Wholesale Banking 2025 and Beyond

Getting proactive about the transformation agenda: Unlocking growth in an evolving market


The wholesale banking industry has only recently come through a difficult period. Focusing on immediate challenges such as the covid-19 health crisis, which created immeasurable human and business trials and tested financial markets, has meant delaying badly needed transformation. Yet, in helping clients navigate a global recession and prove their resiliency, the industry passed the most rigorous stress test since the global financial crisis with extraordinary success.

As we look ahead, we see that the financial environment is once again entering a period of volatility, with rates, inflation concerns and geopolitical instability on the rise. To weather the current storm, incumbent banks must accelerate and scale their transformation agendas such that they can address old and new challenges simultaneously. Market structures are changing, exposures have become more complex and interconnected, new asset classes are becoming too large to ignore, and non-financial factors such as ESG (environmental, social and governance issues) are now critical business drivers. The industry stands ready to deliver on an ever-expanding set of client and societal demands.

This report, the next chapter in PwC’s 2025 and Beyond series, focuses on the critical influential trends for wholesale banks in the near future.

Where are we now?

Wrenching geopolitical shifts. Pressure on global supply chains. Once-in-a-generation spikes in inflation. Energy and commodity insecurity. Technological disruption. Intense competition from within and without, as new and established players compete for market share.

The global wholesale banking industry is at risk in ways it never has been before—just as the traditional role of a bank as the sole provider of credit intermediation is eroded by new entrants spurred by exponential increases in technological capabilities. In a few short years, the market landscape has moved from being dominated by one-to-many models to a landscape in which many-to-many approaches are prevalent. The ability to access liquidity is now more democratic and nearly instantaneous.

The goal for incumbents will be to avoid disintermediation, as economic uncertainties remain top of mind for corporate and private clients. To do so, banks must chart a path between the pincers of changing market structure and technological disruption. Smaller-scale and largely reactive transformation initiatives that have been common in the industry will no longer suffice. Incumbents that don’t formulate a proactive and comprehensive transformation strategy risk facing significant margin pressures, losing out on growth opportunities, and falling well behind their peers in areas such as partnerships, payments, and the innovation of technology stacks towards fully integrated digital banking operating models.

A market of opportunity

The implications are far-reaching. Consider the backdrop of rapidly evolving financial market digitisation in the form of blockchain technology and asset tokenisation, and the attendant infrastructure changes required for scaled adoption and participation in these changes in market structure. Moreover, these market shifts represent a generational opportunity to build new growth engines within the wholesale banking industry.

We’re confident that banking leaders understand the opportunity. When we surveyed 678 US executives about which potential policy shifts are driving significant changes in their businesses, financial services executives were particularly focused on technology and data regulations (63%). Sixty-nine percent of them also told us that capitalising on digital transformation would be central to their firm’s ability to grow in 2022, well above the broader average across all industries of 60%.


Source: PwC

Alongside badly needed technology is the mounting ESG agenda: new and emerging regulation, expectations for corporate governance, and a growing investor appetite—on both the buy and sell sides—for sustainable assets, such as carbon trading. Here, too, bankers see the opportunity to help clients finance their green agenda and introduce new benchmarks and measures.

The core challenge for wholesale banking leaders—and what we believe has prevented incumbents from taking a more proactive approach to their transformation—is balancing the growing complexities of daily operations within the wholesale banking industry with a focus on the extended time horizons of an enterprise-wide transformation. Large-scale wholesale banking digital transformation initiatives have also been known to have unanticipated impacts on supporting functional teams, such as risk, finance, compliance and even the front office; and historically uneven front-to-back alignment has compromised programme efficacy and placed pressure on resources—time, talent and cash—when they were needed elsewhere.

Indeed, the scope of the undertaking should not be misunderstood. At an investment level alone, change on the scale required to move the needle at banks would require a significant increase of the investment currently allocated to transformation initiatives. And as we look ahead, we also expect macroeconomic headwinds to stress leaders and their balance sheets just when the ground beneath their feet is shifting. Heightened inflation in particular has created market conditions that constrain traditional players from being able to provide liquidity owing to the cost of capital and the pressures on returns.

