- December 2025
Expectations placed upon banks’ decision-makers have increased significantly. The regulatory landscape is under constant development, requiring balancing between pursuing strategic objectives and maintaining full compliance. Banks are navigating an evolving competitive environment, marked by the entry of agile fintechs, technology giants, and shifting customer expectations. In addition, rapid technological transformation, such as the advancement of artificial intelligence, automation, and cloud computing, continues to reshape banking and other industries alike.
Banking as a business has unique characteristics that make them complex to manage and create structural tension, requiring constant liquidity management. This tension arises from the need to balance short-term liquidity with exposure to long-term credit risk. In essence, banks function as “balance sheet machines,” continuously transforming short-term liabilities into long-term assets while managing risk and liquidity. Successfully navigating this dual challenge demands careful and continuous management of asset and liability maturities, ensuring the institution remains solvent and resilient while pursuing strategic objectives.
Middle management plays a pivotal role by translating strategic goals into actionable targets and routines. A key element is making the “middle layer” visible and auditable, so that the alignment between strategy and operations can be systematically assessed. Without clear translation mechanisms, organisations risk losing alignment and relying on informal norms rather than structured processes. Our findings indicate that insufficient emphasis on the management layer, combined with the intangible and structural characteristics of banking organisations, generates distinctive frictions not always present in other industries.
Drawing on our interviews and industry expertise, we identify three prominent sources of friction within banks
1. Power centers, that banks naturally develop due to their complex, regulated operations, are necessary. However, this distribution can cause internal friction and hinder strategic alignment. To overcome these challenges, banks need transparent structures and robust middle management to coordinate priorities across these power centers.
2. The lack of consistent terminology and perspectives within areas such as risk management, finance, business, and IT poses significant challenges for effective communication and collaboration within banks. Without a shared language, misunderstandings arise, hindering strategic alignment and effective decision-making.
3. Data is the tool for shared language, but as maturity regarding data-driven practices varies across businesses, functions, and teams, it cannot yet enable banks to transform operations to the next level, such as AI. True transformation requires moving beyond data-driven approaches to become insight-driven where data is translated into actionable meaning. Furthermore, many employees lack the skills to articulate phenomena using data, limiting the institution’s ability to generate insights and drive change.
To steer a bank optimally, organizations must move from fragmented operations to strategic integration, prioritizing governance, cultural alignment, and cross-functional collaboration.
The key is to follow three avenues:
- Build a shared management information system (MIS)
- Develop a common organizational language
- Invest in diverse management skills to overcome persistent frictions and enable insight-driven decision-making
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