Hartford Business Journal

HARTFORDBUSINESS.COM | JANUARY 12, 2026 35 INDUSTRY OUTLOOK | BANKING & FINANCE Gianni said Bank of America's AI-driven tools have helped reduce fraud losses "by 50%," underscoring growing interest in automated detec- tion models. The bank said it expects the number of digital interactions, including mobile banking and digital payment transfers, to keep climbing in 2026. Eagleson said banks will increas- ingly rely on automation and data analytics to spot risks and improve service. He said AI can support "real-time awareness, reduced losses, and quicker response to suspicious activity," while also improving person- alization for clients. Orr said "AI-driven fraud is becoming more sophisticated," and warned that banks must balance innovation with compliance, especially as reporting requirements evolve. She said financial institutions will need to allocate significant resources for IT governance, cybersecurity infrastructure and fraud prevention. Mergers and acquisitions Merger activity could increase in 2026, several bankers said, driven by rising technology and regulatory costs. Canina called consolidation a "hot trend," citing expenses tied to tech- nology, regulation and staffing. He said large regional or national banks could become more active in the market. Eagleson said he expects "a meaningful uptick in mergers and acquisitions in 2026," especially among smaller banks facing margin pressures. Regulation and compliance Orr pointed to potential state-level changes in 2026. She cited Connecticut legislation that calls for a Department of Banking study on digital banking, consumer protections and crypto licensing. Recommendations from that study are expected in early 2026, and banks are monitoring potential new requirements for basic accounts and reporting. Canina said he expects "significant regulatory changes" at the federal level, which could affect banks of all sizes. He said changes to consumer protections and capital requirements should be closely watched in the coming year. EXPERT'S CORNER Emerging tech jitters create potential openings for value investors in 2026 By Rosa Y. C. Chen W henever new technology appears, investors imme- diately try to predict the effect it will have on existing businesses: which companies or industries stand to benefit, and which will see their business models disrupted? A company perceived to have a high poten- tial for disruption by new technologies can see its stock drop precipitously even if there's no current evidence of disruption. Just the possi- bility is enough to make investors sell. Currently, investors are anticipating disruption from three major sources: AI, stablecoins and tokenization. But not all of these disruption fears are evidence-based or equally rational. Unfortunately, without evidence in hand and only rampant forecasting, all stocks at risk get sold. The under- performance that results from such concerns could represent an opportu- nity for value, contrarian investors. Disruption from AI Based on the disruptions we are already seeing from AI, investors are extrapolating the worst-case scenarios and divesting of industries and companies where there's concern for the core business model. Affected stocks include Intuit, ServiceNow, Adobe, HubSpot and Salesforce, all of which have under- performed, with some now trading at relatively low valuations. In particular, many investors believe that AI will negate the need for specialized software such as tax preparation software (Intuit's TurboTax) or orchestration software for enterprises (ServiceNow). Despite the fact that these companies are incorporating AI into their products, investors are skeptical and have rotated out of these names. For some of these companies, the actual risk is likely overblown, at least in the intermediate term. And there's lots of evidence of AI being an enabler for them. As these stocks fall, the risk-return proposition is becoming more attractive. Fears of disruption from stablecoins There's not much evidence yet that stablecoins or tokenization are actually disrupting industries, but investors are projecting the likely disruption of AI onto other emerging technologies that might not turn out to be as disruptive — and that's enough to affect prices. With stablecoins, in the most extreme scenario, consumers will be able to pay for everything instantly with a stablecoin wallet, and there- fore no one will need payment processors, card issuers or networks. This means the entire payments ecosystem currently required for you to pay for gas at the gas station disappears or is simplified greatly. At least, that's what some people are envisioning, as it's not actually happening yet. But payments compa- nies like Visa and Mastercard have already seen their share price fall. Companies that are expected to benefit from stablecoins, like Circle or Tether, have done very well, and those that are expected to be disrupted have not done well, even though there's currently no evidence of disruption. It could happen, but it's far from certain, and if anxiety wears off before this possible future comes to pass, stock prices in the legacy payments sector could be positioned to rise. Tokenization and derivatives Companies that run derivatives exchanges, like Intercontinental Exchange, are also feeling the heat. The idea behind tokenization is that you can transact any illiquid asset such as real estate or valuable artwork in a token. These can then be traded easily by anyone or sold in fractional incre- ments. Recently there's been a push to tokenize financial assets: money markets, futures contracts, stocks and so on. As it stands, owning a token tied to a physical asset does not mean you actually own it. It's meant to be a proxy of the asset without ownership. The goal is to eventually be able to trade the actual asset using tokens. This would simplify the current complicated and confusing landscape for transacting in tangible assets, eliminating the need for the derivative contracts ecosystem, for example. As Intercontinental Exchange domi- nates these markets globally, it has become a prime target for investors who believe its business model is at risk. The company isn't standing still, however, and has been testing and incorporating tokenization into its services in hopes of streamlining its own operations. When faced with new technolo- gies, investors' imaginations can get ahead of reality, prompting them to anticipate near-term disruption. This will cause them to sell any compa- nies that seem to be at risk, even if currently there's very little evidence this is happening. In the meantime, these stocks can trade at appealing valuations and, if the worst-case scenarios don't materialize, could deliver significant outperformance. Rosa Y. C. Chen is director of research and a portfolio manager at Hartford-based registered investment advisor Bradley, Foster & Sargent. Rosa Chen TOP SBA LENDERS IN CT (FY 2025) LENDER NO. OF LOANS TOTAL LOANS AMOUNT LIVE OAK BANKING COMPANY (NC) 31 $51,447,400 WEBSTER BANK (CT) 64 $30,519,900 NEWTEK BANK (FL) 57 $28,722,000 M&T BANK (NY) 240 $24,242,600 TD BANK (DE) 126 $17,804,200 READYCAP LENDING LLC (NJ) 29 $16,544,200 BEACON BANK AND TRUST (MA) 11 $16,090,000 NORTHEAST BANK (ME) 71 $10,759,600 IVES BANK (CT) 19 $9,458,000 GBANK (NV) 4 $9,422,000 LIBERTY BANK (CT) 55 $8,629,900 Source: U.S. Small Business Administration

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