Why Global Banks Must Move with Precision and Speed in the Age of AI

Headline: Why Global Banks Must Move with Precision and Speed in the Age of AI

Subheadline: Record profits mask structural challenges as fintechs, AI, and digital assets reshape the banking industry

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Executive Summary

The global banking industry delivered another year of exceptionally strong financial performance in 2025, with net income reaching $1.3 trillion, up 7 percent from the previous record set in 2024, according to McKinsey & Company’s Global Banking Annual Review 2026. Revenue margins remained elevated, and banks added $853 billion in surplus free cash flow to equity, extending a record-setting trend that began in 2022.

Yet beneath these headline numbers lie structural concerns. Banking’s price-to-book and price-to-earnings ratios continue to trail every other industry, and return on tangible equity has begun to decline again—from 12.4 percent in 2024 to 11.8 percent in 2025. Investors remain unconvinced that banks have used their recent windfall to build durable long-term value.

More importantly, the 2026 review highlights four converging forces that threaten banks’ most valuable asset: the customer relationship. Mature fintechs now capture an estimated 17 percent of industry revenues. Neobanks such as Revolut and Nubank have crossed the growth-performance frontier that previously separated challengers from incumbents. Agentic AI and digital assets—including stablecoins—are enabling customers to bank without traditional banks. And customer trust in new entrants has reached a tipping point.

This article analyzes the implications of the McKinsey report for corporate finance, accounting, governance, and long-term financial strategy. It argues that banks must move beyond precision strategies and adopt an accelerated, AI-driven execution model—becoming multispeed organizations capable of responding to technological disruption at the pace of software, not the pace of regulation.

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Introduction

For more than a decade, global banks have been urged to adapt to digital disruption. The 2026 Global Banking Annual Review from McKinsey & Company offers a stark assessment: adaptation is no longer optional, and the speed of change has become the defining competitive variable. The report, previewed in May 2026, revises the 2025 results and outlines a new strategic imperative—precision with speed.

The review arrives at a time when the banking industry appears financially healthy. Net income hit a record $1.3 trillion in 2025. The industry ranks first among all sectors in aggregate net income. Deposit, loan, and asset-under-management balances grew 6.5 percent, reaching $406 trillion. Yet investor sentiment remains muted, and emerging challengers are attacking the industry’s core profit pools.

The disconnect between strong current performance and weak long-term expectations suggests that investors see risks that income statements do not capture. For CFOs, auditors, and governance professionals, the report raises essential questions about how banks measure value, manage risk, and disclose the impact of technology-driven change.

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Financial Context

McKinsey’s analysis shows that banking revenues are closely linked to wealth accumulation, which has grown faster than nominal GDP for years. From 2020 to 2025, funds intermediated by the financial system expanded by $131 trillion, reaching $468 trillion. Banks have retained a significant share of this growth, with balances rising to $406 trillion in 2025. Revenues before risk costs grew from $6.1 trillion to $6.4 trillion.

However, the report notes that the share of global funds parked on banks’ balance sheets is shrinking. Private capital, fintech platforms, and non-bank financial intermediaries are absorbing a growing proportion of wealth creation. While banks remain the largest single category of financial intermediation, their relative position is eroding.

Net interest margins slipped from 1.65 percent to 1.63 percent globally, reflecting the beginning of interest-rate normalization in major economies. Regional divergence became more pronounced. U.S. banks improved net interest margins by 9 basis points, Japan’s by 7, and the UK’s by 6, while Brazil experienced a dramatic decline from 3.55 percent to 2.93 percent. These regional differences are reshaping business models and capital allocation decisions.

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Main Analysis

The 2026 review introduces the concept of “precision with speed” as a strategic response to four structural challenges:

Mature fintechs: The report estimates that fintech companies now capture roughly 17 percent of industry revenues. This is no longer a niche threat. Fintechs have scaled into lending, payments, wealth management, and even core banking services, often with lower cost structures and superior digital experiences.
Neobanks crossing the frontier: Neobanks such as Revolut and Nubank have moved beyond user acquisition to profitability, demonstrating that digital-only models can achieve the scale and returns once reserved for incumbents. The report describes this as “the call coming from inside the house,” because neobanks often rely on existing banking infrastructure while competing directly for customers.
Agentic AI and digital assets: The combination of autonomous AI agents and stablecoin-based payment systems enables retail and corporate customers to execute financial transactions without interacting with a traditional bank. This reduces the need for banks as intermediaries and poses a fundamental challenge to their business models.
Customer mindset shifts: Customers not only prefer but increasingly trust new entrants for everyday financial services. In the past, banks could rely on older customers who adopted technology slowly. That demographic shield has largely disappeared, as AI adoption is now the fastest in history across age groups.

The report argues that banks have previously survived disruption by waiting it out. But the velocity of AI adoption renders that approach obsolete. Banks must now execute with a speed that matches the pace of technological change. This requires not just precision in targeting customers and markets, but also organizational agility—the capacity to redeploy capital, talent, and technology quickly.

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Business & Market Impact

The findings of the Global Banking Annual Review 2026 carry significant implications for corporate finance, accounting, and capital markets.

#### Corporate Finance and Capital Allocation

Banks’ record profitability has produced ample surplus free cash flow—$853 billion in 2025—which has been returned to shareholders through dividends and buybacks. However, the report warns that investors are not rewarding banks with higher valuations. Price-to-book ratios remain the lowest among all industries. The market seems to question whether current earnings are sustainable or whether they represent a cyclical peak.

