Scenarios for future banking: implications for profitability, liquidity and solvency

Christian Schmieder, Renzo Corrias and Oliver Wuensch

No 1391, BIS Working Papers from Bank for International Settlements

Abstract: Who will perform banking’s core functions a decade from now, and how will risks and profitability evolve? Our framework structures expert judgement rather than forecasts. It examines how technology, regulation and consumer preferences could reshape banking models, focusing on profitability, liquidity and solvency. We classify 9,000 banks across more than 150 jurisdictions into three traditional business models and three emerging technology-based models. Across four scenarios, traditional banks retain roughly three-quarters of banking-system assets, while emerging technology-based models capture 3–27%, compared with about 3.5% under the trend baseline at the ten-year horizon. However, the technology-driven business models could contest roughly 40% of the revenue pool, increasing earnings volatility as fee and platform revenues replace net interest income. Digitalisation may also accelerate deposit outflows, increase reliance on data driven risk assessment and weaken customer relationships. Regulation will influence the extent to which intermediation shifts between traditional banks and emerging bank models as well as non-bank providers. Solvency will depend on sustainable profitability, operational resilience and ecosystem dependencies. The framework identifies supervisory priorities that apply across all scenarios, alongside priorities and indicators specific to each scenario.

Keywords: bank business models; digital banking; platform finance; financial stability; scenario analysis; sensitivity analysis (search for similar items in EconPapers)
JEL-codes: G21 G28 G32 O33 (search for similar items in EconPapers)
Date: 2026-11
New Economics Papers: this item is included in nep-pay
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Persistent link: https://EconPapers.repec.org/RePEc:bis:biswps:1391

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