'Traditional banks losing share to fintechs globally'
"Financial services revenues are growing - but banks are not capturing their fair share," BCG says. The value, it notes, is shifting to fintechs, private credit funds, non-bank liquidity providers, and digital-native banks.
"Maturing digital assets appear to be on pace to cause significant disruption, with most banks currently on the outside looking in."
The fastest-growing players are also the most digitally savvy.
Digital attacker banks clocked 85-100% CAGR in revenues over the past five years. Private credit players and retail trading platforms are close behind. Traditional banks, in contrast, posted only 10-15% CAGR, despite holding the largest share of balance-sheet assets. The challengers' edge stems from scalable platforms, lean cost structures, and a digital-first approach.
"Non-traditional bank competitors are generating new revenue pools," BCG says.
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"The best attackers are positioned for rapid growth, thanks to modern technology stacks and front-to-back digitised operating models."
The disruption extends beyond retail finance. In capital markets, boutique advisory firms and non-bank market makers are chipping away at incumbents' fee income.
"Private credit has been gnawing away at bank share, particularly in the US," the report says. At the same time, banks are grappling with long-term structural challenges.
Fee income is in decline, non-interest income productivity dropped across geographies, and cost pressures are rising. Despite years of tech investment, efficiency improvements are slowing. "Many banks struggle to counter these trends," BCG says, noting that pricing remains an underused lever.
Neobanks' cost-to-serve, the report adds, is often a tenth that of incumbents. "New competitors are winning on productivity."
Investors have picked up on this divergence. In East Asia and the Eurozone, most bank stocks trade below book value. "Investors are avoiding banks that may be in a vicious cycle of outdated operating model and low profitability," BCG warns.
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