chief People Officer at Q2. “The Q2 Philanthropy Fund is one way we stay true to our mission to build strong and diverse communities.”

“Now in year four, the Q2 Philanthropy Fund continues to model what corporate philanthropy can look like,” said ACF CEO Mike Nellis. “With our team as a trusted steward, and employee leaders engaged, Q2 is strengthening the fabric of Austin and every community where Q2 teams live and work.”

Giving Back Every Day

The Philanthropy Fund is just one way our people support communities. Through Q2 Spark, employees have logged thousands of volunteer hours and supported hundreds of nonprofits worldwide. These efforts reflect our values and our belief in strengthening communities alongside the work we do every day to support our customers.

Learn more about the Q2 Philanthropy Fund.

Q2 News September 2025

Q2 — Mon, 15 Sep 2025 05:00:00 GMT

Welcome to the Q2 Chronicle, your monthly newsletter for the latest updates, insights, and resources from Q2. Stay informed about key topics this month, and click below to explore the full edition.

Customer Success

Bank of Ann Arbor Stops $4.8M in Potential Fraud With Help from Q2

Bank of Ann Arbor leveraged Q2’s Positive Pay solution to stop $4.8 million in attempted fraud in a single year, protecting both customers and the institution. By combining innovative technology with proactive education, the bank boosted adoption to 44% of treasury accounts while delivering 100%+ ROI.

UCCU Partners with Q2 to Increase Premium Checking Account Adoption Rate by 500%

Utah Community Credit Union partnered with Q2 to transform its premium checking adoption—jumping from just 8% to over 40% in three months. By integrating premium checking account enrollment into the digital banking experience through Q2 Innovation Studio’s SDK, UCCU delivered a seamless, one-click upgrade experience members love.

Q2 Helps GreenState Reduce Costs While Strengthening its Member Experience

GreenState Credit Union partnered with Q2 to digitize key services like Skip-a-Payment, cutting per-transaction costs by 80% while doubling efficiency. By leveraging Q2 Innovation Studio, GreenState delivered a seamless member experience that saved $8 million annually and freed employees to focus on meaningful financial conversations.

Innovation

Q2 Innovation Studio Go-To-Market Webinars

A strong marketing strategy is key to the success of Innovation Studio products. To support this, the IS End User Adoption team is launching a new webinar series to help FIs promote partner solutions that require end-user adoption. The series begins with an overview of the new Go-To-Market Onboarding resources available on the Q2 Customer Portal and will continue with partner-specific strategies aligned to consumer adoption cycles.

The first two webinars are scheduled for:

Sept 17 – Innovation Studio: Build Your Go-To-Market Strategy ›
Oct 15 – Innovation Studio: Promote Tax Season Resources – Featuring Turbo Tax ›

Partner Webinar: How Rockland Trust Delivers Personalized Financial Guidance

Discover how Rockland Trust redefined digital engagement with Q2 and Personetics. By delivering over 8 personalized messages per customer monthly, they’ve achieved 32% engagement and 73% five-star ratings. Learn how this strategy builds trust, deepens relationships, and drives results—while positioning the bank as a true financial ally.

October 1 | 1 p.m. ET

Q2 News

Q2 Recognized as Best-in-Class by Javelin in 2025 Scorecard

Q2 has once again been named a best-in-class vendor in Javelin Strategy & Research’s 2025 Small Business Digital Banking Scorecard. This recognition reflects our continued leadership in delivering innovative digital banking solutions that empower financial institutions to better serve small business customers.

Blog

Mythos, Banking, and the End of Slow Patching

Watch

Subscribe

Related Links

Transcript

Governance Drifts Before Performance Does

Comfortable quarters are the dangerous ones

What I learned to watch for

Commercial Loan and Deposit Pricing Market Update: April 2026

March volume confirms a fast start to 2026

The funding curve steepens sharply and inversion disappears

All-in funding costs move higher on fixed-rate structures

Spreads show small signs of resilience

Fixed and SOFR coupons converge

NIM holds steady

Community Corner: Balanced mix and a continued revenue premium

Deposit rates remain largely unchanged

Roll-Off Watch: Q1 2026 Review

Got questions?

Equip Teams to Fulfill Treasury Requests Faster

Q2's Continuous Account Takeover Protection: FAQ

Q: What is continuous account takeover protection?

Q: What problem does continuous account takeover protection solve?

Q: Why do traditional fraud controls struggle to stop account takeover?

Q: How is Q2’s approach different from traditional fraud tools?

Q: How does continuous account takeover protection work across the digital banking journey?

Q: What role does AI play in this approach?

Q: What happens when suspicious activity is detected?

Q: Why should banks and credit unions care about this now?

Fast Laps, Tight Guardrails

Watch

Subscribe

Related Links

Transcript

The Future of SMB Banking

Understanding the modern SMB experience

Key trends shaping the future of SMB banking

1. Digital first, not digital-only

2. Real-time payments and cash flow visibility

3. Embedded financial tools for daily operations

4. Data-driven insights and predictive analytics

5. Personalization at scale

The growing role of AI and automation in SMB banking

How financial institutions can prepare for the future of SMB banking

The role of modern digital banking platforms

Building the next generation of SMB banking

Beyond Binary: A Smarter Way To Respond to Account Takeover Risk

Fraud decisions have become more sophisticated, but not always more flexible

Why account takeover requires a more nuanced response now

The better option is not less security. It is more proportional control.

Where a flexible response model can help most

Flexibility can help the back office

Account takeover is not a binary problem

Your Q2 News for April 2026

Your Q2 News for April

INDUSTRY PERSPECTIVE

New Podcast Features Real Talk About AI at Q2

A Playbook for M&A Conversion Success

Celebrate Small Business Week by Unlocking Hidden SMB Growth Opportunities

DIGITAL INNOVATION

April Q2 Customer Innovation Series: AI Built for Progress

Q2 Innovation Studio Go-To-Market Resources and Webinars

Q2 NEWS

CONNECT 26 Check Out the Agenda

Q2 Code: Practical AI for Financial Institutions

Why this matters right now

The need is bigger than speed

How Q2 Code expands what’s possible

AI that is governed and secure

A more practical model for banking innovation

Learn more about AI at Q2

A Closer Look at Q2 Code

Learn more about AI at Q2

Webster Bank: Balancing Growth, Risk, and Relationships

Welcome to Cut to Context

Watch

Subscribe

Related Links

Transcript

 How financial institutions can prepare for the future of SMB banking