To help banks pivot onto the front foot, this report sets out four key trends impacting the transformation agenda for the global wholesale banking industry over the next five years, and points to the growth opportunities—in market structure, ESG, decentralised finance (DeFi) and digital assets—available to banks that understand them and adapt quickly. When properly formulated and executed, transformation will lead to greater revenue, reduced operating costs, and data-driven insights that will better protect their firms.

An integrated approach to the transformation agenda

Banks have historically spent mightily to undertake transformation in silos, usually driven by an urgent business need; regulatory demands resulting from an enforcement action, supervisory finding or operational error; or a vital system upgrade. Last year, the top banks spent roughly US$20 billion[1] on maintaining ageing systems architecture and remedying the lack of data management across their enterprises. What’s more, as threats to traditional wholesale activities mount, relying on a transformation strategy that is both costly and too reactive is insufficient if the goal is to fundamentally alter core technologies to ensure the ability to develop, iterate, and scale products and services.

Many of the business processes that have already been digitised—such as equity trading and fraud risk modelling—are disconnected from one another. Moreover, there is a siloed approach to how and where processes and tasks are automated and digitised. Banks should be approaching this effort with a line-of-business lens for simplifying their ability to deliver products to clients. Realising the full benefits brought by digitisation—lowering total cost of ownership (TCO), improving processing time, reducing operational risk and competing with new entrants—requires a more agile technology stack than the current proprietary systems at most banks.

Building an integrated approach to proprietary systems—rather than buying or partnering with providers—no longer represents sound business practice. Continuing to compete at scale requires embracing modern architectures, such as the cloud. To operate effectively with the new transformation agenda, banking CIOs and CTOs need to act more like venture capitalists and investors looking to optimise partnerships with technology providers, rather than building these systems themselves.


Source: Tricumen analysis for PwC

Transformation in the wholesale banking industry is being driven by four key trends: changing market structure, growing ESG mandates, the rise of decentralised finance and digital assets emerging as a viable asset class. Each presents new challenges and opportunities for sustainable growth, provided business leaders take a proactive approach to the transformation of their products, services and operations.  

Embrace the shifting market structure

Run the bank. Change the bank. It comes as no surprise that these are the two top priorities for banks as market shifts destabilise traditional business models across core wholesale activities—including investment banking, lending, transaction services and wealth management. What is new? The tension between running the bank and changing the bank has never been higher. In an industry often consumed by mandatory transformation needs—and therefore slow to adapt strategically—building the wholesale bank of tomorrow requires agile leadership in order to chart a course through digital disruption, ESG transitions and new regulatory hurdles. At the same time, geopolitical volatility and the first truly inflationary environment in decades add pressure on management teams, further shifting the focus away from badly needed long-term transformation.

Yet, in the coming years, banks that act boldly will have huge opportunities. Whether that means coming off the sidelines on digital assets or safeguarding margins under attack from fintechs, grabbing what could amount to a first-mover advantage requires investing in new capabilities—even more than adapting business models and seeking out new revenue streams. Banks can create the kind of sustained outcomes that allow them to differentiate themselves from competitors and meet the demands of a changing market structure. The winning incumbents will be those that adopt new technology, partner with insurgents, set up new digital units and adopt a proactive transformation agenda. 

The increased pace of transformation is also evident as global regulators accelerate efforts in developing areas of the market, particularly in digital assets and ESG. We expect new rules for cryptocurrencies and stablecoins, as well as for payment order flow, non-bank liquidity providers, and reporting and oversight of the bond market. ESG looms large as well, as the disclosure landscape is defined and standardised across global jurisdictions.

Increased compliance costs come at a time when banks are looking for cost-cutting opportunities. The automation and digitisation of compliance will bring costs down and introduce efficiencies, underscoring the notion that capital market institutions must continue to be technologically advanced. Banks have to strike a balance between looking for new ways to operate and leveraging capabilities that are reaching peak adoption—all while being good global citizens that adhere to ESG expectations.

