What Financial Institutions Can Learn from Hawaii’s Market: Signals for 2026 and Beyond

Economic uncertainty, evolving accountholder expectations, and rapid shifts in delivery and payment behavior are reshaping the financial institution landscape. A recent strategy conversation with a group of Hawaiian financial institutions offered a clear window into the pressures and opportunities many institutions will face heading into 2026. While the discussion reflected the nuances of a unique regional market, the underlying themes have national relevance.

1. How Is a Bifurcated Economy Altering Accountholder Risk and Expectations?

Leaders described the current environment as a “precarious” and “bifurcated” economy in which younger and lower-income households are showing heightened signs of financial strain, while older, asset-rich accountholders remain comparatively stable.

This divide is reshaping how accountholders borrow, save and seek support. Hawaii’s participants reported increased pressure among younger households, particularly around cash flow, rising costs and the psychological toll of financial uncertainty.

Raddon Research Insights helps contextualize the challenge: U.S. households span multiple financial segments, with meaningful portions represented in low-income, middle-income and fee-driven groups.[1] These segments differ in their resilience and behaviors, underscoring why financial institutions must use data to identify who needs intervention—and when.

The takeaway is clear: Consumer economic risk is shifting quickly, and early detection matters more than ever. Using your data to provide meaningful insights allows movement to action quickly and effectively.

2. Deposit Competition Is Intensifying, but the First Mile Matters Most

Participants noted steady but modest deposit growth paired with stronger competition for rate-sensitive funds, especially around money market accounts. Accountholders are shopping more aggressively, moving trial deposits and responding to competitors who can deliver higher yields or faster onboarding.  These data signs allow for quicker action to prevent funds moving to other financial intuitions. 

At the same time, financial intuitions in the session emphasized that product penetration remains strong, yet engagement gaps persist among younger consumers. Many of these younger households struggle with liquidity even as they express intent to save, tension that requires more proactive outreach, not just more products.

This is where tailored approaches become increasingly important. U.S. consumers differ widely across income and deposit-related behavioral segments, from low-income depositors to middle-market and upscale households.[2] Effective deposit strategy hinges on knowing which segment an accountholder belongs to and meeting them with solutions aligned to their reality. The most strategic institutions will focus on reducing friction in onboarding, identifying deposit outflows earlier and pairing products with personalized guidance.

3. Is Hidden BNPL Debt Becoming a Blind Spot?

A notable concern raised during the discussion was the rise of buy now, pay later (BNPL) among younger accountholders. Because BNPL obligations rarely appear on traditional credit reports, leaders acknowledged that this creates blind spots in underwriting and credit assessment. This is not about product competition; it’s about the accuracy of risk visibility. When an accountholder’s actual repayment burden is understated, loan performance can be harder to predict.

Participants emphasized two priorities moving forward:

1.     Better analytics and data partnerships to surface BNPL usage and accountholder pitfalls

2.     Financial education, helping younger consumers understand the cost and long-term implications of installment-style purchases

This is a national issue, not a regional one. And it represents an opportunity for financial institutions to differentiate through transparency, coaching and smarter data integration.

4. Branches Still Matter, but Their True Value Is Now Consultative

Despite continued digital adoption, the financial institutions in the session noted that branch usage remains meaningful, especially among older accountholders who prefer in-person guidance. But the nature of branch activity has changed: Accountholders walk in less for transactions and more for reassurance, coaching, onboarding help and problem-solving. Boomers and Gen X remain a large share of the U.S. consumer population, and both groups tend to value human interaction in complex financial moments.²

Hiring staff to fill these evolving roles is challenging. Many frontline employees now come from retail or hospitality backgrounds, requiring stronger onboarding and training to succeed in a consultative environment. However, when staffed and supported intentionally, the branch has the potential to become an experience differentiator with strong financial advice built on trust.

5. Strong Performance Highlights the Need for Data Maturity

The institutions represented in the session were performing well, but leaders were clear that sustaining that momentum will require better, faster insight. That means tightening trial-deposit monitoring, improving data quality and gaining clearer visibility into accountholder behaviors across channels. With more accountholders experiencing uneven financial pressure, early-warning indicators are becoming essential. In short, data readiness is now central to growth, retention and risk management.

Strength Paired With Smart Acceleration

Financial institutions are fundamentally strong, but the environment demands sharper insight, faster modernization and more intentional accountholder engagement. The institutions that lead in 2026 will be those that:

• Anticipate uneven economic strain
• Simplify and strengthen deposit experiences
• Improve visibility into emerging risks like BNPL
• Elevate branches as consultative hubs
• Modernize data to personalize at scale

The cooperative model has always been built on trust and consumer centricity. As the landscape grows more complex, that foundation remains an advantage, but only if financial institutions move with clarity, speed and purpose.

_{[1] Raddon Research Insights, The Deposit Mindset: How Consumers Are Thinking About Savings and Investments, Consumer Segments Table (age and income distribution).}

_{[2] Raddon Research Insights, Delivery and Payments, Generational Segments Table.}