Understanding McKinsey’s Global Banking Annual Review 2025
Keeping up with the ever-changing dynamics of the banking industry is critical for professionals in the field. In late October, McKinsey published its Global Banking Annual Review 2025, a report that highlighted both the historical trajectory and potential future of the sector.
The Core Message: Precision Over Scale
The report, titled Why precision, not heft, defines the future of banking, presents an interesting blend of a historical overview of the industry and a showcase of McKinsey’s tech capabilities. While some may perceive this as a sales pitch for their Artificial Intelligence (AI) solutions, it’s important to delve into the key insights offered. McKinsey argues that AI is a “double-edged sword” in the banking sector, suggesting that it could revolutionize the industry or potentially pose risks if not properly managed.
McKinsey’s Predictions for AI in Banking
McKinsey’s report includes an analysis of potential scenarios for the adoption of AI in banking. Here are the two main possibilities they outline:
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AI could “revolutionise everything”, replacing most customer-facing banking roles for a bot-to-human ratio of 100:1 or more. Despite this, customers may still prefer human interaction for certain services, such as when their debit card delivery fails.
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On the other hand, AI might “never fully scale”, and would only be used to assist knowledge workers. Even in this scenario, customers, including the older generation, might fully adopt AI agents to conduct all their interactions with banks.
Interestingly, the report does not clearly favor one scenario over the other, instead suggesting that both banks and consumers might adopt a middle-ground approach. However, it avoids making any bold predictions or committing to a base case.
Analyzing the Numbers
The report also includes a series of percentages that, when added up, reach 80 per cent. Following this, there are four categories of <5 per cent. The interpretation of these figures is left to the reader's discretion. It could be that McKinsey sees these unlikely scenarios as having a roughly 5 per cent likelihood, or that there are other potential outcomes they did not have space to include.
The Key Takeaway
Despite the ambiguity and potential sales pitch, the report offers a clear conclusion: “The banking industry’s next growth curve won’t be won by scale but by precision.” This suggests that banks should focus on targeted, precise strategies rather than seeking to simply grow in size. It’s a reminder that in a rapidly changing industry landscape, adaptability and precision are key to success.
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Further reading:
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