Nasdaq Whitepaper: Scaling Banks in an AI Risk Era

Scaling banks during an era of artificial intelligence risks demands new approaches for regional and community institutions. These organizations must move away from traditional growth strategies and adopt updated operational frameworks. A Nasdaq whitepaper, “Redefining Growth for America’s Mid-Sized Banks,” explains how mid-sized banks can close the gap between ambitious expansion goals and their current capabilities. The document states that regulatory changes, competition, and financial crime risks have transformed the requirements for successful growth.

Technology as a Growth Engine

Technology now serves as a central driver of expansion rather than just a support function. Huntington National Bank’s CFO, Zachary Wasserman, said technology played a key role in doubling the bank’s size over five years. The institution increased its spending on digital and core systems five times during that period.

Cloud-based platforms and automation help banks grow without raising costs or risks at the same rate. Institutions that match technology investments with their business strategies gain an advantage. These tools allow banks to manage higher transaction volumes and customer demands that come with expansion.

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The Operational Bottleneck

Digital progress has not eliminated operational challenges. A CEO of a mid-Atlantic regional bank noted that while stress tests now run in an hour, manual setup of reference points still causes delays. The report points out that fragmented systems and manual processes reduce flexibility.

Standardizing data and automating configurations would speed up operations. Integrating stress testing into regular planning could help banks respond more quickly to changing conditions.

The whitepaper describes this shift as more than a technical update. Mid-sized banks once treated infrastructure as fixed until forced to change. AI-driven threats have changed that view, requiring banks to rethink what makes a stable foundation. Compliance now means ensuring automated systems remain secure against manipulation, not just meeting basic requirements.

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Rising Threats and Regulatory Expectations

AI has transformed the risk environment for financial institutions. Criminal networks now use industrial-scale fraud, with global illicit financial activity projected to reach US$4.4 trillion in 2025. Fraud losses and scams alone may exceed US$500 billion. According to the Nasdaq Verafin 2026 Global Financial Crime Report, 90% of professionals saw an increase in AI-driven attacks over the past two years.

A Chief BSA/AML and Sanctions Compliance Officer called the spread of AI-powered scams an “epidemic.” Regulators now expect banks to show strong, data-based controls and the ability to adjust quickly to new fraud patterns.

Striking a Balance

The report notes that growth without preparation increases risk, while preparation without growth wastes resources.