The return of corporate strategy in banking

Banking institutions must urgently relearn strategic discipline to reverse a decade-long decline in returns caused by indiscriminate growth and blunt cost-cutting measures. The current environment of low interest margins and aggressive disintermediation by new competitors necessitates a shift from reactive restructuring to deliberate, focused choices. Success in this landscape requires establishing a clear institutional ambition regarding customer relationships and risk appetite, followed by rigorous portfolio selection to identify specific geographies and product lines where a bank is best positioned to win. Leading global and regional banks are already moving away from "lazy profit pools" to redefine their competitive models and stake out specific market ground. Ultimately, the widening performance gap between winning banks and laggards underscores that profitability now depends on crafting sophisticated, differentiated strategies rather than pursuing scale for its own sake.