The article presents the problems and challenges which in recent year (2012-2016) touched the cooperative banking in Poland, both in terms of the activities of cooperative banks, as well as the whole sector. These problems and new regulations in the banking sector is the catalyst for the changes taking place at the microeconomic level (business model of cooperative banks) as well as at the level of whole cooperative banking sector. We present the causes of these changes and identify potential paths of development of cooperative banks and the essence of the new organizational and business model of sector based of the Institutional Protection Scheme.