The German banking sector faces a paradox: never before have so many institutions been as operationally stable as they are today, yet at the same time the pressure to change has rarely been greater.
Whilst short-term earnings in recent years have benefited from the turnaround in interest rates, recent studies by Oliver Wyman¹ and EY² paint a clear picture: the real challenges aren’t in the next quarter, but in the transformation of the business model by 2035. Banks must adapt to new customer needs, changing competitors, stricter regulatory requirements and a far-reaching economic structural shift.
The key question is therefore:
How can banks remain successful in a world where data is becoming the most important factor?
The answer lies within themselves and in a new paradigm: data-inspired banking.
Challenge 1: From a bank focused on interest rates to an advisory bank
For decades, the profitability of many banks has been based primarily on net interest income. This model is increasingly reaching its limits.
Falling interest rates, rising refinancing costs and intense competition mean that traditional interest income will generate less growth in future. At the same time, new opportunities are emerging in the areas of wealth creation, retirement provision, investment advice and the financing of economic and infrastructure transformation.
The challenge: Whilst many banks know their customers well, they make only limited use of existing data to forecast future needs.
Data-inspired banking as a solution
What if data were no longer used merely for documentation, but to actively manage customer relationships?
Examples:
- Identification of life events and opportunities for advice
- AI-powered ‘next best offer’ systems
- automated pension and wealth analyses
- personalised product offers in real time
Customer data thus becomes a strategic advisory advantage.
Challenge 2: Rising credit risks
Rising insolvencies, geopolitical uncertainties and the restructuring of entire industries are increasing the risks in loan portfolios.
Traditional risk models are often based on historical data. However, the future demands the ability to identify trends at an early stage and to make active use of forecasts.
Data-inspired banking as a solution
Modern banks use:
- Real-time data
- AI-based early warning indicators
- Supply chain and network analyses
- Sentiment analysis from news sources
- Scenario simulations
This enables banks to identify risks earlier and take proactive action before loans default. Risk management is evolving from a backward-looking control function into a forward-looking forecasting and simulation tool to manage risks.
Challenge 3: Digital competitors are targeting the customer interface
FinTechs, neobanks, platform providers and international competitors are steadily gaining market share.
The biggest risk isn’t just losing individual products; it’s about not losing the connection with the customer. Whoever’s in charge of the customer interface will have control over value creation in the long run.
Data-inspired banking as a solution
Data-inspired banking brings together:
- customers
- analytics
- digital channels
- automation
to create an integrated customer experience.
Instead of focusing on products, start organizing around the customer:
- Which needs are emerging?
- Which problems need to be solved?
- Which services will be needed in the future?
The bank is transforming from a product provider into a data-driven solutions provider.
Challenge 4: Financing Germany’s transformation
By 2035, more than 1.5 trillion euros will be needed in investments for energy, infrastructure, digitalisation, and future industries.
These projects differ significantly from traditional corporate loans:
- longer tenors
- new risk profiles
- complex project structures
- greater involvement of institutional investors
Banks do not yet automatically possess the necessary capabilities for this.
Data-inspired banking as a solution
Data provides transparency on:
- project progress
- risks
- cash flows
- ESG criteria
- scenarios and stress tests
At the same time, modern data platforms facilitate collaboration with:
- asset managers
- private credit investors
- insurance companies
- public institutions
The data-inspired bank thus becomes the orchestrator of complex financing ecosystems.
Challenge 5: Regulation, efficiency and costs
Banks are having to meet an ever-increasing number of requirements, whilst cost pressures are mounting. Many banks are attempting to resolve this problem by taking on additional staff. However, this model is reaching its limits, and not just for cost reasons.
Data-inspired banking as a solution
A modern data architecture enables:
- automated regulatory reporting
- consistent data management
- transparent governance
- AI-supported documentation
- end-to-end process automation
The result:
- lower costs
- higher data quality
- faster decision-making
- greater compliance assurance
Banks gain time for value-adding activities.
Challenge 6: Demographic change
In upcoming years, a large number of experienced staff will retire. At the same time, the demands on data, technology and AI skills are increasing. The critical risk is, that knowledge disappears faster than we can build it up.
Data-inspired banking as a solution
Through smart data usage, expert knowledge is digitalised and made scalable.
Examples:
- digital knowledge platforms
- AI-powered assistance systems
- intelligent decision support
- automated analyses
As a result, knowledge becomes less dependent on individual people, and the organisation becomes more adaptable and resilient.
Data-inspired banking as a new paradigm
Data-inspired banking is much more than just a technology project; it describes a new model of leadership and thinking.
The core idea is this: Decisions are systematically supported by data, analytics and AI. Whilst people and their experience remain the ultimately decisive factor, decisions are underpinned by data, validated by it, or indeed made possible by it in the first place.
Three questions are central in this context::
- What data helps us to better predict the future? No longer a rear-view mirror, but radar.
- How does data become decisions? Not reporting, but managing.
- How can data be translated into customer value? Not information, but interaction and cooperation with customers.
Data-inspired banking – data-based creativity shapes the future of banks
Conclusion
What will determine the future of banks is certainly a very complex question, and the answer will vary slightly for each institution. In this article, based on studies by Oliver Wyman1 and EY2, we have assumed that it is not primarily balance sheet size, branch networks or individual products that will determine the long-term future of banks in general.
In our view, the future will be determined by the ability to
- understand customers better,
- identify risks earlier,
- manage processes more intelligently,
- meet regulatory requirements efficiently and
- develop new, data-inspired business models.
The winners of the next ten years will therefore not necessarily be the largest or currently most successful banks, but rather the banks that make the most effective use of their data.
Data-inspired banking is therefore not an IT initiative. It is the strategic response to the key challenges facing the banking sector of the future.
Sources
- 1. Dr René Fischer, Alexander Peitsch, Stefan Schwengler, Philipp Bulis, Natascha Fischer, Janine Junge, Banksreport 2025 (only available in German)
- 2. EY, Banks are taking a more pessimistic view of the economy – but remain optimistic about their own business, 4 August 2026 (only available in German)
