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Envisioning the futures of retail banking

As the long-established industry is reshaped, looking ahead to five far-reaching hypothetical scenarios can help focus the strategic mind.

Picture a future in which customers conduct all their financial services through digital wallets handled by nonbanks like Apple, Google, and Uber. Or imagine another potential future, in which a mere handful of mega banks dominate global markets. Or yet another, in which traditional currency fades from relevance, and transactions largely happen through cryptocurrencies and digital tokens.

As we look ahead, it’s obvious that there isn’t one clear future for the vast retail banking industry. Rather, there are several possibilities for how the next decade could unfold. Today, retail banking is at a critical inflection point, and it’s no exaggeration to say that ten years from now, the industry as we know it could become irrelevant.

To avoid that fate, leadership teams at incumbent retail banks need to understand the current trends affecting the industry, extrapolate them forward, and project how the industry could look in the 2030s, so that they can prepare. We’ve sketched out a vision of the potential futures in our new report: Five scenarios for the future of retail banking: Building strength amid transition. Each of the five scenarios is grounded in trends that have already begun playing out. But we have deliberately taken those changes to their logical extremes for effect, and to provide a useful thought exercise for leadership teams at retail banks. Our work underscores the need to look far, far ahead when planning for the future. And it helps provide greater clarity into where and how banks can compete to remain relevant.

A confluence of challenges

Before we map out the future, it’s necessary to survey the present: retail banks around the world face a confluence of challenges, which together create more complexity and competition for established players. Embedded finance, for example, is a powerful new trend in which new market entrants including Big Tech firms, fintech players, and retailers offer financial services like lending, payments, and digital wallets, generally operating with much lower regulatory oversight. Customer expectations are changing, too, as people now demand fast, seamless, personalized, and intuitive experiences, across both digital and in-person channels (all with the appropriate level of data security). Meeting those new customer expectations calls for new capabilities, in areas like Web 3.0, AI, and machine learning, and distributed-ledger technologies like blockchain—all of which are outside banks’ traditional areas of expertise. Meanwhile, the regulatory landscape is changing, as policymakers seek to balance the rapid pace of innovation, societal expectations, and competitiveness with financial stability.

This complex and evolving web of trends is rewriting long-established ideas about whom consumers trust and how they prefer to conduct their financial lives, while forcing banks to address the fundamental question of what a financial institution is—and what value it provides.

Five scenarios for the future of retail banking

To help retail banks adapt to these current market changes—and prepare for the future—here are the five scenarios we’ve developed for how the industry might look in the coming decade.

This complex and evolving web of trends is rewriting long-established ideas about whom consumers trust and how they prefer to conduct their financial lives.

Front-end revolution. As embedded finance gains momentum, new players from outside the traditional banking industry capture client relationships—the “front end” of banking—and incorporate financial services into their platforms. Well-known, cash-rich brands in the technology, media, and entertainment sectors deploy an improved user experience and hyper-personalized offerings to control more of the customer relationship. Established banks—generally facing higher regulatory burdens and dealing with outdated technology—compete as the infrastructure backbone of the financial system, acting as utility providers that offer licensed services and products.

Winner takes all. A wave of consolidation results in a few mega banks and fintech companies ruling the banking landscape. These massive, tech-enabled institutions generate a competitive advantage through scale. Customers gravitate toward the largest, most personalized, and most convenient platforms, and generally have no concerns about data privacy or the ability to choose. Only banks with scale advantages will be able to make the steep (and potentially risky) technology investments needed to unify their architecture and create the end-to-end data linkage necessary for a truly differentiated customer experience.

Scattered landscape. Amid deteriorating societal trust, customers grow doubtful about global institutions. Clients and assets flow from global players to more locally focused banks with smaller balance sheets, deposits, and lending facilities, and to specialized micro-niche players. Winning players identify a clear target segment and develop a cohesive offering to meet those customers’ needs.

Resurgent regulators. Regulators take an active approach to a wave of Big Tech and other nontraditional entrants to ensure a safe and strong financial system. More specifically, regulators expand their technology and cyber risk capabilities and increase their monitoring and surveillance, with the explicit goal of protecting customers. Government antitrust actions push technology players out of the industry and increase barriers to entry; competition comes solely from firms that hold full financial service licenses. This regulatory burden makes it harder for banks to innovate, leading to increased standardization of products and services, with fewer opportunities for firms to differentiate.

The rise of central bank digital currencies. The steady decline in the use of cash continues alongside the rollout of central bank digital currencies (CBDCs). These digital currencies gain wide acceptance in B2B, B2C, and C2C segments. Incumbent banks lose the basic bank account to central banks, making traditional bank business models unviable. To compete, some big banks and tech firms acquire leading players from the crypto ecosystem to continue their existing service offerings (though under heavy regulatory scrutiny from central banks). Data, security, computational power, and algorithms will be the key factors for success.


No one can predict precisely how the future of the industry will look. But thinking through the challenges posed by these scenarios should push retail banks of all sizes to rethink both the value they provide to customers and the role they want to play in society and the new banking ecosystem. Regardless of which scenario predominates, institutions that focus on developing a tech-powered transformation, crafting a data-enabled customer focus, and building broad-based trust will earn the right to compete.

Author Profiles:

  • Eugénie Krijnsen is an industry leader in the financial markets sector for PwC Europe. Based in Amsterdam, she is a partner with PwC Netherlands.
  • Roberto Hernandez advises clients in financial services on transformation for PwC. Based in Dallas, he is a principal with PwC US.
  • Kurtis Babczenko is global banking and capital markets leader for PwC. Based in New York, he is a principal with PwC US.
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