The Biggest Threats to Commercial Bank Revenue
Banks are earning record profits while losing control of payments, distribution and the customer relationship. Protecting future revenue requires more than a better mobile app.
Commercial banks are earning record profits while losing control of the customer relationship. Both can be true.
Global banking profits increased by 7% to $1.3 trillion in 2025. Bank-held deposits, loans and assets under management rose from $381 trillion to $406 trillion. Yet beneath those strong results, the structure of banking revenue is changing.
Fintechs, neobanks, mobile money operators, digital wallets, private credit firms and technology platforms are taking control of the financial activities customers perform most often. Banks still provide regulated balance sheets, capital, liquidity and compliance. Their competitors increasingly control the customer experience, transaction data and product distribution.
What the 17% Fintech Figure Really Means
The claim that fintechs have captured 17% of global banking revenue needs context.
McKinsey compared the world’s 1,000 largest banks with the 1,000 largest fintechs by valuation. Within that group, fintechs increased their share of combined revenue from 10% in 2021 to 17% in 2025. Their revenue grew by 22% during the period, compared with 5% for banks.
Across the wider market, fintechs generated approximately $650 billion in 2025, against $7.3 trillion for the banking industry. Banks remain much larger, but fintechs are growing faster in some of banking’s most valuable activities. Payments remain the largest fintech segment, while lending, wealth management and capital markets are attracting stronger competitors.
Fintech Is Taking a Larger Share of the Competitive Revenue Pool
Share of combined revenue among the world’s top 1,000 banks and top 1,000 fintechs, plus revenue growth from 2021 to 2025.
| Measure | 2021 | 2025 |
|---|---|---|
| Fintech share of combined revenue | 10% | 17% |
| Revenue growth, 2021–2025 | Fintechs 22%; banks 5% | |
Why Today’s Profit Numbers Can Be Misleading
Banks traditionally earned much of their revenue by accepting deposits and lending those funds at a higher rate. That model remains important, but transaction banking and product distribution now contribute a larger share of industry earnings.
McKinsey estimates that transaction banking and distribution generate 47% of banking revenue and 57% of profits. These activities include payments, cards, cash management, foreign exchange and the distribution of financial products. They are also easier for competitors to unbundle.
Where Banking Profit Now Sits
Transaction banking and distribution carry a disproportionate share of profit and face faster competition from new business models.
Transaction banking and distribution
Balance-sheet activities
Transaction banking and distribution already produce almost half of industry revenue.
A fintech does not need to replace an entire bank. It can take one profitable activity, improve the customer experience and expand into adjacent services. A payment company can add merchant lending. A wallet can add savings. A remittance platform can add foreign-exchange services. A digital lender can add transaction accounts and cards.
The bank may continue holding the deposit or financing the loan while somebody else owns the customer, data and margin.
The Invisible Bank Problem
How customer primacy can move away from the institution carrying the balance-sheet and regulatory burden.
Receives income, pays, saves, borrows and manages money through the most convenient interface.
Owns the interface, engagement, transaction data, product discovery and part of the margin.
Provides the licence, deposit account, liquidity, settlement, capital, compliance and credit capacity.
How Commercial Banks Can Protect Revenue
Defend the Primary Customer Relationship
Measure active salary deposits, payment frequency, savings balances, credit usage, products per customer and retention. Registered accounts do not equal customer primacy.
Win in Payments and Transaction Banking
Strengthen instant payments, merchant acquiring, cards, cash management, mobile money connectivity, cross-border settlement and reconciliation.
Become an Open Platform
Expose secure APIs for payments, identity, accounts, lending and treasury. Participate wherever financial services are distributed without surrendering all customer access and economics.
Modernise the Core and Operating Model
Address product configuration, core banking, digital channels, data, reconciliation, exception handling, fraud and reporting. A new interface cannot compensate for slow operational systems.
Apply AI to Measurable Problems
Prioritise credit assessment, fraud, collections, customer service, document processing, compliance and reconciliation. Every use case needs reliable data and an accountable business owner.
Build, Buy and Partner Deliberately
Build capabilities that define the bank’s position, buy proven technology where ownership matters and partner where speed or distribution matters more than full control.
Remove Structural Cost
Do not digitise unnecessary processes. Simplify products, retire duplicate systems, automate high-volume work and redirect savings toward customer ownership and growth.
Choose Where to Win
Few institutions can lead simultaneously in retail, SME, corporate, payments, wealth and infrastructure. Capital and technology investment should follow a deliberate market position.
Twelve Forces Reshaping Commercial Banking
The threats fall into three groups: competitors taking the customer interface, alternatives pressuring the balance sheet, and operating constraints limiting the bank’s response.
Fintechs and Neobanks
Focused providers are taking payments, cards, lending, remittances, wealth and merchant services one journey at a time.
Mobile Money and Wallets
Telcos and wallets increasingly control daily transfers, bill payments, merchant payments and transaction data.
Embedded Finance
Financial products are moving inside retail, telecom, mobility and business platforms, reducing direct bank visibility.
Open Banking
Customer-permitted data access enables third parties to build stronger financial management, payments and credit experiences.
Stablecoins
New settlement routes can pressure remittance fees, foreign-exchange margins, correspondent income and deposits.
Private Credit
Specialist lenders are moving faster in SME, consumer, asset, working-capital and corporate finance.
Deposit Competition
Digital accounts, money-market products and mobile platforms make deposits easier to compare and move.
Margin Compression
Competition and regulation are reducing transfer, card, FX and lending margins while customers expect lower digital fees.
Legacy Technology
Slow product configuration, fragmented data and manual operations restrict revenue as directly as they raise cost.
AI-Native Competitors
Competitors can automate service, scoring, fraud, collections and personalisation with a lower marginal cost.
Fraud and Cybercrime
Direct losses, compensation, service disruption and damaged trust reduce both current and future revenue.
Compliance Cost
Capital, financial-crime, cyber, privacy and resilience obligations make banks costlier to operate than specialised competitors.
A Practical 12-Month Response
The first year should connect revenue defence to a limited number of customer journeys and operating changes. Broad transformation programmes without commercial priorities move too slowly.
Find the Revenue Leakage
- Map the revenue pools facing the greatest pressure.
- Identify where customers are moving activity elsewhere.
- Measure digital activation and transaction frequency.
- Select two priority customer journeys.
- Document the technology and operating constraints.
Fix and Prove
- Redesign the selected customer journeys.
- Launch targeted payment, savings or lending offers.
- Automate the highest-cost operating processes.
- Establish API and partnership governance.
- Deploy AI use cases with measurable owners.
Scale What Works
- Modernise the supporting platforms.
- Expand successful products across segments.
- Build merchant and partner distribution.
- Retire redundant systems and processes.
- Redirect investment toward proven opportunities.
Banks Are Profitable, but the Customer Is Moving
Commercial banks retain powerful advantages: licences, deposits, capital, risk expertise, trust and access to payment infrastructure. Those advantages will not protect revenue if customers increasingly experience financial services through somebody else’s platform.
Banks do not need to defeat every fintech, telco or digital platform. They need to avoid becoming regulated balance sheets hidden behind competitors that own the customer, data and distribution.
Sources and Method
- McKinsey, Global Banking Annual Review 2026: Precision with Speed. Used for banking profit, balances, revenue composition and the top-1,000 bank and fintech comparison.
- McKinsey and QED Investors, The Next Age of Fintech. Used for total fintech revenue and sector growth context.
- Bank for International Settlements, Annual Economic Report 2026. Used for the competitive implications of stablecoins and payment innovation.
Hero image: UN Trade and Development. Article analysis and visual interpretation: FinHive Africa.
