Traditional banks can no longer just strive to be better at what they do. Within a few years, their current business model, which calls for them to provide a full range of banking services and channels by default, will no longer be sustainable. To thrive in the digital age, today’s banks will need to engage with customers in new ways and connect with broader business ecosystems to offer more than traditional banking products.

Based on our analyses and client experiences, we believe four business models are poised to reshape the industry. These models are now possible to pursue because of the maturity of the technologies that will enable them. They differ not only in the services they provide, but also their market focus, the manner in which they make money, and how they evaluate their performance (see Figure 2). Importantly, none of these models is mutually exclusive. A bank may pursue one model, or select aspects of each to deliver a truly differentiated service. Whether they are applied in isolation or in combination, we anticipate these business models will deliver the majority of banking revenues in just a few years.

Because transitioning to these new models is a multiyear journey, it’s critical that banks begin their migrations today. Those that wait will be left behind.


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