Corporate and investment banks that overhaul their transaction banking operations could lift the business’s value by as much as 1.5 times through higher revenues and improved cost efficiency, according to McKinsey & Company.
The consultancy said banks should take a targeted approach to innovation in transaction banking, alongside investments in artificial intelligence (AI) and digital assets, in a report published in December 2025.
McKinsey estimates that partnering with fintech firms alone could boost transaction banking operating profits by 3% to 5%. Meanwhile, front-office improvements—such as enhancing the productivity of client-facing teams and relationship managers—could deliver a 10% to 20% uplift in operating profit, based on earlier research.
Transaction banking generates nearly $1.3 trillion in annual global revenue and accounts for about half of wholesale banking income. However, declining interest rates, geopolitical risks, and rising competition are expected to pressure the sector.
McKinsey also noted that customers are increasingly willing to change banks in search of better service and user experience. Up to 20% of clients switch providers each year for operational deposits—traditionally considered sticky—according to its 2025 Corporate and Commercial Deposits survey.
The firm expects a growing divide between global leaders and laggards, with top performers building deep, multiproduct client relationships, while weaker players face shrinking margins as they compete primarily on price.
Fintech partnerships can help banks deliver the innovative services clients demand, significantly shortening time to market compared with slower in-house development efforts, the report added.
AI, meanwhile, is emerging as a transformative tool for efficiency gains and cost reduction, S&P Global Ratings said in a separate study. Standard Chartered, for instance, has established an “AI factory” that has cut underwriting memo preparation times in Hong Kong from days to minutes.
Click here for more on Banking
