Back-to-the-future retail banking: three pathways to profitability

In recent years, more and more European retail banks claim to have become customer-centric. Yet so far, customers do not appreciate this effort. They believe banks typically put their corporate interests first and have little understanding of client needs. As a result, customers resent paying extra for services and products, putting additional pressure on banks, whose traditional sources of revenue are steadily declining in a prolonged period of low interest rates.

We identified three customer-centric pathways to profitability for the region’s retail banks, based on the survey results and additional insights gained from analysis of revenue pools in Europe’s banking market. This year’s European Retail Banking Study also modeled and calculated the potential impact on the P&L of branch-based and digital banks which followed the pathways described. In each case, there was a substantial positive P&L effect, from 19 percent (Trusted Advisor), to 23 percent (B2B Product Specialist), to 25 percent (Ecosystem Player). Our research provides the route map for banks seeking a return to long-term, sustainable profitability.