Across Texas, community banks and credit unions are once again being tested. Deposit competition remains fierce, margins are thin, and regulatory and cyber risks continue to grow. Meanwhile, national banks and fintechs have the scale and budgets to move faster.
But mid-sized institutions still have a powerful lever: digital leverage. With the right tools and partnerships, they can do more with less, turning today’s challenges into an edge.
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Deposit Pressure Isn’t Over
The liquidity scare of 2023 may have eased, but deposit competition hasn’t gone away.
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Core deposits are under pressure: many Texas institutions saw customers rotate into higher-yield money-market funds and CDs.
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Community banks managed some growth, but credit unions actually lost deposits in 2023.
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Even as deposits have been replenished in 2024–25, they’ve come at the cost of higher interest expenses and thinner margins.
This balancing act—keeping deposits without crushing profitability—remains a top concern. According to Jack Henry’s 2025 strategy survey, growing deposits is still the #1 goal for 64% of banks.
Margin Compression Meets Efficiency Mandate
Rising deposit costs and a high-rate environment continue to squeeze net interest margins. Even though the yield curve has normalized, margins remain historically low.
The result: efficiency is no longer optional. In 2025, 54% of bank CEOs say improving efficiency is their top strategic priority—the first time it’s ranked #1. This is driving investment in automation, analytics, and digital modernization to help banks “do more with less.”
The Weight of CRE, Compliance, and Cyber
Beyond liquidity and margins, three other pain points dominate:
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CRE exposure: Texas community banks hold over half of all CRE loans in the state, with particular concentration in office and lodging segments under stress. 2025 is a pivotal year as a wave of CRE loans mature at much higher rates, raising default risks.
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Regulatory burden: New rules like CFPB’s Section 1071 and heightened post-SVB scrutiny weigh heavily on smaller banks. Compliance costs eat into already thin margins, and vendor lock-in with core providers limits room to maneuver.
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Cybersecurity: For the first time, fraud and cyber threats outrank all other concerns, with 38% of banks citing cyber/fraud as their #1 risk. From account takeovers to ransomware, the threat landscape is expanding while resources remain stretched.
Why Digital Leverage Matters
Texas mid-sized banks can’t win on scale. But they can win on speed, agility, and smart use of digital tools. Opportunities include:
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Automating compliance and back-office tasks: freeing scarce staff for higher-value work.
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Upgrading digital channels: a mobile account opening process under 3 minutes is now table stakes for attracting Gen Z customers.
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Deploying AI in risk management: predictive models to flag at-risk CRE loans or forecast deposit outflows.
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Strengthening fraud defenses: machine-learning systems that catch anomalies in real time.
How Workana Helps
At Workana, we help Texas community banks and credit unions put digital leverage into practice:
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AI-driven automation: squads that streamline onboarding, loan processing, and compliance reporting.
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Digital modernization: nearshore teams that upgrade mobile platforms, integrate fintech features, and improve customer engagement.
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Risk and fraud analytics: data specialists who build predictive tools for deposits, credit, and fraud detection.
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Cybersecurity reinforcement: vetted experts who strengthen monitoring and response capabilities in real time.
The difference is speed and pragmatism. Instead of multi-year consultancy projects, Workana squads deliver targeted results in weeks—at a fraction of the cost, with full cultural and time zone alignment. Learn more here.
The Bottom Line
Texas’s community banks and credit unions sit at a crossroads. They can’t fight megabanks dollar for dollar, but they can fight smarter. By leveraging AI, automation, and nearshore talent, they can protect deposits, improve efficiency, and keep trust at the core of their business.
Because the future of community banking isn’t about outspending the giants. It’s about outmaneuvering them.
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