Simon Kucher’s global study
Unlock better growth in Retail and SME Banking
At Simon-Kucher, we are committed to driving sustainable and profitable growth. To better understand the shifting priorities in Retail and SME banking, we conducted a global study informed by direct conversations with our clients. Combined with insights from our ongoing work with leading Retail and SME-focused banks worldwide, this research uncovered five macro trends creating challenges and opportunities alike, as well as four key success factors where banks are focusing their efforts to achieve long-term, sustainable growth.
Banking macro trends
Our latest study highlights five key trends defining the new era of banking: the rise of digital-native customers, a widening talent gap, the growing role of AI and automation, heightened economic and regulatory uncertainty, and increasing demand for sustainable, values-driven financial products.
Gen Z has completely different expectations than previous generations, demanding a seamless, mobile-first digital experience beyond traditional online banking, with services embedded into everyday digital interactions. Failure to deliver intuitive and frictionless experiences risks losing customers to fintechs, online investment platforms, and neobanks.
The industry is undergoing a significant talent shift, losing experienced employees faster than they can be replaced. As a ton of knowledge walks out the door, banks must show they are innovative, tech-driven employers capable of competing with fintechs.
Many banks already use AI for back office and customer service automation. The next wave of AI holds significant optimization potential of sales, advisory, and pricing. AI-supported meeting summaries, risk assessment, loan approvals, and mass-personalization of customer communication can compensate for the talent drain while making operations more efficient. This allows for strong revenue growth despite fewer frontline staff.
Uncertainty directly impacts banks' interest income, compressing net interest margins and challenging traditional revenue models. At the same time, inflation continues to strain both consumers and businesses. Discretionary spending is down, savings behaviors are shifting, and loan repayments are becoming riskier. As tariff conflicts weigh on bank balance sheets and income, the increase in insolvencies, particularly among SMEs, is a significant risk. Meanwhile, banks can’t afford to lose sight of the strict regulatory framework they operate within, with increasing regulations becoming a structural factor that must be embedded into growth strategies.
As customer values continue to evolve, especially among younger generations, there is growing interest in financial products that reflect ethical and sustainable principles. While not yet the primary driver for all customers, offering sustainable finance options can help position banks for long-term relevance in a values-driven market.
Four key success factors for driving Better Growth
Segment-specific growth strategies
Banks need to choose target customers wisely, deciding which customer segments they serve best and crafting a unique value proposition that directly speaks to them. Traditional segmentation (age, income, geography) is no longer enough. Data analytics, AI, and real-time behavioral tracking enable detailed customer profiles that inform best-fit product development, engagement strategies, and pricing.
Customer retention & relationship banking
Once banks have mastered the art of smart customer acquisition, the real work begins: Relationship banking is where the biggest growth opportunity lies, according to our study results. Deeper customer relationships lead to higher product penetration, improved retention, and greater share of wallet. In fact, banks that excel at customer satisfaction and customer engagement unlock significantly higher lifetime value across their portfolio. To fully capitalize on the potential, banks must focus on five critical wins in customer engagement.
Revenue model optimization
The revenue model is at the heart of success in banking. It directly determines who wins and who struggles in an increasingly competitive market. There are significant untapped opportunities for revenue model optimization, including structuring modular mortgage and SME-lending offers, growing fee income with relationship-based pricing in daily banking and investments, or increasing margins and retention with data-driven deposit pricing. Banks that get those topics right unlock long-term profitability.
Operational efficiency
While revenue growth is critical, banks can significantly drive profitability and competitiveness by increasing automation, improving speed, and optimizing resource allocation. The banks that successfully leverage AI to streamline manual operations, enhance decision-making, and reduce inefficiencies also deliver better customer experiences, making them stronger competitors against digital-native fintechs.
Our study shows how banks can grow in Retail and SME Banking, despite adverse macro trends, economic volatility or talent drain. AI is fundamentally changing marketing processes and creates new opportunities for better engaging and servicing customers. Mission critical is now to seize these new opportunities by optimizing revenue models across the entire product portfolio.
Jens Baumgarten, Senior Partner
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With over three decades of experience as growth advisors working across financial services, we understand what it takes to grow in today’s challenging market.
Banking is an industry with complex revenue models, margin pressures, and regulatory constraints. At Simon-Kucher, we understand how to optimize growth strategies within these challenges. Our approach is data-driven, with clear, actionable steps that drive measurable improvements in customer engagement, pricing optimization, and operational efficiency.
Ready to take your bank’s growth strategy to the next level? Get in touch with us today and let’s build a smarter, more profitable future together.