The future of banking
The structural forces reshaping global banking and the strategic decisions leaders cannot defer....
Finance
For future success, banks must respond strategically to these six shifts
A new report on the future of banking identifies six structural, powerful shifts affecting a bank’s ability to operate successfully over the coming decades. Bank leaders cannot afford to ignore them.
Rapid read:
- Geopolitics is now a core banking risk. States are weaponizing interdependence through war, sanctions, tariffs, and policy volatility, reshaping capital flows and balance sheets. Fragile trade routes and rising rivalry are testing the global bank model and must be embedded in core strategy.
- Agentic AI marks a step‑change, not an upgrade. Banks are moving from task automation to cognitively enabled systems that influence decisions and workflows. The opportunity is large, but fragmentation, legacy tech, regulation, and skills gaps risk widening the gap between AI potential and what banks can safely deploy.
- Winning strategy is defined by constraint. Banks must balance innovation with resilience, trust, and regulation. Those that treat capital, regulation, and operating limits as strategic assets – rather than barriers – can turn friction into advantage while delivering both reliability and speed in a volatile, tech‑driven world.
To mark becoming a fully-fledged bank in the UK, the mega-fintech Revolut launched a TV advertising campaign featuring Irish comedian Graham Norton on a brown horse. As Norton explains cheekily at the end: “It’s a metaphor.” The advert, which is a parody of some of the advertising tropes historically used by legacy banks, is a fun watch, posing a simple but in fact consequential question – one that possibly keeps bank executives awake at night today: What is a bank?
It’s a clever provocation. In a few seconds, the ambitious digital startup turned financial services powerhouse challenges decades of accumulated assumptions about balance sheets, operating structures, and the very definition of financial intermediation. But do these hold water in 2026?
What will the banking leaders look like in five years?
Banking models, after all, were built for a different time, one defined by relatively stable geopolitics and smooth cross-border trade, fairly predictable regulations, centralized banking infrastructure, and long technology cycles. For decades, scale, capital strength, and regulatory privilege formed durable competitive moats. Banks sat at the center of client liquidity, orchestrating payments, lending, and risk with little serious threat to their primacy.
Today, those foundations are being relentlessly pounded and squeezed by a set of existential and overlapping forces that are galloping mercilessly forward. Economic statecraft is bumping up against revenue streams; intelligent automation and agentic AI are reshaping workflows, organizational structures, and decision-making. Open banking, enabled by regulations like the Revised Payment Services Directive (PSD2) in the EU and similar elsewhere, disintermediates certain key functions that banks used to control end-to-end.
Once more, the customer is king and queen – and banks must rebuild for heightened customer-centricity, looking to the likes of Netflix, Uber, and Apple for inspiration – while at the same time strengthening resilience and compliance with more complex regulations.
I by IMD’s new report, The Future of Banking: The structural forces reshaping global banking – and the strategic decisions leaders cannot defer, identifies six structural shifts that will determine whether banks will be able to operate successfully over the coming decades or lose momentum and market share. The report examines these shifts through the perspectives of IMD professors, the real-world experience of bank leaders, and executives of breakthrough technology innovators, positioning as strategic partners to help banks build new competitive advantage.
Drawing from the report, this article explores three of these catalytic shifts.
1 – Fracture lines on the world map now demand the same attention as credit or market risk
The era of seamless globalization is over, and financial institutions are being pulled into geopolitical fault lines. During the post-Cold War multilateral trade era, many policymakers assumed economic interdependence would reduce geopolitical confrontation. But now, states are weaponizing interdependence. Tensions and rivalry between countries and regions have become a first-order banking risk. War, policy volatility, sanctions, and trade tariffs are already reshaping balance sheet decisions, capital flows, and customer behavior.
In response, issues once treated as episodic must now be embedded in the core strategy.
The conflict in the Middle East and the blockading of the Strait of Hormuz, a major maritime chokepoint for trade, particularly oil, provide the latest evidence of governments using economic statecraft to reshape global power dynamics. While banks aren’t directly in the firing line in this conflict, they face significant downstream effects from financial market volatility, worsening funding conditions, and increased risk aversion. HSBC, NatWest, and Deutsche Bank have announced impairment charges in their first-quarter earnings statements to cover potential losses from the fallout. The “global bank” model is being tested by a world that is becoming structurally less global.
