By Om Kapoor August 20, 2025
Midyear Banking Outlook: Navigating Policy Shifts & Leading with AI
The past few months have been defined not by slow uncertainty but by rapid, high-magnitude shifts. Tariff volatility, elevated geopolitical tensions, cooling labor markets, and monetary policy uncertainty are ultimately converging to compress decision timelines. In this environment, stability — when it appears — is fleeting.
This pace of change has transformed the chief financial officer (CFO) from a traditional financial steward into a strategic navigator. Today’s finance leaders are thus no longer confined to closing the books and reporting history. Instead, leaders must collaborate across the C-suite to anticipate what comes next, model its potential impact, and guide strategic responses — often in real time.
To explore this shift, we launched Finance 2035 for Financial Services. After surveying and interviewing more than four hundred Financial Services Chief Executive Officers (CEOs), CFOs, business leaders, and investors for the report, the research shows that expectations have multiplied: expectations have multiplied:
- 77% of leaders say the CFO’s remit has expanded significantly in the past three to five years.
- 69% of industry leaders and 87% of investors believe the role will be even more critical by 2035.
- 78% of CEOs and line-of-business managers already expect CFOs to act as ambitious growth drivers.
Together, these insights highlight the rising demand for the Office of Finance to guide the enterprise with agility, foresight, and continuous performance monitoring, especially when the environment is continuously evolving.
When the Rulebook Keeps Changing
Policy and economic signals now change so quickly that the “shelf life” of stability has all but vanished. As a result, what’s true this quarter might be obsolete the next, making agility — not just accuracy — the defining skill for finance teams.
Nowhere is the volatility clearer than in monetary policy and the data that surrounds it. Yet the challenge goes beyond rate decisions, with a host of issues creating an environment of whiplash:
- Constant revisions to underlying jobs and inflation figures
- Conflicting signals from different agencies
- Questions about the credibility of key data sets
For CFOs, operating in this environment requires running and maintaining multiple parallel scenarios for different rate, employment, and inflation environments, all while recalibrating forecasts as soon as new numbers are released. What was once a quarterly planning exercise has become a nonstop cycle of adjustment across multiple indicators.
Tariffs are another source of disruption. According to Yale’s Budget Lab, the U.S. effective tariff rate is at the highest level since the 1930s, now hovering near 18.6%. This rate has led banks to revisit risk models and hedging strategies, particularly for clients dependent on imports. In addition, cross-border lending, commodity financing, and trade credit lines are all directly impacted. Those impacts create knock-on effects across liquidity planning and credit provisioning.
Tax reform under the One Big Beautiful Bill Act (OBBBA) also introduces both opportunity and complexity for banks. Tax relief for individuals, small businesses, and corporations is set to increase cashflow, reduce default risk, and drive new loan demand, particularly in high growth sectors that benefit from incentives and grants such as aerospace/defense and US-based manufacturing. This creates openings for banks to reallocate capital and design products and services that capture emerging demand.
At the same time, OBBBA introduces new operational responsibilities for banks. For example, lenders must now issue internal revenue service (IRS) forms tied to the new auto loan interest deduction, requiring updated processes and reporting systems.
Deposit incentives like the “Trump Account”, a one-time deposit and tax-advantaged savings program for newborns, are projected to channel billions into deposits according to the Joint Committee on Taxation, which will likely fuel balance sheet expansion. OBBBA provides banks with a balance sheet buffer and increased liquidity, but time to market and execution is key. Those that can swiftly reallocate capital and launch tailored products for high-growth sectors while navigating compliance will be positioned to capture the biggest benefits from these legislative changes.
Mergers and acquisitions (M&A) appetite in banking is also rising as regulators pull back on constraints that once slowed consolidation. Between 2021 and 2024, many deals dragged on for months or even years. For example, New York Community Bank’s purchase of Flagstar took 584 days to close. Umpqua’s merger with Columbia required 504 days, while U.S. Bank’s acquisition of MUFG stretched to 436 days.
