Banks narrow global ambitions as competition intensifies

Only four of the world's top 20 banks were global universals in 2025.

Banks are concentrating on regional markets rather than pursuing worldwide expansion as fintechs gain market share and artificial intelligence (AI) and stablecoins erode traditional advantages.

“The advantage is building scale where it really matters, leveraging synergies between markets where they can reuse existing skills and capabilities, and have the right scale of operations,” Valeria Laszlo, an associate partner at McKinsey & Co., Inc., told Asian Banking & Finance.

Banks are increasingly focusing resources on a smaller number of priority markets instead of maintaining subscale operations across multiple countries, she said.

She cited DBS Group Holdings Ltd.'s pan-Asian strategy and Banco Bilbao Vizcaya Argentaria, S.A.'s links with Spain, Mexico, South America, and Turkey as examples.

Only four of the world's 20 biggest banks by market capitalisation were classified as global universal banks in 2025, down from 10 in 2005, according to McKinsey data.

Laszlo said fintech companies are capturing a growing share of banking revenue, whilst digital banks are finding more paths to profitability.

“It's not purely an incumbent retrenchment story: new digital players like Revolut and Nubank are also building continental-scale platforms alongside traditional banks,” she said in an emailed reply to questions.

Agentic AI and stablecoins are also weakening customer loyalty, forcing banks to boost customer relationships through loyalty programmes, tailored offers, and services beyond traditional banking, Laszlo said.

Competition is likely to intensify as more institutions focus on the same regions, said Debopriyo Bhattacharyya, an associate partner at McKinsey.

“Competition will intensify, but not simply through crowding,” Bhattacharyya said in an emailed reply to questions.

Banks operating in the same markets are pursuing different strategies, with some focusing on wealth management and others on transaction banking or retail banking, he said.

Retreating global banks are also creating opportunities for regional lenders. Domestic banks in Southeast Asia, the Middle East, and Africa are filling gaps with business models tailored to local markets, Bhattacharyya said.

Multinational companies are increasingly using several banking partners rather than relying on a single global institution.

Banks are responding by expanding partnerships and correspondent banking arrangements whilst retaining wholesale and transaction banking capabilities, he added.

Wholesale banking remains the main exception to the regionalisation trend because corporate clients still require cross-border banking services, Laszlo said.

The shift is also driving mergers and acquisitions.

Laszlo said banks are increasingly buying firms to add AI, data, and specialised business capabilities rather than simply increasing scale.

“This consolidation should improve customer experience and the cost of financial intermediation, but it still leaves room for specialized niche players and smaller players differentiating themselves by close ties to the local community,” she said.