Three questions for bank executives to consider in order to surface vulnerabilities and opportunities
Of the rivalry between governments, whether as a result of national security or competitiveness concerns, which of these most directly affects your institution’s business model?
- What type of insight about the causes and consequences of global upheaval do you most wish you had reliable, regular access to that you do not currently have? What analytical capability gap does this reveal?
- How modular is your bank’s operating model? If a key partner jurisdiction became inaccessible or significantly more costly due to geopolitical developments, could you pivot quickly? What would be the cost, and what is the cost of not being able to pivot?
- What capabilities do your senior bankers need to strengthen, or develop for the first time, to lead more effectively in an era of sustained geopolitical rivalry?
Legacy technology stacks, regulatory constraints, data silos, and a skills shortage limit how quickly banks can scale AI capabilities.
2 – Agentic AI: An inflection point of magnitude
For the past 15 years or so, banks have been preoccupied with digital transformation. Many millions of dollars have been spent modernizing infrastructure, improving customer interfaces, and automating workflows with “old” rules-based AI technology. Progress has been incremental.
Developments in intelligent automation and agentic AI change the game. Agent-based systems enable banks to transition from task automation to cognitively-enabled organizations. They will redefine how banks think, decide, operate, and engage with their customers.
Banks have already started their AI journey, partnering with the likes of OpenAI and Anthropic on Copilot tools for employees and advisors, and chatbots. Some banks have gone further, testing know-your-customer (KYC) agents and routine compliance tasks. Higher-value, more complex workflows will be next on the list, but adopting agentic workflows in a high-stakes environment must be controlled, operating within regulatory and internal risk frameworks. In the report, Goldman Sachs Vice Chair Richard Gnodde posits a future where an AI agent passes judgment in the boardroom – though that future is a while off.
One of the most common pitfalls in AI adoption is fragmentation. In times of change, it is often the case that banks will launch dozens of pilots across functions and geographies. This is similar to what happened in the earlier days of the digital transformation. Many of these sandboxed experiments never scaled and only proved to be a distraction.
The AI transformation will be uneven. Legacy technology stacks, regulatory constraints, data silos, and a skills shortage limit how quickly banks can scale these capabilities. The result is a widening gap between what is technologically possible and what is operationally feasible.
Three questions for bank executives to consider to surface vulnerabilities and opportunities
- As generative AI moves from productivity tool to decision-making partner, which banking activities should remain fundamentally human-led?
- How can my bank build trust, governance, and regulatory accountability into AI systems when the technology is evolving faster than institutional controls and supervisory frameworks?
- Do our AI investment commitments make sense in terms of our strategy?
Regulation defines the playing field and technology defines execution speed.
3 – Strategy is defined by constraint
Unlike digital startups, banks cannot move fast and break things. They must continuously balance innovation with resilience; evolve but with trust front and center.
Customers may tolerate app crashes from social media platforms; they do not tolerate instability in their primary bank. Data breaches, fraud incidents, or operational failures erode not just brand reputation but confidence in the financial system itself. A bank’s license to operate is inseparable from resilience.
The banks that succeed are those that can navigate the tension between safety and speed: moving fast enough to remain competitive, yet cautiously enough to preserve stability and trust in a world of decentralized finance, blockchain-based infrastructure, AI‑driven decision-making, and emerging quantum risks.
Regulation defines the playing field, and technology defines execution speed. Capital becomes the decisive instrument of strategic choice.
The banks that win are those that can navigate the friction and turn limits into leverage.
Three questions for bank executives to consider to surface vulnerabilities and opportunities
- Which capabilities must become more resilient as banking becomes increasingly AI-driven, digital, and interconnected?
- Are we treating regulation, capital, and operational constraints as barriers to growth – or as sources of strategic advantage?
- In a world where customers expect both instant innovation and absolute reliability, can our operating model realistically deliver both?
The IMD report sets out a framework for how leaders can think about the changes they need to make. To explore the rest of the systemic shifts changing banking for good, access the report here.
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