How Community Banks Can Navigate Regulatory Ambiguity With Compliance-First Strategies

The regulatory headwinds may be shifting for community banks. Last week, the OCC announced new guidance narrowing the scope of its examinations and emphasizing its intention for more tailored, risk-based supervision. 

By aligning oversight with each bank’s size, complexity and risk profile, the OCC appears to be signaling a new era of modernized oversight. The announcement adds to a growing pattern of strategic openings for banks ready to navigate the shifting terrain.

In Treasury Prime’s 2025 Banking Innovation Index survey, nearly half of community bank leaders say they feel paralyzed by regulatory uncertainty, slowing their digital innovation efforts. The good news? The other half say it’s motivating them to be even more proactive about compliance. 

Instead of waiting for perfect regulatory clarity, forward-looking banks are investing in compliance-first strategies that build operational resilience, strengthen trust and accelerate digital transformation.

Why a compliance-first mindset matters now

With regulations relating to bank-fintech partnerships still in flux, community banks can’t afford to wait for perfect clarity. Moving forward with compliance-first systems now creates a stronger foundation for long-term growth.

Even if federal rules ease, as expected, most boards and executives are unlikely to overhaul strategies overnight  — especially with the potential for further shifts ahead. At the same time, banks are already navigating increased compliance costs and higher insurance requirements without consistent standards. The need to innovate remains, but so does the risk of missteps.

The collapse of banking-as-a-service (BaaS) provider Synapse reveals a critical vulnerability in fintech infrastructure. Partner banks depended on Synapse’s technology for visibility into customer accounts, and when that access was abruptly severed, they were left blind to balances and transactions. In response, many froze funds to limit exposure, cutting off customers from their money and eroding trust that had taken years to build. In certain instances, customers are still waiting to recover FDIC insured funds.

This breakdown highlights a broader issue. A reliance on third-party infrastructure without independent oversight introduces compliance risks that can’t be solved retroactively. 

Future-proof compliance must be embedded within the digital fabric of banking operations, not bolted on. For community banks, this proactive approach is essential to safeguard against operational failures and regulatory volatility, while still enabling and advancing innovation.

Four compliance-first strategies that support digital growth 

As community banks look for ways to keep moving forward, these four strategies highlight how strong compliance practices can create stability and open the door to digital growth.

Adopt data portability practices now‍
Consumers expect to move money, connect accounts and onboard to new apps without friction. Whether or not Section 1033 passes and formalizes those expectations as legal rights, community banks need to adapt to existing shifts in consumer behavior.

Standardized APIs make that possible by enabling secure data sharing, faster product launches and participation in embedded finance ecosystems. By creating a direct path between banks, fintechs and end users, APIs ensure those everyday actions, from linking an account to funding a payment, happen quickly and reliably.

Treasury Prime’s API-first platform is built for interoperability across bank cores, fintechs and business platforms. By using standardized, secure connections, it allows customer data to move where it needs to go, whether it’s funding an account, sharing transaction history with a budgeting app or supporting a new embedded finance program. 

This approach turns data portability into a practical reality, giving consumers the seamless access they expect while ensuring every exchange meets compliance requirements.

‍Build transparency into infrastructure
Trust is built on clear visibility. For community banks, that means systems must provide direct, real-time access to account-level data instead of relying on fragmented reports or third-party dashboards. When data is siloed or maintained outside of the financial institution, banks face blind spots that make it harder to reconcile transactions, monitor compliance and respond quickly to customer issues.

Banks need technology that connects directly into their cores and ensures every account action can be tracked, reconciled and audited. This level of transparency not only protects consumers but also demonstrates to regulators that safety and soundness compliance standards are being met consistently. 

By showing clear, verifiable records, banks reduce the risk of examiner findings while building stronger confidence in their fintech partnerships.

With Treasury Prime, banks maintain continuous visibility into account and transaction data, even in FBO structures. The platform is designed to eliminate blind spots, making it easier for compliance and operations teams to manage risk while still supporting innovative digital programs.

Strengthening governance across teams
Ensuring good governance for fintech partnerships is a top priority for banking leaders, and that means internal compliance processes can’t afford to be fragmented, reactive or treated as a procedural formality. 

Legal, risk and technology stakeholders must contribute to a shared approach, with closely coordinated processes and staff that reinforce consistency in how data is handled, shared, and monitored.

Strengthening governance means developing specific protocols for customer data, setting clear criteria for evaluating third-party tools and clarifying how oversight is distributed across teams. These foundations help prevent accountability gaps and minimize regulatory friction.

Treasury Prime supports this model with infrastructure that embeds compliance and data transparency into every integration. Community banks gain the agility to pursue fintech collaboration while upholding the operational discipline their regulators demand.

Link compliance to innovation
Compliance can become a growth enabler when it’s embedded across a bank’s digital strategy. Institutions that invest early in strong data infrastructure are in a better position to respond quickly as new opportunities emerge.

Equipped with the right systems, banks can pursue fintech collaborations, explore embedded finance models or introduce new offerings without risking operational slowdowns due to compliance missteps.

Treasury Prime helps banks activate this approach. Its platform enables secure data exchange while reinforcing established governance frameworks. This allows community institutions to scale digital initiatives with confidence and control.

From ambiguity to advantage‍

As demand for digital financial services accelerates, 99% of bank leaders now see embedded finance as essential to their long-term survival — and most say it’s critical. Yet with regulations continuing to evolve, uncertainty remains a constant.

That uncertainty creates a choice. Community banks that leverage compliance-first strategies will not only meet evolving expectations but also strengthen their operations, build trust and position themselves to grow alongside the next wave of fintech innovation.

Ready to explore how compliance-first embedded finance can support your institution’s growth? Connect with our team to explore what’s possible.