Financial Services: What is Really Changing

Over the past few months, I have had dozens of conversations with leaders across asset management, transaction banking, payments, and credit cards. My goal was simple, to understand how financial institutions are thinking about revenue generation in a world that is moving faster than ever.

While some patterns mirror what we see in consumer finance, my real interest was in the B2B side the complex, often messy world of financial product manufacturing and distribution. That’s where the real shifts are happening.

Here is what I have learned.

1. Product differentiation doesn’t last long anymore

In most parts of finance, the product itself is no longer the differentiator. Every asset manager, bank, or payment provider has invested heavily in product manufacturing, the machinery is well-oiled. There are nearly 9,000 mutual funds and ETFs listed on Fidelity alone, and global assets under management crossed $147 trillion by mid-2025.

A higher return or a new product feature might give you an edge for a few months, but it doesn’t last. What is starting to matter more is distribution, who controls the client relationship and how efficiently they can scale that relationship.

McKinsey said it best:

“Firms with access to proprietary distribution: Their structural access to client channels and end-client relationships provided resilience against market volatility and enabled superior pricing and servicing economics.”

You can see the same trend in transaction banking. Everyone offers similar cash management and payments. What sets winners apart now is the client experience something that can influence up to 20% of operating profit.

2. Fee compression is real (and relentless)

Almost every product, from mutual funds, ETFs, credit cards to transaction banking has become a commodity.Innovation cycles are shorter, replication is faster, and pricing pressure is constant.

It’s not hard to see why: the cost of manufacturing a financial product keeps going down, and the big players can adapt quickly. The result? Margins are squeezed.

Think about Robinhood’s commission-free model or even the early robo-advisors that couldn’t scale profitably. The lesson is clear: the only sustainable advantage is distribution and scale. Without that, even the best product won’t move the needle.

3. Clients are changing faster than institutions

Whether it’s an institutional buyer or a corporate treasury team, client expectations are completely different now.They are used to the instant, personalized experiences of consumer apps and they expect the same speed, transparency, and ease in B2B finance.

The challenge is that most financial institutions are still running on fragmented, legacy systems. Everyone I spoke to acknowledged the gap: they want to deliver a seamless client experience, but their internal data and systems don’t talk to each other. As an example, Transaction banking generates almost $1.3 trillion annual revenue. As per KPMG’s report on trends and opportunities for transaction banking, customer journey and experience can impact 10 to 20 percent on operating profit.

This is where the real transformation needs to happen not just in products, but in how financial institutions engage with clients.

4. Technology is finally becoming a revenue driver

Banks have used AI and ML for years for risk models, trading algorithms, fraud detection, you name it. But now, the focus is shifting toward using technology to drive revenue.

The irony is that while we talk about real-time payments and digital trading, a lot of sales processes are still run on paper, PDFs, and spreadsheets.

I have sat with sales teams over the years back when deals were on Excel and cold calls were common, then Salesforce dashboards, and now AI-driven insights.The biggest shift came during COVID: sales teams wanted tech that made their jobs easier and their pitches stronger.

Today, AI isn’t just a buzzword it’s an enabler. It helps teams prepare faster, personalize better, and close more deals. Institutions that build this capability early are setting themselves up for a genuine first-mover advantage.

5. The industry is reorganizing around sales and distribution

If there’s one theme that cuts across everything, it’s this: financial institutions are rethinking how they sell.

I’m seeing teams restructure, streamline processes, and invest heavily in sales enablement infrastructure, not just CRM systems, but full-scale frameworks that help teams work across functions, align on data, and move faster.

It’s a little chaotic right now. Different teams are experimenting with new structures and tools. But this is the kind of productive chaos that leads to repeatable patterns and eventually, scale.

Final Thought

After talking to so many people across the industry, one thing stands out:

Financial products create choices and options.

Maintaining relationships, focused execution and scaled distribution drive decisions!!!

The edge now comes from how organizations distribute, how well they understand their client, and how effectively they use technology to close that loop.

That is where the next wave of winners in financial services will emerge.