Competitive threats from non-traditional players

The diversity of the financial sector has increased in both developed and emerging markets. Fintechs and big tech companies are offering a wide and expanding range of financial services. Some remain focused on a single product or service, while others have leveraged their initial successes to broaden their service offerings—e.g., Square and PayPal moving from payments to lending. Some fintechs become service providers to, or value chain partners with, banks; and others aim to become banks in their own right.

In recent years, digital-only and digital-mainly neo-banks have also emerged. They compete largely in the same regulatory space as incumbents, but have modernised business models and streamlined infrastructure. Big tech companies in core markets—including telecommunications, logistics, transportation, e-commerce marketplaces and online search—add another set of diverse players to the industry. Incumbents, for their part, are also adopting new technology, partnering with fintechs and setting up new digital units, as they look for ways to adapt to the new environment. 

This hyper-diversification of financial services has implications for both competition and regulation. Regulators’ policy actions with respect to financial services and competition are bound to reward certain business models more than others.

Take a stronger and more trusted stance on ESG banking

In the first nine months of 2022, US$586 billion flowed into sustainable finance bonds. This represented a return to pre-pandemic levels, and a 26% decrease from record highs in the same period in 2021 as the market braced against macroeconomic volatility. However, sustainable investments continue to be a market of rising importance for investors. PwC research revealed that eight in ten investors plan to increase their investment in ESG products over the next two years.

Although the market opportunity is clear, banks must be vigilant and learn from prior instances when regulation caught up with the market and forced change (e.g., Dodd–Frank in 2010). Transparency and strong risk management capabilities will create a competitive advantage. We also expect banks to play a greater role in enabling clients to meet their climate obligations, following such initiatives as the Glasgow Financial Alliance for Net Zero, a coalition of banks, asset managers and insurers that seeks to align US$130 trillion in assets with the goal of net zero by 2050. More recent pressures are coming from the US Securities and Exchange Commission, which has proposed climate disclosure requirements. The industry supports the spirit of the rule requirement, but changes are needed to improve clarity and operationality.


However, for banks to truly differentiate and capitalise on ESG opportunities, they’ll need to do more than finance the green transition and play up marketing—they’ll need to capture the full impact across their organisation and allocate their focus accordingly. To do so, banks will need to analyse revenue opportunities, such as sustainable financing, ESG-focused sales and trading, and new sectors; risk capabilities, such as the incorporation of climate risk, enhancements to credit risk models, and considerations to reputational risks; and reporting capabilities, including regulatory requirements regarding ESG disclosures from the SEC, risk reporting to account for climate risk, and reporting to meet growing customer demand for climate and ESG metrics.

All three of these components have a common, and critical, dependency: data. The lack of standardisation of ESG data has led to the current situation, in which firms and products have their own ESG metrics, and in some cases just manually capture data in spreadsheets. Although shortcuts have been common in ESG reporting, the days of “greenwashing” are rapidly coming to an end. In order to successfully calibrate the intersection of ESG and transformation, banks will need to take a strategic, thoughtful approach to capturing, collating and developing the necessary data.

The data required to analyse new revenue opportunities will vary across banks’ business lines. While sales and trading teams may be focused on developing pricing models and hedging strategies based on climate risk, underwriting and lending teams may be focused on financing sustainable initiatives and on developing new product offerings such as “blue bonds”—a relatively new sustainability bond related to ocean conservation—as well as assessing transition risk for existing investments. The data necessary for assessing risk capabilities will also vary across risk stripes and areas within the organisation, whether physical and transition risks or counterparty risks, interest rate risks or reputational risks. Finally, comprehensive data will be especially critical for firms’ reporting capabilities. Although disclosures to the market and to investors have largely been voluntary so far, investors are now demanding more detailed and reliable reporting. Regulators in the US and overseas are in the process of standardising required disclosures that will compel banks to develop comprehensive carbon analytics. 

These initiatives will trickle down into the investment process, and valuations and asset selection will have to cater to various client needs. As the growing movement to “account” for ESG gains momentum, fewer banks may lend to companies with a negative climate or social impact. The cost of capital for these companies will increase. Regulators, global accounting and reporting boards, and the World Economic Forum are all starting to look at so-called impact transparency—a way to systematically measure ESG. As companies move towards measurement, it will ultimately affect accounting, profitability, lending, valuation and how the investment community sees companies and their banks.

