Why Global Banks Are Racing to Simplify

Wall Street’s biggest revenue engine—corporate and investment banking—has become too complex to sustain. A 2025 McKinsey analysis of global banks found that complexity is now the largest driver of excess operating cost. Product catalogs have grown at top-tier banks. Middle-office staff often use many different booking systems for a single trade. The result is clear: every dollar of revenue now costs more to produce than it did a decade ago.

This math is forcing CEOs to choose between continued bloat and radical simplification. Banks that choose simplification are removing old technology stacks. They are cutting product menus. They are flattening organizations that once had many layers between clients and the boardroom. The benefits include lower costs, faster onboarding, and better pricing. Banks can also invest more in AI and data tools that will shape the future.

From Legacy Layers to Lean Ops: The 2026 Simplification Playbook

The same pressure is changing how deals get done. At Barclays, the number of steps to open a custody account for a sovereign-wealth fund dropped sharply. This happened after the bank merged several onboarding platforms into one cloud stack. Cycle time and error rates both fell.

McKinsey’s benchmark study shows this approach is spreading fast:

• Product rationalization: Banks that retired low-margin structured notes and FX swaps freed significant capital.
• System consolidation: Replacing multiple trade-capture systems with a single golden copy cuts technology run-cost.
• Span-redesign: Removing management layers can speed up credit decisions and improve staff satisfaction.

The hardest part is cultural change. “We had vice-chairs who treated every product as their fiefdom,” said a senior HSBC executive. Killing a legacy swap variant required the same political effort as closing a branch in a board member’s hometown. Banks that succeed tie product retirement to P&L owner bonuses. They also give simplification teams veto power over new product launches.

Automation’s Double-Edged Sword

Automation is the next frontier. But it also creates a trade-off between speed and control. Goldman Sachs now uses machine-learning models to match many FX trade confirmation emails. The gains disappear, however, if data is polluted by inconsistent client identifiers across multiple booking systems. Simplifying data first is essential. McKinsey finds that banks that consolidate client reference data before rolling out AI see fewer error-related losses. Banks that automate on dirty data suffer more trade breaks.

Span-redesign: Removing management layers can speed up credit decisions and improve staff satisfaction.

Measurable Gains from Streamlined Processes

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The results are noticeable in boardrooms. Commonwealth Bank of Australia reduced its institutional-banking cost-to-income ratio. This happened after retiring many product variants and moving much of the remaining volume to straight-through processing. Finance chief Alan Docherty told investors in February. The bank’s share price outperformed the ASX 200 banks index over the next 12 months.

Clients also notice the difference. A December BlackRock treasury survey found that most asset managers now rank “operational friction” as a top-three factor when choosing a prime broker. This is higher than balance-sheet depth for the first time since 2008. Banks that resolve most corporate-client inquiries in one call gain market share. Banks that need three or more interactions lose ground.

The benefits are strongest in emerging markets. In the past, documentation moved by courier. Standard Chartered’s digitized trade-finance platform cut document-checking time for Indian textile exporters to Singapore. The time dropped from days to hours. This helped the bank increase its India-Southeast Asia trade revenue last year, according to internal data shared with McKinsey.

How Simplification Will Redefine Competitive Advantage

Regulators are also helping simpler banks. The Basel Committee proposed capital relief for banks with “demonstrably streamlined” operational-risk profiles. This could reduce risk-weighted assets for banks that simplify aggressively. That means more capital available for top-10 global banks.

“Simplicity is becoming a proxy for management quality,” said JPMorgan banking analyst Hugh Cummins.

Equity analysts are already noticing the difference. Banks in the top quartile of McKinsey’s complexity-score index trade at a premium to tangible book. Bottom-quartile banks trade at a discount. The gap has grown since 2022. This is true even after adjusting for return on equity. “Simplicity is becoming a proxy for management quality,” said JPMorgan banking analyst Hugh Cummins.

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The long-term goal is data monetization. Once client data is on a single platform, banks can sell analytics. These include payment-flow forecasting, carbon-footprint tracking, and supply-chain liquidity. McKinsey estimates new data products could add several percentage points to corporate-banking revenue pools by 2028. Early movers could capture half of this growth.

Who Wins When Complexity Disappears

If current trends continue, the corporate-banking hierarchy in 2029 will split clearly. On one side are “lean orchestrators.” On the other are “full-service relics.” Winners will have fewer products. Most processes will run without human touch. A growing share of revenue will come from data services. Laggards will still use product menus the size of phone books. Meanwhile, their simpler rivals will use tech savings to offer higher credit lines and cheaper pricing. Mid-cap corporates looking for global cash-management partners will gain the most. This is true only if they choose banks that finished the hard work of modernization before the next credit cycle begins.

How Radical Simplification Transformed Corporate and Investment Banking at JPMorgan Chase

JPMorgan Chase’s radical simplification effort aimed to streamline operations and cut costs. Key steps included:

Respond to changing customer needs and preferences.

• Removing many separate software applications used by its corporate-banking arm.
• Implementing a new, more efficient technology stack.
• Reducing product offerings significantly.

The results were clear:

• Significant cost savings.
• Improved efficiency and less manual processing.
• Better client experience through faster onboarding and better pricing.

How Simplification Will Redefine Competitive Advantage

As banks keep simplifying, the competitive landscape will change. Banks that simplify well will be better positioned to:

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• Invest in digital technologies and innovation.
• Respond to changing customer needs and preferences.
• Deal with increasingly complex regulatory requirements.

McKinsey says the banks that lead in simplification will be those that balance efficiency with effectiveness. They will create more agile and responsive organizations.