Banks could face a massive $170 billion drop in profits if they fail to adapt their business models to compete with AI-driven third-party agents, particularly those using agentic AI, according to a report from McKinsey & Company.
Despite a record revenue of $5.5 trillion in 2024—pushing the sector’s net income to an all-time high of $1.2 trillion—banks are beginning to feel the effects of fading favourable market conditions. McKinsey’s Global Banking Review 2025 highlights that factors such as a peak in global wealth, high interest rates, and low-risk costs have helped banks achieve these record results. However, these “tailwinds” are now dissipating.
“Recent performance has been buoyed by exceptional conditions, including peak global wealth and strong revenue margins driven by higher interest rates, but these factors are fading fast,” McKinsey said in its report. The consultancy added that return on equity (ROE) is barely outpacing the cost of capital.
Banks’ Technology Struggles
Banks have spent about $600 billion annually on technology, but McKinsey claims productivity remains sluggish, and tech investments are failing to deliver meaningful improvements. As revenue streams come under pressure, banks will need to turn to more effective solutions, and AI could be their saving grace.
However, the report warns that AI is a “double-edged sword”—while it could bring significant cost savings and operational efficiencies, it also has the potential to disrupt the industry.
The AI Threat: Agentic AI
One of the key areas of concern is agentic AI, which could redefine customer interactions with financial institutions. McKinsey estimates that this kind of AI could significantly disrupt areas like deposit management and credit card lending, driving consumers to switch away from traditional banking models.
Currently, $23 trillion of the $70 trillion in global consumer deposits is sitting in checking accounts with near-zero interest rates, while the remainder is parked in savings accounts offering relatively low returns. McKinsey points out that agentic AI could erode these traditional deposit models, potentially leading consumers to shift their funds into higher-yielding accounts more efficiently.
Long-Term Impact on Profitability
While AI has the potential to improve productivity in the short term, the long-term consequences for banks could be even more severe. As consumers increasingly turn to AI agents to optimise their finances, banks could see a steady decline in profitability.
McKinsey warns that if banks don’t reposition their business models in the coming years, they risk losing up to $170 billion, or 9%, of their global profit pool by the end of the decade. This would result in average returns falling below the cost of capital, threatening the long-term viability of many institutions.
The report concludes that banks must embrace AI-driven solutions sooner rather than later or risk falling behind in the evolving digital financial landscape.