ESG in banking is not going away. Firms that take quick-fix approaches will find themselves struggling to catch up to those that develop thorough and comprehensive data requirements to account both for the new opportunities afforded by ESG in the market and for the expanding array of required disclosures. Given that 45% of the global population is highly vulnerable to climate change, and up to US$14.2 trillion of infrastructure assets globally are at risk of extreme flooding within the next 80 years, transformation is no longer optional. Either organisations position themselves to capitalise on the opportunities ESG transformation is providing, or they will be forced to transform later, at a significant cost.

Turn the tables on decentralised finance

The bold claim for decentralised finance is that it will disintermediate banks from their traditional role as financial middlemen and transform the entire financial system through peer-to-peer (P2P) transactions and blockchain technology. Yet, with the total value of locked assets fluctuating from highs of US$257 billion in 2021 to current lows of roughly US$58 billion, and often unfair associations related to money laundering, cybercrime and lack of data privacy (in contrast to traditional financial systems), DeFi has yet to fully establish itself as a contender to replace the existing system.

The challenge to banks is clear. The wholesale banking industry must now turn its apparent weakness into a strength, partly through leveraging its regulated status to shore up trust and manage risk—and it must do this as it steels itself against an all-out assault. Traditional fintech and new digital asset participants innovate in the DeFi space at a pace that banks simply can’t match. New entrants also benefit from a more agile tech stack, and are therefore not encumbered by legacy systems. Banks, without swift action, risk further disintermediation from core activities; for example, new P2P models are leading to a reduction in deposits, which will in turn impact a bank’s ability to capitalise and lend.

The increasing pace of innovation will also make picking the winning partner an endless activity. Wholesale banks will need to forge innovative partnerships and embrace roles within financial ecosystems. Having an API (application programming interface) strategy will also be a key focus for all banks going forward, as they begin to treat APIs as a product and develop the right operating model to support them.

Banks will opt to take deposits and continue to offer risk management in new and technologically advanced ways. Risk management will be highly automated and will include second- and third-order risks tied to reputational and societal concerns. With this approach, all product innovation, user experiences and distribution will be handled by an ecosystem, largely shadow banks and tech companies, which, in turn, will sell through banks. As capital formation, technology and governance continue to evolve at wholesale banks, we expect that decentralised ecosystems such as the DAO will continue to evolve and disrupt the industry.

Future-proof business lines with digital assets

As recent events have shown, high volatility, lack of regulatory clarity, and an ever-changing cast of characters, tokens, and protocols has typically closed off market entry to firms that have anything less than an aggressive risk tolerance. Staying on the sidelines has been a prudent choice for many to date, but it will become increasingly difficult.

Many market participants believe that recent events will cleanse the industry of firms with questionable business models while those with better practices have an opportunity to focus on building their products and strengthening their risk management. We share this view. Firms that enhance capabilities in the areas of investor protection, disclosures and liquidity management will be well-suited to meet the increased expectations from regulators, policy-makers and customers.

Given the slow movement of legacy banking institutions into digital assets and the increase in regulatory clarity expected from the US government and other regulatory bodies globally, the next round of market entrants will likely include more towards traditional financial institutions. Leveraging their risk management and regulatory expertise, these entrants will offer an increasing array of products and services. These include safe custody; spot ETFs (exchange-traded funds) for cryptocurrencies; a robust derivatives market enabling liquidity and less volatility; and decentralised, but connected, liquidity pools, which enable better price formation, tokenisation and securitisation of real-world assets (e.g., real estate and funds).

As macroeconomic and inflationary pressures mount—and the cost of capital continues to explode—firms should take advantage of the downturn to develop clear business plans and strategies that bring traditional banking services to crypto-native firms and launch expanded products and services for native digital assets that future-proof their business lines. In the long term, we believe that the efficiencies of digital assets for operations will enable a lower cost of capital once volatility subsides.

Seven ways banks can adapt

One of the main challenges at any bank is determining how to best allocate resources and capital to bring about the types of transformation required for sustainable success. This is especially challenging when external variables such as regulation, rates and economic volatility change dramatically.

