By Futurist Teresa Grobecker and Futurist Thomas Frey
There is something deeply strange happening inside the global banking system right now, and almost nobody is talking about it clearly.
In 2024, banks around the world generated more profit than any industry in recorded history — $1.2 trillion in a single year. Record balance sheets. Record earnings. A historic run of success built on high interest rates, inflated wealth cycles, and low credit risk. By every traditional measure, banking had never been stronger.
And yet investors don’t believe it.
The banking sector’s price-to-book ratio — the market’s fundamental judgment about a company’s future value — sits nearly 67 percent below the average of every other major industry. That gap is not a rounding error. It is a verdict. The people allocating capital at scale are telling us, plainly, that they do not think these profits are sustainable. They believe the foundations underneath them are shifting. And they are right.
This is the paradox at the center of the most important transformation in modern financial history: banking has never been more profitable, and it has never been more vulnerable. Understanding why both things are simultaneously true is the starting point for understanding everything that comes next.
Record Profits Built on Borrowed Time
The profits that made 2024 such a banner year for banking were largely a gift of circumstance. When interest rates rise sharply, the spread between what banks pay depositors and what they charge borrowers widens dramatically. Banks didn’t build something new — they harvested a favorable environment. Now that environment is normalizing.
Meanwhile, the structural forces that took decades to build are deteriorating faster than most institutions want to admit. The traditional bank’s three core advantages — geographic proximity, information asymmetry, and regulatory moat — are all eroding simultaneously. You no longer need a branch nearby. You no longer need a loan officer to explain your options. And the regulatory walls that once kept technology companies out of financial services are being scaled, brick by brick, by fintech firms that are getting smarter about how to work within them.
In 2025, twenty-one fintech companies filed for banking charters in the United States — more than the previous four years combined. That number is a signal, not a statistic. The challengers are no longer content to partner with banks from the outside. They want the keys.
America’s banking footprint is collapsing. Thousands of branches are disappearing as finance shifts from physical infrastructure to digital and AI-driven systems.
The Great Branch Evacuation
Nothing makes the transformation of banking more visible — or more tangible — than what is happening to physical branches.
At their peak in 2012, American banks operated nearly 83,000 branches across the country. Today, roughly 15,000 of those locations have closed, a net loss that is still accelerating. In the first thirteen weeks of 2025 alone, more than 320 U.S. branches were filed for closure. JPMorgan Chase shuttered 375 locations since January 2024. Wells Fargo, Flagstar, U.S. Bank, and Citizens Bank all accelerated closures through the year. The Midwest lost 19 percent of its branches in 2025. California saw reductions of 35 percent or more in some counties.
These are not just real estate decisions. They are statements about what banking will look like in ten years.
And yet here is the counterintuitive truth inside that data: 83 percent of Americans still visit a bank branch at least once a year. Over 200 million Americans still conduct transactions in person. The branch is not dying because customers don’t want service — it is dying because the service model itself is being reinvented. The physical visit is becoming the exception, not the rule. When the exception becomes the rule, everything about how you design, staff, and operate around the exception has to change.
The branches closing fastest are the ones built for transactions. The ones surviving — and in some cases expanding — are being rebuilt as financial wellness centers, community hubs where human judgment and relationship add value that an app cannot replicate. Fifth Third Bank, one of the regional players moving aggressively, framed it well: branches staffed by bankers who understand local needs, empowered by technology to deliver meaningful guidance. That is a fundamentally different job description than processing deposits.
AI agents, embedded finance, and blockchain are converging simultaneously—reshaping banking faster than traditional institutions can adapt to the collapse of their old advantages.
Three Forces Arriving at Once
What makes this particular moment different from every previous wave of banking innovation is the simultaneous arrival of three transformative forces, each powerful on its own, collectively historic.
The first is artificial intelligence — not the narrow AI of chatbots and fraud detection that banks have been deploying for years, but agentic AI: systems that can take action, make decisions, and execute complex multi-step financial tasks without human intervention at each step. McKinsey’s analysis suggests that AI financial agents could erode up to 9 percent of global banking profits unless institutions adapt their models. Banks that move fast could see a four-percentage-point gain in return on equity. Banks that hesitate face the very real possibility of falling below their cost of capital.
The second force is embedded finance — the migration of banking services out of bank-branded apps and into the platforms people already use for work, shopping, travel, and life. This isn’t coming. It is already here, just unevenly distributed.
The third is the blockchain-enabled reimagining of what ownership and money actually mean — a force that touches everything from central bank digital currencies to fractional asset ownership to cross-border payments that settle in seconds instead of days.
None of these forces is new. What is new is that they are all maturing at the same time, reinforcing each other, and arriving into a banking system whose structural advantages are weakening precisely when it needs them most.
Bank loyalty is collapsing as AI-assisted financial decisions rise. Customers are no longer choosing institutions by habit—they’re optimizing continuously through machines.
The Loyalty Cliff
Perhaps the most underappreciated signal in all of this is what is happening to customer loyalty — or rather, what is happening to its disappearance.
In 2018, roughly one in ten Americans chose a new credit card from their existing bank without comparing alternatives. By 2025, that number had fallen to one in twenty-five. People are shopping. They are comparing. They are making decisions based on rate, experience, and features — not habit and proximity.
Over half of consumers globally now use generative AI tools in some part of their daily life. Nearly a quarter use them specifically for financial tasks — researching rates, understanding terms, modeling scenarios. These are people who have already outsourced part of their financial thinking to a machine. The next step — delegating financial execution, not just research — is not a generational shift. It is eighteen months away for early adopters and five years away for the mainstream.
When loyalty erodes and AI-assisted decision-making normalizes simultaneously, the customer relationship that traditional banks spent decades cultivating becomes fragile in ways that have no historical precedent.
The Window Is Shorter Than It Looks
Here is what history tells us about moments like this one: the window between “this is changing” and “this has changed” is always shorter than incumbents expect and longer than challengers hope.
The travel agency industry had fifteen years of warning before Expedia made it structurally obsolete. Kodak had the digital camera in its own labs. Blockbuster had a Netflix partnership on the table. In each case, the institutions that failed weren’t blind to the change — they were anchored to the economics of the present and psychologically unable to cannibalize what was still working.
Banking is at that moment right now. The profits are still there. The branches are still standing, most of them. The old model is still functioning. And somewhere in that comfort, the danger lives.
Over the next five columns, we are going to go deep into each of the forces reshaping banking — the reinvention of the branch, the rise of the AI financial co-pilot, embedded finance, the democratization of wealth, and the coming battle over who controls money itself. Each piece will take you further into a future that is already, in pieces, arriving.
The question for every institution, every advisor, and every individual reading this is the same one it has always been at moments of genuine disruption: are you watching it happen, or are you part of what happens next?
Related Articles
McKinsey & Company — Global Banking Annual Review 2025: Why Precision, Not Heft, Defines the Future of Banking https://www.mckinsey.com/industries/financial-services/our-insights/global-banking-annual-review
U.S. News & World Report — Which Banks Are Closing the Most Branches in 2025? https://www.usnews.com/banking/articles/which-banks-are-closing-the-most-branches-in-2025
McKinsey & Company — Agentic AI Will Shake Up Banking, Shrinking Global Profit Pools https://www.mckinsey.com/industries/financial-services/our-insights/banking-matters/agentic-ai-will-shake-up-banking-shrinking-global-profit-pools