The fusion of digital and physical assets and the subsequent affect on consumer expectations and banking capabilities is creating substantial challenges and opportunities. Increased competition from financial technology startups, combined with a more stringent regulatory landscape, further heighten the importance of making and executing the right strategic decisions.

Companies that embrace the disruption in their industry may be better positioned to earn customer loyalty, identify new profit pools and strengthen risk management processes.

The dual bank of the future challenge. Banks today need the right strategy and capabilities to be able to transform their existing businesses and, at the same time, reinvent themselves through new digital business models.

Earn customer loyalty—and the cost reduction it brings. Customer loyalty yields significant rewards. Loyal customers buy more, stay longer, often cost less to serve, and refer valuable new customers. That raises the stakes for banks to deliver the right customer experience for the interactions that matter most to banking customers, using the most cost-effective channel that will earn their loyalty.

Embed superior risk management and governance systems into the organization. Banks need sound risk-control mechanisms, with end-to-end decision-making processes, to guard against dangerous risk exposure now and adapt to government and regulatory changes going forward.

Evaluate opportunities in banking's new profit pools. A big catalyst for change is the rapid evolution of the industry's traditional profit pools. As markets mature, wealth shifts away from deposits toward investments. Banks in many countries are poised to capture growth opportunities in wealth management, with strong starting points in transactional products and distribution networks. The winners will create new pricing and service models adapted for diverse customer segments.