At incumbent banks, pressure will be put on decision-making in the near term as priorities for the transformation—in particular operational capabilities and workforce—become ever more urgent. All the while, banks must manage the tension between day-to-day operations alongside a programme of sustainable change. Here, we offer seven strategic considerations to help banking leaders identify gaps in their transformation agenda and develop an adaptive capacity to prosper in the years ahead.

1. Continuously evaluate your transformation agenda in light of ever-increasing market changes.

Understand the horizon for industry shifts and business threats, and always be ready for the change—furthermore, make changing a core competency with the right skills throughout the enterprise to encourage agility.

2. Create the capacity and capabilities to evaluate run-the-bank versus change-the-bank activities.

Approach strategy-setting and budget allocation with large-scale change in mind. Stay focused on your set course during times of volatility, addressing sustainability and net zero targets for yourself and your clients and determining how to be ready for digital assets and Web3.

3. Enhance data and analytics capabilities. 

Develop an arsenal of comprehensive and real-time analytics via a multidisciplinary approach that addresses the needs of the front office and risk management.

A spotlight on data and analytics

Market volatility and liquidity crises, such as those experienced during the acute phase of the covid-19 pandemic in early 2020, exposed the limitations of single-asset-class datasets, exposure management and decision-making. These dynamics have led our clients to increase their focus on developing comprehensive cross-asset and real-time analytics.  

More broadly, big-data strategies have begun to impact several other areas in capital markets in recent years, including sentiment analysis for trading, risk analytics (as mentioned above) and market surveillance. Data management is now a strategic function within most financial institutions; and regulatory, customer and internal drivers have resulted in firms re-evaluating data related to trading, risk management and operations.

Typically, data strategies can be applied to a whole range of functions, from front-office trading to back-office processing, surveillance, reference data and support. Unsurprisingly, firms today that are focused on data-driven initiatives are looking to discover unique ways in which data can address prevailing problems across their value chain—and, importantly, provide a competitive advantage in a fast-moving environment.

4. Empower mid- and senior-level leaders to facilitate the change.

Empower and develop leaders with the agility to cross the organisation and the attitude to go deep where needed, and to simplify how the operating model should work to be agile. Foster a management mindset that views run-the-bank and change-the-bank initiatives as one and the same.

5. Continuously upskill your teams to enhance and accelerate the adoption of new capabilities.

Make the investment in getting all of your people ahead of these trends. Engage and empower all employees to learn about the disruption and be transparent about what your organisation’s strategy and approach will be—regardless of maturity. Develop thoughtful ways to demonstrate how the trends and transformations will impact your employees' roles and functions.

6. Make concerted decisions about where you want to carve out a place in the developing market.

Evaluate your operational capabilities to identify where you need to build versus buy, hire and control. Take stock of your ranking in the market and capabilities to grow market and wallet share with regard to your transformation. How does the change better position your organisation? Develop criteria and metrics for winning, and monitor them to emphasise success.

7. Effectively communicate across the organisation to influence often disparate stakeholders.

Clearly articulated reasons for transformation initiatives are critical in motivating stakeholders at both the interdivisional and enterprise level. Having the right “shepherds” in leadership roles is crucial to developing the adaptability and decision-making agility required to thrive and win in an environment of such complex technological, competitive and geopolitical disruption.

Amid a backdrop of constant change, the challenge for leadership teams is to look forward through the fog, understand the scope of the evolution underway and act boldly to deliver sustainable success.


Kurtis Babczenko
Global Banking and Capital Markets Leader and US Finance Transformation Leader
Principal, PwC US

Christopher Scarpati
Capital Markets Advisory Leader
Principal, PwC US

With contributions from Scott Satriano, Managing Director, PwC US; Matthew Blumenfeld, Director, PwC US; and Jacob Kindberg, Director, PwC US.

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Kurtis Babczenko

Kurtis Babczenko

Global Banking and Capital Markets Leader, and US Finance Transformation Leader, PwC United States

Christopher Scarpati

Christopher Scarpati

Capital Markets Advisory Leader, PwC United States