Thirty years ago, if you’d asked 100 people to describe how they did their banking, they likely would have described the same process: visiting a physical branch, speaking to tellers, and filling out deposit slips.
But if you asked that question now? You might get 100 different answers.
Sure, some people still bank “the old-fashioned way.” But many more access banking through alternative methods, all of which require intensive IT integration.
Understanding the nature and demands of the new “distributed banking” is the first step towards developing a digital architecture that can adequately serve it.
The Branch Isn’t Dying (It’s Being Distributed)
According to the FDIC, almost 1,000 bank branches closed between May 2025 and May 2026. At first glance, this stat would make you think that people have suddenly lost access to banking.
If the taco stands all close, it’s harder to buy tacos, right?
But in the case of banking, that isn’t actually true.
Even as financial institutions close their physical branches, consumers’ access to banking is increasing. How can this be so? Because almost all of us now carry a mini bank around with us in our pockets and purses.
The American Bankers Association (ABA) has found that 55% of consumers now bank primarily through mobile apps. And they’re not doing it begrudgingly. The ABA also found that 96% of Americans approve of their bank’s digital experience.
In other words, we’ve entered a brave new world where nontraditional banking is the norm.
And the banking revolution isn’t limited to mobile apps. Even in their physical offerings, financial institutions are testing exciting new models. Cafe-style banking centers in shopping malls, tablet-toting loan officers working in parking lots and public parks, and ATMs in grocery stores are all now standard across the country.
No, access to banking doesn’t disappear when a bank branch closes. It’s simply pushed out into the world, where today’s consumers are more likely to find it.
For a deeper dive into distributed banking architectures, get our eBook: The Invisible Bank – Architecting Distributed Trust for the New “Banking-from-Anywhere” Model.
What Distributed Banking Actually Demands (The Infrastructure Problem)
Of course, adopting distributed models in the financial services industry isn’t as simple as flipping a switch. All those mobile apps and remote banking centers require underlying IT infrastructure in order to function properly. And even more importantly, that infrastructure must be reliable and secure if financial institutions are to maintain their customer’s trust.
When constructing a trustworthy IT infrastructure for distributed banking, it’s helpful to focus on three main areas of need: connectivity, security, and compliance. Get those three components right, and you have a financial institution that’s building responsibly toward the future.
Connectivity
A reliable internet connection is essential in pretty much any modern business. That said, in the financial services industry, connectivity is especially important because it’s a matter of retaining customer trust.
Imagine a loan officer from a local credit union who is planning on finalizing a mortgage at the site of a real estate closing. They’ve got the contract pulled up on their tablet, everyone is ready to sign, and then wham, out goes the internet connection, and everyone is left standing around, waiting desperately for the pages to load.
Not only is this terribly awkward for everyone involved, but it’s also devastating for the credit union’s reputation. Here are the would-be homebuyers making the most significant financial transaction of their life, and the loan officer can’t even bring the contract up on their screen.
These types of embarrassing failures are especially likely with distributed banking models because financial institutions are operating in locations that they don’t physically control. That’s why investing in wireless technology is so important.
Security
By their very nature, distributed banking models widen the surface area for potential cyber attacks.
Employees and even customers are accessing platforms from mobile devices. Institutions are operating on internet infrastructure managed by shopping malls and other external owners. And vast amounts of sensitive data are moving constantly through far-flung digital systems. All of this increases risk and raises the cybersecurity stakes.
Meanwhile, AI is enhancing bad actors’ toolkits as they seek to perpetrate fraud on financial institutions. Deepfakes and voice cloning allow criminals to credibly mimic clients and even pass traditional “know your customer” standards, while AI-powered phishing campaigns bombard employees, most of whom are now working from mobile devices.
This complex threat environment requires a forceful response – one that seeks to “fight fire with fire” by incorporating AI into defense and disaster recovery.
Compliance
Financial institutions have been some of the most regulated entities in the country for over a century (the National Banking Act first implemented legal standards back in 1863). Now, the digital transformation is subjecting banks, credit unions, and lenders to a new range of regulations, many of them focused on data handling and cyber security.
On top of legal requirements, cyber insurance (which is a financial necessity for these institutions) makes additional demands. Insurers will only insure an organization if it shows itself to be meeting certain security standards.
Pleasing both the insurance giants and Uncle Sam requires a vigorous commitment to compliance.
Why Compliance Must Be Continuous
Say the word audit, and you conjure up dated images of shirt-sleeved, mustachioed Feds carrying boxes out of an old storeroom.
In reality, compliance today is less about sudden dramatic interventions. Instead, modern authorities are demanding continuous visibility into a financial institution’s dealings, allowing them to check at a moment’s notice that legal standards are being maintained.
To keep regulators and insurers happy, financial institutions need to build this visibility into their standard operations – something that, fortunately, often coincides with the automating of key workflows and functions.
It’s vital for organizations and their advisors to recognize just how urgent the compliance issue is. If continuous compliance isn’t built into operations, then the institution is constantly accumulating risk. There’s simply no way to tell if every standard is being properly met until it’s too late.
And what does “too late” look like? It could be an audit, a failed cybersecurity renewal, or even a reputation-destroying data breach. In any case, it will have a devastating effect on the institution’s efforts to thrive in distributed environments.
Distributed Trust: The Core Need in Modern Banking
When financial institutions launch mobile apps, open banking cafes, and send their loan officers out with tablets, they’re distributing their services throughout their communities. But in order for this new model to work, more than just access needs to be expanded. There’s something else that must be distributed simultaneously: trust.
Customers need to trust that their mobile banking app is just as secure as the old-style physical branches with their locks and vaults. Latte-sippers need to feel confident tapping their debit cards to an ATM that shares a location with an espresso machine. Homebuyers need to know that when the loan officer arrives on-scene with their tablet, the sale will actually go through.
Understood in these terms, ensuring connectivity and security in the financial services sector becomes more than just an IT problem. It’s a central business imperative, determining whether a modern financial institution can survive in the new distributed reality.
As you meet with FinServ stakeholders, this notion of “distributed trust” should sit at the center of the conversation. Nobody here is “selling” IT solutions. They’re laying the foundation for a digital banking structure that users will actually trust.
Read about the three pillars of distributed trust architecture: [link to blog #2, with title]
Leading the “Distributed Trust” Conversation
Some stakeholders in the financial services sector still haven’t recognized the extent to which moving away from traditional banking requires a reinvigorated IT infrastructure. Technology architects can step in and help make that vital connection.
When discussing distributed trust with FinServ customers, the focus should be on three key points:
- The shift to digital and non-traditional banking is here, whether financial institutions are ready for it or not.
- Connectivity, security, and compliance represent the three top priorities for financial institutions adopting distributed models.
- The need for change is urgent; regulations are charging, enforcement is intensifying, and the threat of AI fraud will only worsen.
To naturally explore these issues in conversation, you can also ask related discovery questions while prompting stakeholders to evaluate their institutions based on several main criteria.
What to Evaluate
As financial institutions upgrade their digital infrastructure for the age of distributed banking, here are some key areas of evaluation:
- Internet downtime (and the cost of that downtime)
- Security standards (consider penetration testing)
- AI utilization and preparedness (ensure data is AI-ready)
- Regulatory compliance
- Cyber-insurability
- Awareness of AI-powered threats among staff
- Robustness of AI governance and explainability standards
By documenting where they stand in these areas, organizations can identify their most urgent technological needs.
Learn More
By working with Intelisys, you are perfectly placed to assist financial institutions with the implementation of an IT architecture built for distributed trust.
For more insights and additional help having this conversation with customers, check out the Intelisys FinServ hub.