Recent deals, however, are moving faster. Atlantic Union’s recent acquisition of Sandy Spring, for example, was approved in just 85 days. If this trend continues, dealmakers could face a much more efficient process in today’s regulatory environment.
Even with a changing regulatory environment in Washington, regulatory complexity remains a persistent challenge. Federal oversight has relaxed in certain areas, but state-level regulators are doing the opposite. For example, California has expanded requirements for fair-lending disclosures, and New York is enforcing stricter consumer protection rules, particularly for digital banking services. This patchwork of federal leniency and state-level tightening forces institutions to navigate compliance risks that can shift overnight.
In this environment, policy sensitivity and other drivers like macro volatility cannot live in a static spreadsheet. Drivers must instead be embedded into rolling forecasts so that CFOs can reallocate capital, adjust pricing, and pivot strategies mid-cycle — not months after the fact.
Technology’s Role in the New CFO Playbook for Banking
The pace and magnitude of change in tariffs, taxes, monetary policy, and regulatory frameworks make static planning cycles unworkable. Finance leaders can’t wait until quarter-end to respond — they need tools that can absorb new signals, recalibrate forecasts instantly, and guide strategy in real time. This is where technology, and increasingly artificial intelligence (AI), has become essential to the CFO playbook.
The adoption of AI in banking initially took root in customer-facing and risk functions:
- Personalized chatbots & virtual assistants, some of which can provide advice and personalized cross-selling
- Analyzing standard and alternative credit data to support underwriting decisions
- Anomaly detection in Know Your Customer (KYC), Anti-Money Laundering (AML), and fraud
But within the Office of Finance, use cases are multiplying and now expanding into forecasting, scenario planning, and real-time analysis. AI-enhanced models are being run in parallel with traditional driver-based approaches. Through such approaches, CFOs get a second lens to rapidly validate or challenge assumptions in an environment where revisions and shocks are the norm.
The breakthrough is the shift from automation to decision intelligence, enabling finance teams to move beyond static models and continuously sense and adapt:
- Predictive capabilities turn external signals — macroeconomic data, policy updates, market shifts — into rolling forecasts that can update daily.
- Agentic AI further accelerates the shift by enabling finance teams to interact with the agents as an extension of their team, using natural language to surface insights.
- The impact of a tariff hike, tax change, or Fed move can be quickly reflected in profitability, capital, and liquidity outlooks.
In a world where stability has the shelf life of weeks or even days, foresight and speed empower CFOs to proactively lead with confidence rather than act reactively.
OneStream: A Platform Built for Agility
Amid the changing regulatory landscape and relentless market volatility, fragmented point solutions only complicate finance operations, creating silos and slowing access to the analysis needed to make decisions. The Office of Finance needs a single platform that unifies core finance, contextualizes operational analytics with results, and embeds AI directly into critical workflows. OneStream is that platform, bringing together all three in a single, unified and extensible solution, powered by its plug-and-play architecture, enabling CFOs to lead with speed and confidence.
At OneStream, AI doesn’t live off to the side. SensibleAI™ is embedded in the platform, drawing directly on governed, unified data. You shouldn’t need a PhD in data science to get value. Accordingly, SensibleAI meets business users where and how they work. That approach strengthens the accuracy, transparency, and speed of finance processes, all without creating yet another tool to integrate or secure. With Forecast, Studio, and Agents, SensibleAI turns context into clarity, automates complexity without sacrificing control, and gives finance leaders confidence in every decision.
OneStream enables CFOs to turn volatility into advantage and empowers them to deliver insights and decisions that withstand scrutiny from both regulators and the boardroom.
Conclusion
The turbulence of 2025 underscores a simple truth: Volatility is no longer the exception but the environment in which banks operate. For CFOs, the path forward lies in building resilience through agility, embedding sensitivity into every forecast, and elevating finance from record-keeper to strategic partner, steering the results of the enterprise.
