Question 1

What is AI governance for community banks?

Accepted Answer

AI governance for community banks is the framework of policies, controls, and oversight processes that ensures AI tools — whether built in-house or embedded in vendor software — are used responsibly, comply with regulatory expectations, and align with the bank's risk appetite. It covers AI inventory, risk classification, vendor due diligence, model documentation, board oversight, examiner readiness, and incident response, sized for institutions under $10 billion in assets.

Question 2

What is SR 26-2?

Accepted Answer

SR 26-2 is the Federal Reserve's updated supervisory guidance on model risk management, replacing SR 11-7. It applies to AI and other models used in banking and broadens expectations around governance, documentation, validation, and ongoing monitoring. Community banks are expected to apply the guidance proportionate to their size, complexity, and risk profile.

Question 3

Does my community bank need an AI governance policy?

Accepted Answer

Yes. Even banks that have not deployed in-house AI almost certainly use vendor products that embed AI — credit decisioning, BSA monitoring, fraud detection, document processing. Examiners are increasingly asking how those tools are governed. A foundational AI policy, AI inventory, and committee charter are now a baseline expectation regardless of asset size.

Question 4

How is AI governance at a community bank different from a large bank?

Accepted Answer

Large banks operate dedicated model risk teams, validation departments, and seven-figure governance budgets. Community banks carry the same regulatory obligations with a fraction of the staff. Effective community bank governance is proportionate — fewer artifacts, simpler workflows, and shared responsibility across IT, compliance, risk, and the board — but it still has to answer the same examiner questions.

Question 5

Who should own AI governance inside the bank?

Accepted Answer

Day-to-day ownership typically sits with a senior IT or risk leader, often the ISO or CRO, supported by a cross-functional AI Governance Committee that includes compliance, lending, operations, and audit. The board owns ultimate oversight and approves the policy framework. Roles, escalation paths, and reporting cadence should be documented in a committee charter.

Question 6

When should a community bank start building an AI governance program?

Accepted Answer

Now. Examiner attention on AI has accelerated through 2026, and the gap between what banks have documented and what regulators expect grows every quarter. A foundational program — inventory, policy, committee charter, and first board report — can be stood up in roughly 90 days with the right materials and a clear roadmap.

The AI Governance Program You'd Build If You Had the Time.

Four problems community banks can't ignore

The big frameworks weren't written for you

Examiners are already asking about AI

Vendor AI is inside your institution and nobody's tracking it

Your board owns AI oversight but has no framework for it

The Community Bank
AI Governance Handbook

15 chapters. The full governance lifecycle.

Written by a practicing bank VP

Built around the questions examiners are asking today

90-day Quick Start guide included

The Community Bank
AI Governance Toolkit

Policies & Frameworks

Risk & Assessment Tools

Board & Communications

Ready to build a governance program
that fits your institution?