For corporate finance leaders, this suggests that banks must make difficult choices about reinvestment. Capital allocated to digital infrastructure, AI capabilities, and strategic acquisitions may be more valuable in the long run than incremental buybacks. The report’s emphasis on “precision strategies” implies that banks should concentrate resources on specific customer segments, geographies, and products where they possess durable advantages rather than pursuing scale for its own sake.

#### Financial Reporting and Valuation

Accounting professionals should note the report’s reliance on metrics such as revenues after risk costs divided by balances, return on tangible equity, and price-to-book ratios. These measures differ from GAAP or IFRS metrics and highlight the importance of non-GAAP performance indicators in assessing bank value. CFOs may need to refine management reporting to track the financial impact of AI adoption, customer ownership, and digital disintermediation more accurately.

#### Capital Markets and Investment

Institutional investors are increasingly focused on banks’ ability to adapt to AI and fintech competition. The report’s finding that banking’s price-to-equity ratio trails other industries reflects a market discount for technological disruption risk. Investment decisions in the banking sector will depend more on banks’ demonstrated capacity to execute precision strategies than on near-term earnings momentum.

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Governance Insights

The Global Banking Annual Review 2026 raises important governance issues, particularly around technology adoption, risk management, and board oversight.

#### AI Governance and Accountability

Agentic AI—systems that act autonomously—creates new governance challenges. Banks deploying AI agents for customer interactions, credit decisions, or trading must ensure that these systems are transparent, explainable, and compliant with regulatory expectations. Boards must establish clear accountability frameworks for AI-driven outcomes, including model risk management and data governance. The speed of AI deployment should not outpace the development of internal controls.

#### Regulatory Compliance and Financial Stability

As banks adopt faster, precision-driven strategies, regulators will be watching closely. The report notes that geopolitical frictions have benefited investment banks through increased volatility, but that such conditions require agility. Banks must balance speed with sound compliance, particularly in areas such as anti-money laundering (AML), know-your-customer (KYC), and customer data protection. The rise of stablecoins and other digital assets also raises questions about the regulatory perimeter and the need for new types of oversight.

#### Financial Transparency

The report’s observation that customer ownership is shifting toward new entrants has implications for financial transparency. Banks may need to disclose more about customer acquisition costs, retention rates, and the share of revenues derived from digitally active customers. Such disclosures could help investors assess franchise durability but must be developed within existing accounting frameworks to avoid inconsistent reporting.

#### Board Oversight and Strategy

Boards of directors face a fundamental challenge: ensuring that management is moving with the speed required while maintaining discipline and risk control. The report recommends that banks become “multispeed organizations,” able to operate at different velocities for different functions. Governance structures must support this agility, with clear escalation paths and rapid decision-making processes for technology-related initiatives.

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Future Outlook

Looking ahead, the next three to ten years will determine which banks successfully navigate the transition to an AI-driven, customer-centric financial system. The McKinsey report points to several likely developments:

Acceleration of AI adoption: By 2030, AI agents could handle a significant share of routine banking services, from payments to portfolio rebalancing. Banks that fail to integrate AI into their core operations risk losing cost advantages and customer satisfaction.
Further rise of platform banking: Fintechs and neobanks will continue to expand, potentially capturing more than 20 percent of industry revenues within the next several years. Incumbents may respond by partnering with, acquiring, or replicating successful digital models.
Digital assets and stablecoins: Stablecoins could become a mainstream payment infrastructure, reducing banks’ role in transaction processing. Banks must decide whether to adopt digital assets as part of their product offerings or risk being bypassed.
Regional alignment: Business models will become more regionally distinct, with banks in different markets following different strategic paths. This will require CFOs and treasury teams to adapt capital allocation and liquidity management to regional dynamics.
Regulatory evolution: Policymakers will develop new frameworks for AI governance, digital assets, and customer data rights. Banks that participate in shaping these regulations—rather than reacting defensively—will gain strategic advantages.

The report’s core message is that banks have less time than they think. The industry’s historical ability to outlast disruption will not work in the age of AI. Banks must now combine precision in strategy with unprecedented speed in execution.

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Conclusion

The Global Banking Annual Review 2026 presents a clear-eyed view of an industry at a crossroads. Record profitability masks erosion in customer ownership, investor skepticism, and the rise of disruptive technologies. For CFOs, auditors, and governance professionals, the report underscores the need to look beyond short-term earnings and focus on long-term sustainability.

Banks that can execute precision strategies with speed—deploying AI, reallocating capital, and responding to customer needs in real time—will be best positioned to thrive. Those that cannot will face the risk of becoming utilities in a financial system increasingly owned by digital-first competitors. The choice is not about whether to adapt, but how quickly.

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Key Takeaways

Global banking net income reached a record $1.3 trillion in 2025, up 7 percent year-over-year, but return on tangible equity declined to 11.8 percent.
Fintechs now claim approximately 17 percent of industry revenues, and neobanks are challenging incumbents on both growth and profitability.
Agentic AI and stablecoins are enabling customers to transact without traditional banks, threatening the intermediation role of banking.
Investor valuations remain low relative to other industries, indicating skepticism about banks’ long-term value creation.
Banks must adopt precision strategies focused on specific markets and customer segments, executed at the speed of AI adoption.
Governance frameworks must evolve to address AI accountability, digital asset risk, and the need for more agile organizational structures.

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Sources

McKinsey & Company, *Global Banking Annual Review 2026: Precision with speed*, May 21, 2026. Available at: https://www.mckinsey.com/industries/financial-services/our-insights/global-banking-annual-review