Traditional banks would retain about three-quarters of banking-system assets in each of four scenarios examined by the Bank for International Settlements. But asset shares may understate how much banking business could shift to new providers, the study says.
The scenarios—slow transformation, technology acceleration, platform expansion and political uncertainty—combine different assumptions about technology, regulation, consumer preferences and macro-financial conditions. The BIS says its framework organizes expert judgment; it does not produce forecasts.
The authors classified about 9,000 banks in more than 150 jurisdictions into three traditional business models, using 20 years of bank-level data. They then mapped possible changes in market shares and in who performs banking functions, earns income and takes on risk.
New providers, including digital-only banks, technology platforms and decentralised finance, currently hold less than 2% of banking-system assets, according to the study. They could nevertheless gain ground in payments, loan origination, distribution, advice and fee income, even as traditional banks continue to hold most assets.
The study says this separation could affect bank earnings and funding. If fees replace more interest income, earnings may become more volatile. Digital channels could also allow deposits to leave faster, shortening the time between funding stress and pressure on capital.
Greater operational and third-party dependencies could add to existing pressures on mid-sized banks, the BIS says.
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