The global banking sector posted record profits of USD 1.2 trillion in 2024, the highest in history for any industry. Funds brokered by the banking sector reached USD 426 trillion—four times global GDP. However, capital markets remain sceptical: bank valuations are nearly 70% lower than the average for other industries, according to McKinsey’s Global Banking Annual Review 2025: “Why precision, not heft, defines the future of banking.”
The valuation gap is significant: only 15% of publicly listed banks create real value (with P/B 1 and P/E 13), compared to 54% in all other industries. Despite growth in 2025, banks’ P/E ratios remain about 70% below the global corporate average.
The study reveals that, despite achieving record financial performance, banks face major structural pressures: falling interest rates, rapid technological change, shifts in consumer behaviour, and intense competition from fintechs and private lenders.
McKinsey’s analysis shows that agentic AI—autonomous AI systems capable of executing complex multi-step processes—will radically reshape banking operations and consumer behaviour.
Strategic implementation of AI can reduce operating costs by 15-20% overall, with gross cuts of up to 70% in certain categories. However, if banks do not quickly adapt their business models, the sector’s overall profits could decline by USD 170 billion (9%) over the next decade. Banks that adopt AI early can gain up to 4 percentage points in return on tangible equity (ROTE), while those that delay risk decline.
The study highlights fundamental changes in the behaviour of bank customers. Loyalty is declining: only 4% of US checking account applicants choose their existing bank without exploring alternatives, compared to 25% in 2018.
Mobile banking has become dominant, with 63% of consumers using mobile devices for banking in 2024, compared to 41% in 2020. At the same time, AI adoption is growing rapidly: 51% of consumers use GenAI, and 23% use it for banking or financial activities.
The McKinsey study’s recommendations include precision strategies in four key areas: technology, with investments in AI and technologies with maximum impact; the new consumer, with individual-level personalization (“segment of one”) through AI and data; capital efficiency, through precise allocation, product by product, customer by customer, and specific M&A: transactions that add concrete capabilities, not just size.
The McKinsey Global Banking Annual Review 2025 report is based on data and insights from McKinsey Panorama, McKinsey’s proprietary banking research tool, as well as the experience of clients and practitioners around the world. The study includes analysis of more than 30,000 consumers in seven countries and more than 15,000 banks globally.
Read More: Banks made record profits globally in 2024, but risk losing USD 170 billion
