Banks posted record profits in 2025. McKinsey’s annual global banking review says that may be masking a structural problem they are running out of time to fix.
Global banking net income reached $1.3 trillion last year, up 7% from 2024 and the highest figure on record. Yet the same report, released in May 2026, identifies four converging forces that are quietly eroding the customer primacy banks have relied on for generations. The authors describe the combination as a tipping point. The language is measured. The data is not.
The Satisfaction and Trust Gap
The two metrics banks have historically cited as their competitive floor – customer satisfaction and trust – have narrowed or reversed. Fintechs hold a 24-point net promoter score advantage over traditional banks across seven European markets, according to McKinsey’s Retail Banking Survey, which covered more than 21,000 respondents in 2025. On trust, scored on a 10-point scale, fintechs now rate 8.3 versus banks’ 7.9.
The trust gap is narrow, and McKinsey stops short of saying banks have lost their trust advantage. The direction of travel, the report argues, is what matters.
“Banks have long treated trust as an unassailable moat,” the review notes. The data suggests that moat still exists. It is no longer reliably deep enough to retain customers on its own.
The Generational Fault Line
The generational dimension sharpens the problem. Sixty-five percent of Gen Z respondents said they would be willing to try an e-wallet provider for financial services. Among boomers, that figure is 30%. Older customers, who represent a disproportionate share of bank profits, remain loyal – for now. Younger borrowers are forming their primary financial relationships elsewhere, often at the moment of a purchase, before any bank offer enters the picture.
Fintechs Are Taking Share – in Lending Specifically
Fintechs now hold 17% of revenues shared with the top 1,000 banks, up from 10% in 2021. Their revenues grew 22% over that period, compared with 5% for traditional institutions. Neobanks including Nubank, Revolut and Wise are posting returns on equity between 30% and 35%, outperforming most incumbents. McKinsey explicitly names lending as one of the profit pools now under direct attack – not a future risk, a 2025 data point.
The End of the Grace Period
McKinsey frames the pace of change as a departure from historical patterns. Banks have traditionally responded to technology cycles with what the report calls “smart followership” – waiting for new platforms to mature and relying on older, high-value customers who adopted slowly. That strategy worked in part because banks’ most profitable customers were also the slowest to change behavior. The report argues that protection no longer exists.
Generative AI reached 45% adoption among US working-age adults within two years of its mainstream launch. Mobile banking took 15 years to reach the same threshold. More striking, the generational gap in AI adoption is small: older Americans are adopting at nearly the same rate as younger ones. Agentic AI systems are already capable of comparing credit products, switching balances and refinancing debt automatically on a consumer’s behalf. Institutions not present in digital and embedded channels may not appear in the comparison set at all.
Where Profits Are Actually Moving
On the revenue side, McKinsey’s data shows that transaction banking and distribution now account for 47% of revenues and 57% of profits at major banks, while the on-balance sheet share of intermediated funds fell from 44% in 2022 to 40% in 2025. Those distribution revenues face, in McKinsey’s words, “far more competition and faster disruption from new business models” than any other segment of banking. Embedded finance and lending offered at the merchant point of sale are the primary competitive vector.
McKinsey’s Prescription
McKinsey’s prescription for banks is organized around a three-speed innovation model. The “faster” tier, designed for strategic bets with a clear path to revenue, explicitly names embedded finance and banking utilities alongside AI-enabled advisory and marketplace platforms. The report recommends banks treat this tier with “venture-capital-like urgency” and shift from episodic vendor relationships to “continuous ecosystem orchestration.” The practical implication is that banks which have not already begun building or deploying embedded lending infrastructure are operating behind the curve McKinsey is describing.
Source: McKinsey & Company, “Global Banking Annual Review 2026: Precision with Speed,” May 2026. Authors: Klaus Dallerup, Miklós Dietz, Pradip Patiath, Vik Sohoni, Valeria Laszlo. Customer data: McKinsey Retail Banking Survey 2025, n=21,000, 7 EU countries.
