BCG report finds financial institutions to deliver record shareholder returns in 2025; And for the first time in years, more than 80% of global bank equities are trading above book value
However, financial institutions still rank very low in price-to-earnings multiples. To bridge that gap and maintain value creation, the industry will need to modify its approach. Operating from a position of strength, institutions have earned the right to boldly invest in AI, growth and active portfolio reshaping
Financial institutions plan to invest 2% of revenue in AI this year. When placed at the center of the strategy and deployed at scale, such investments drive significant productivity gains in the banking domain.
Although the threat of AI agents disrupting banks’ customer relationships has never been stronger, banks have a window to respond with their own agent offerings to engage customers, leveraging the trust they have earned over decades.
The pace of M&A in financial institutions is stronger than any other sector globally. Conditions for portfolio reshaping are the most favorable in more than a decade
The best opportunities for innovation lie at the intersection of three structural forces: AI, non-bank financial institutions, and digital assets.
boston, 8 June 2026 /PRNewswire/ — 2025 was a banner year for financial institutions, outperforming all other industries, including information technology. Moreover, most global bank equities now trade above book value. This recovery is real and sustainable, built on improved profitability, disciplined cost management and a strong balance sheet.
Boston Consulting Group (BCG)
Having earned the right to act decisively from a position of strength, institutions now have the opportunity to tackle a persistent issue: price-to-earnings multiples have remained largely unchanged. Maintaining strong returns will require improving multiples, building on scale growth and developing a business model that is less dependent on the balance sheet – not just defending existing profitability.
For the first time in many years, 80% of global bank equities (except China) trade above book value, giving institutions the authority and financial power to act boldly. However, the report warns that if institutions default to returning capital through buybacks and dividends rather than reinvesting in scalable growth, they risk ceding ground to faster-moving competitors.
“Financial institutions have had an extraordinary year, but the market is telling them something important: past performance is not enough,” said Saurabh Tripathi, global leader of the financial institutions practice at BCG and co-author of the report. “The P/E discount reflects genuine investor skepticism about whether banks can deliver sustained, compound growth. Institutions that act now to redesign their operating models, redeploy capital into growth, and build AI into their strategic core have a real opportunity to close that gap. Those that don’t will find it widened.”
The Productivity Paradox and How AI is Breaking It
Despite years of significant technology investment, there has been only modest improvement in operating expenses relative to assets in most global banking markets, and the number of employees in the financial industry has grown at about 2% annually over the past three years. Digitization simply layers existing processes rather than fundamentally reimagining technology.
AI will change the rules of the game. New players have demonstrated tremendous growth on the back of truly scalable operating models. AI offers every organization an opportunity to get there. The report notes that winners are deploying AI at enterprise scale rather than running isolated AI pilots. The results of credit underwriting, money management, engineering and operations are already significant. Financial institutions plan to invest 2% of revenue in AI this year, with only the tech industry set to spend more. But it will be important to target a genuine operating and business model redesign.
“The productivity problem in banking is structural, not cyclical, and incremental digitalization has not solved it,” said Andreas Biffer, managing director and partner at BCG and co-author of the report. “The organizations that are leading the way are reinventing the way they work from the ground up by putting AI at the center. The benefits are already measurable, and the gap between leaders and laggards is growing faster than it was a year or two ago.”
A clear vision of disruption is essential for bold growth
For institutions trading above book value, targeting investment and scalable growth are now the primary value levers. AI is expanding the addressable market in ways that were not previously affordable, opening up new opportunities in wealth management, lending and other fee-based opportunities. At the same time, disciplined M&A, supported by the strongest conditions for reshaping the portfolio in a decade, provides a complementary path to step-change value creation.
As the report warns, realizing these opportunities requires paying attention to a landscape that is structurally changing. Non-bank financial institutions are strengthening their position in the global revenue pool, digital assets are increasingly moving toward mainstream financial infrastructure, and AI itself is squeezing margins even as it enables growth. The institutions best positioned to win are those that position themselves at the intersection of these forces rather than defending against them.
Bold ambition demands bold execution
Taking advantage of this opportunity requires more than strategy. This requires a fundamental redesign of how institutions are structured and run. The final chapter of the report outlines what such a redesign looks like in practice: focusing investment on a small number of high-impact AI bets chosen with rigorous discipline, building out the five foundational enablers – technology, data, risk and compliance, operating models and talent – at enterprise scale rather than piecemeal, and ensuring that the CEO personally owns the change rather than simply sponsoring it. The outlines of an intelligent financial institution are already visible among early movers. The window for construction towards this is still open, but it will not remain open indefinitely.
Boston Consulting Group bridges the gap between ambition and results for the world’s leading companies and organizations. We are built for this era of unprecedented change – bringing strategic clarity rooted in over 60 years of deep domain knowledge, with applied AI shaped by our practitioners. BCG works side by side with CEOs across industries and geographies to deliver transformational impact at scale: strong returns, transferred capabilities, and change that sticks. For more information visit bcg.com.
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