The Talent Shortage in Community Banking: What It Means for Recruiting in 2026

Introduction

Community and regional banks are foundational to the U.S. financial system—serving small businesses, local consumers, and regional economies. But recruiting and retaining key talent is becoming increasingly difficult. As technology, regulation, and competitive pressures evolve, community banks are facing a growing “talent gap” across roles ranging from risk and compliance to digital banking and lending. Understanding what is driving the shortage—and how recruiters and bank leadership can address it—is critical as we move into 2026.

What the Data Shows

• According to PCBB’s 2025 Banking Talent Strategy, a survey of 265 U.S. banks with less than $100B in assets found many institutions struggle to attract senior-level talent due to lack of career development, unclear growth paths, and competition from fintechs. (pcbb.com)

• The Glozo 2025 Banking Recruitment & Salary Trends report analyzed more than 70,000 banking-sector job postings across the U.S., finding roles in AI, cybersecurity, compliance, risk management, and fraud detection are among the fastest‐growing, yet are taking significantly longer to fill. (glozo.com)

• A recent report by VisBanking indicates that ~65% of banking institutions are struggling to fill critical positions, and turnover in some mid‐sized banks is nearing 25% annually, especially in tech-adjacent roles. (visbanking.com)

Why the Shortage Exists

1. Skill Gaps and Evolving Role Demands

   Community banks increasingly need candidates with fintech-level expertise: cloud computing, data analytics, cybersecurity, and digital product management. But traditional banking pipelines don’t produce enough candidates with these blended skill sets. (mrinetwork.com)

2. Competition from Fintechs and Big Tech
   Fintech firms and technology companies lure away talent with higher pay, equity, flexible environments, and cutting-edge tech stacks. Community banks struggle to compete with those offerings.

3. Aging Workforce and Succession Constraints
   Many senior leaders in community/regional banks are nearing retirement, but internal pipelines are weak. Leadership roles blending finance and digital innovation are particularly hard to fill.

4. Regulatory & Compliance Burden
   The rising burden of AML, KYC, and cybersecurity regulations increases the need for compliance and audit specialists who also understand technology. These hybrid skill sets are scarce.

5. Changing Workplace Expectations
   Millennials and Gen Z demand flexible work, modern tools, and career mobility. Banks that can’t adapt risk losing younger candidates to fintechs.

What This Means for Recruiting

• Longer Time-to-Fill: Critical tech-adjacent positions now take weeks longer to fill than standard banking roles. (glozo.com)

• Premium Compensation & Perks: Competitive salaries must be coupled with hybrid work, sign-on bonuses, or even profit-sharing to stay competitive.

• Upskilling & Internal Development: Building internal career pathways and reskilling staff is increasingly essential.

• Employer Branding: Banks must market themselves as innovative, mission-driven, and community-focused to stand out.

• Flexible Models: Contract specialists, part-time hires, and remote engineers can fill temporary gaps during transformations.

Case Examples

• A Midwestern community bank reframed its compliance officer posting to highlight career growth and hybrid flexibility, doubling applications.

• A regional bank in Texas used recruiters to target fintech professionals seeking more stability. By showcasing its culture of purpose and community impact, the bank successfully hired two data specialists.

Summary

The talent shortage in community banking is structural, not temporary. The convergence of technological demands, regulatory pressure, generational shifts, and fintech competition makes recruiting more complex. For employers, the path forward includes competitive compensation, robust internal training, and strong employer branding around innovation and purpose. For candidates, this shortage represents opportunity: those with fintech or digital expertise are in higher demand than ever. Recruiters who understand both banking and fintech will be the bridge connecting these evolving talent markets in 2026 and beyond.