Profitability continues to be hampered by overcapacity. Banks continue to operate in a competitive environment, with revenues under pressure not just from their peers but also from new entrants from outside the sector, such as fintech companies.
Banks need to speed up their digital transformation, a process that requires substantial investment but has the potential to 2/4  BIS central bankers' speeches  deliver both cost savings and higher revenues. Consolidation through mergers and acquisitions is one way of tackling structural problems, by helping to unlock economies of scale and diversify revenues.