The latest McKinsey Global Banking Review has portrayed a post-lockdown banking industry in which a set of "outperformers" is diverging significantly from the rest of the pack on several counts. It counts CBA among this number.

"Traditional business models are becoming more commoditised and less profitable," the report says.

"New competitors and some banks are taking advantage of digital and fast execution skills to fulfil customer expectations and deliver higher shareholder value."

According to McKinsey, analysis of historical data shows two-thirds of the value generated by the industry is created during the first couple of years following a crisis. 

"Value will be captured by those institutions that radically shift their business models in response to today’s market pressures: margin compression, the digital expectations of customers and the rapid growth and success of non-traditional banking players," the report says. 

The challenges facing a capital-intensive industry in a low-price environment also show up in valuations. On McKinsey's calculations, banks – overall – are trading at about 1.0 times book value, versus 3.0 times for all other industries and 1.3 times for financial institutions excluding banks, with 47 percent of banks trading for less than the equity on their books. 

And these undervaluations persist after a period in which the financial system as a whole gained about $1.9 trillion (more than 20 per cent) in market cap between February 2020 and October 2021.

This year's McKinsey Banking Review also introduces four sources of divergence, based on analysis of more than 150 financial institutions globally — including banks, specialists, and fintechs. 

The first three – geography, scale, and segment focus – are difficult for banks to change, McKinsey points out. The fourth – the business model – is "well within their power to adapt". 

"Banks often can’t change their geography, scale or segment, but the business model they adopt is in their control." 

McKinsey's concern is that too many banks are too slow to recognise the need to de-link their income from fee generation based on their balance sheets.

There are, however, some banks diverging from the pack, to use McKinsey's terminology. Among those banks cited by McKinsey as "pursuing an ecosystem model of some kind" to create income streams outside the traditional model is the Commonwealth Bank of Australia.

McKinsey bases this conclusion on CBA's moves in 2020 to set up x15, its wholly owned start-up venture, with the mandate to build, buy, or back at least 25 concrete solutions for CBA customers by 2024. 

At the time the McKinsey report was being compiled, CBA had nine digital ventures in areas such as home search, property management, hospitality, and small business. "It also has investments in Little Birdie, an AI-powered retail price tracker, and Amber Energy, a subscription-based energy retailer," the McKinsey report notes.