.svg)
.png)
For decades, balance sheet strength has been the primary symbol of stability in banking. Capital ratios, liquidity buffers, and deposit volumes have long served as the dominant indicators of institutional health. In markets such as Belgium, where depositor trust remains high and interest rates remain relatively moderate, deposit-based models continue to play a fundamental role in anchoring client relationships and funding core activities.
However, senior banking executives are increasingly questioning whether balance sheet strength alone still translates into revenue resilience. The issue is not that deposits have lost their relevance — far from it — but that the drivers of profitability associated with them have become progressively more volatile, external, and harder to manage strategically (Deloitte, 2026; BIS, 2024).
Traditional balance-sheet metrics remain essential for prudential stability, yet they no longer guarantee consistent earnings in an environment shaped by overlapping disruptions. As a result, financial institutions are reassessing what “resilience” truly means — and how it can be sustained beyond interest-rate cycles (McKinsey, 2025).
When balance sheet strength becomes a mirage of control
Over the past decade, banking profitability has been heavily influenced by forces largely outside institutional control.
Macroeconomic and geopolitical uncertainty — driven by inflationary pressures, interest rate fluctuations, trade tensions, and political instability — has increased market volatility and directly affected margins and asset valuations (Deloitte, 2026; BIS, 2024). Net interest income has become increasingly sensitive to monetary policy cycles, exposing banks to abrupt and often unanticipated shifts in profitability.
At the same time, technological disruption has reshaped the competitive landscape. Well-capitalised FinTech firms and Big Tech players are eroding traditional revenue sources while setting new standards for digital experience, speed, and personalisation (Accenture, 2024; PwC, 2024). Banks are required to invest heavily in artificial intelligence, data infrastructure, and cybersecurity — often without immediate revenue upside — further pressuring cost structures and increasing the strategic importance of scalable banking wealth management software.
Regulatory complexity adds another layer of constraint. The evolving framework around Basel IV, increased scrutiny from European supervisory authorities, and heightened expectations around internal models and non-financial risk management introduce additional compliance costs and operational risks (ECB, 2025). These requirements are essential for systemic stability, but they also consume capital, management attention, and technological resources.
Customer expectations are shifting just as rapidly. Clients increasingly demand digital-first, personalised, and seamless experiences across channels, forcing institutions to modernise legacy systems and rethink their operating models. Yet many banks still operate with fragmented IT landscapes and siloed organisational structures, limiting their ability to manage risk holistically, adapt quickly to change, or deploy a unified digital wealth management platform across geographies (PwC, 2024; McKinsey, 2025).
Finally, there is a deeper structural limitation. The traditional balance sheet captures only a fraction of a bank’s true economic value. Intangible assets such as brand strength, proprietary investment intelligence, client data, and technological capabilities — all central to future returns — remain largely absent from balance-sheet metrics. This creates what many executives now describe as a mirage of strength: solid capital and liquidity ratios that mask vulnerabilities in adaptability, scalability, and revenue sustainability (McKinsey, 2023).
In response, banking leaders are broadening their definition of resilience. Beyond capital and liquidity, they are focusing on strategic agility, expanded risk frameworks, and technology-driven operational efficiency. Within this redefinition, revenue diversification — particularly through fee-based activities — has become a central strategic priority (McKinsey, 2025; PwC, 2024).
Why fee-based income is moving to the centre of banking strategy
This shift does not signal a rejection of deposit-based models. Instead, it reflects a growing consensus that interest-driven revenues alone may be insufficient to support long-term growth and stability (McKinsey, 2024).
Non-interest income offers structural advantages in an environment defined by volatility and disruption. It reduces dependency on rate cycles, improves capital efficiency, and provides greater visibility on future earnings (McKinsey, 2025). Institutions with a higher share of fee-based revenues display more stable profitability and a greater capacity to invest in innovation, advisory capabilities, and digital wealth management solutions (McKinsey, 2023).
