A new report by leading international management consulting firm, McKinsey & Company, has revealed that the net Income of the global banking industry rose to $1.3 trillion, up from 2024’s record-setting tally of $1.2 trillion, clearly making it the highest net income of any industry.
According to the 2026 Global Banking Annual Review, which was released on Thursday, as rates began to fall in major markets, net interest margins (NIM) declined slightly, globally, from 1.65 per cent in 2024 to 1.63 per cent in 2025.
The report stated, “However, some markets improved their margins. US banks’ NIM rose 9 basis points (bps), Japan’s banks (7 bps), and UK banks (6 bps). Emerging markets were not quite as fortunate, as margins slipped slightly, and in Brazil, dramatically (from 3.55 per cent to 2.93 per cent.)
“Balances (deposits, loans, and assets under management) grew by 6.5 percent in 2025, up from 6.2 per cent annually in 2020–24. Investors benefited from higher dividends and share buybacks; and banks socked away another $853 billion in surplus free cash flow to equity, which, while somewhat lower than previous years, continued the record-setting trend begun in 2022.”
The firm, which advises corporations, governments, and institutions on strategy, operations, and technology, and has maintained an active presence in Nigeria since 2002, about two months ago projected that Nigeria’s banking industry was on course for a structural transformation that would see market size rise to $16 billion by 2030, driven by consolidation, digital expansion, and regulatory tightening,
The report acknowledged the geopolitical dynamics that had been making the headlines recently, adding that for the most part, banks have adapted well.
It said, “Investment banks have done exceptionally well from volatility in 2025 and 2026. The new frictions are far from settled, of course, and doubtless will require even more agility from banks.
“Meantime, the industry also faces four rising challenges to its most vital asset: the customer relationship. Fintechs (including neobanks, like Revolut and Nubank) were mostly an irritant to incumbents for the past 20 years—until 2025, when irritation became something more acute.
“A new breed of mature fintechs has, by one measure, claimed 17 per cent of industry revenues and is looking for more.
“Neobanks pose a second challenge.
“The call is coming from inside the house, is a troupe of many horror films, and banking is experiencing a version of it.
“Neobanks, such as Revolut and Nubank, have broken through the growth/performance frontier and rewritten the expectations of incumbent institutions.”
The report added, “Agentic AI and digital assets, such as stablecoins, are a two-headed technological revolution that make it easier for retail and corporate customers to bank without banks.
“Finally, customers’ attitudes are reaching a tipping point; they now not only favour but also trust more the new entrants delivering everyday reliable services.”
On finetechs, the global banking report stated that while their revenues still trailed the traditional banks by far, the strongest fintechs were growing fast, becoming profitable, and moving into banks’ most lucrative pools—payments, wealth management, capital markets, and lending.
It explained that among the combined revenues of the largest 1,000 banks and top 1,000 fintechs by valuation, fintechs’ share rose from 10 per cent in 2021 to 17 per cent in 2025—far outpacing banks’ growth.
The report said that was evidence of fintechs’ maturing from niche challengers into scaled financial institutions.
It stated, “This fast growth also suggests that fintechs and neobanks are winning broader customer relationships, not just individual transactions. Companies like Chime—which recently hit GAAP profitability—and Robinhood—which joined the S&P 500 last year—are expanding their narrow product lineups into broad financial ecosystems. “Combined with strong digital experiences, these broader offerings could persuade consumers to switch carriers or open additional accounts.
“Traditional institutions still have an edge in their physical footprints. Even for Gen Zers, ATM and branch proximity are among the three most-cited factors behind choosing a bank. But that alone won’t be enough to preserve customer primacy as fintechs and neobanks expand their product suites and deepen customer trust.”
On the implications for banks, the report said, “The battle is expanding beyond providing financial infrastructure to owning the customer relationship.”
It added that with more intermediaries positioning themselves between banks and consumers, banks faced growing pressure to strengthen loyalty through digital experiences and services that make them the centre of consumers’ financial lives
Ndubuisi Francis
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