Each of the three business models – daily banking, navigating life events and building and protecting wealth – if executed successfully, could provide a much-needed boost in profitability for retail banks, with target cost-to-income ratios between 40% and 50%. Cost-reduction levers would differ for each model but would include optimisation of branch networks and maximum automation of customer acquisition/onboarding, credit underwriting, servicing and more. In addition to increased product penetration across the customer base, income levers include new revenue streams with ecosystem partners….
The adoption of platform-based business models will unleash a kind of internal disruption, requiring banks to give up revenue in some areas as they position themselves for fast growth in the target business.
From ‘Reshaping Retail Banks: Enhancing Banking for the Next Digital Age’, McKinsey & Co