Investment and advisory services are particularly attractive in this context. They generate recurring revenues, require limited balance-sheet allocation, and scale more effectively across client segments and geographies (EFAMA, 2024). Unlike lending activities, they are not directly constrained by funding availability or yield curve dynamics.
The strategic question, therefore, is no longer whether investment services should play a larger role — but how to scale them without inflating cost-to-serve or compromising trust (PwC, 2024).
The structural limits of deposit-heavy revenue models
Deposit-led revenues remain valuable, but they are inherently exposed to external drivers. The ECB’s Financial Stability Review underscores how interest income is shaped by central bank policy decisions and yield curve movements — variables that no individual institution can control (ECB, 2024). Even in structurally stable retail markets, margin compression remains a recurring risk.
This exposure is compounded by capital intensity. Deposits require balance-sheet usage, liquidity buffers, and regulatory capital, all of which constrain marginal returns. Fee-based investment revenues, by contrast, are capital-light and contribute positively to marginal ROE (BIS, 2024). Over time, this creates a strategic divergence: institutions with stronger non-interest income bases are able to invest proactively in digital platforms, advisory tools, and asset management automation, while deposit-heavy institutions remain reactive (McKinsey, 2025).
Why converting savers into investors remains difficult
Despite the strategic logic, the transition from savings to investment remains structurally challenging. Large volumes of liquidity sit on balance sheets, yet client conversion is often slower than expected (OECD, 2024).
At the client level, behavioural factors play a decisive role. Retail and mass-affluent clients consistently prioritise certainty and liquidity, particularly during periods of volatility. Uncertainty often reinforces cash preference rather than encouraging long-term allocation discipline (OECD, 2024). Morningstar’s Mind the Gap research further illustrates that many clients avoid active investment decisions altogether in the absence of structured guidance (Morningstar, 2023).
However, behavioural inertia is only part of the equation. Institutional barriers often amplify these frictions. In many banks, savings, lending, and investments operate as parallel activities, supported by different systems, incentives, and governance structures. McKinsey’s work on wealth management operating models highlights how this fragmentation prevents seamless client journeys and limits the ability to scale advice through a single digital wealth management platform (McKinsey, 2025).
Inconsistent investment propositions further weaken trust. When portfolio construction, risk interpretation, and rebalancing practices vary across advisors, branches, or regions, clients struggle to understand the value of the offering — and institutions struggle to industrialise portfolio optimisation (Natixis IM, 2023; EFAMA, 2024).
Advisory capacity and the need for industrialisation
Even where demand exists, advisory capacity quickly becomes a constraint. Human advice does not scale linearly, and PwC’s Asset & Wealth Management Trends show how rising cost-to-serve pressures disproportionately affect mass retail and emerging affluent segments (PwC, 2024).
At the same time, advisors spend significant time on low-value, repeatable tasks such as portfolio construction, rebalancing, and suitability documentation. This limits their ability to focus on client engagement, behavioural coaching, and long-term relationship management (PwC, 2024).
Addressing this mismatch requires a shift from artisanal advice to industrialised investment guidance. Portfolio construction is centralised, decision rules are formalised, and asset management automation reduces operational risk while improving consistency and cost efficiency (Accenture, 2024; McKinsey, 2025).
Model portfolios and digital tools as structural enablers
Within this framework, model portfolios provide the backbone of scalable advice. They embed predefined risk frameworks, centralised governance, and documented investment logic, transforming portfolio construction into an institutional capability rather than an individual choice (Natixis IM, 2023; Morningstar, 2023).
Digital advisory tools extend this logic by automating risk profiling, suitability checks, and allocation processes. The most effective models are hybrid: a digital wealth management platform ensures scale and governance, while human advisors focus on complex decisions, life events, and behavioural support (Investopedia, 2024; BCG, 2024).
How Gambit Financial Solutions addresses these institutional challenges
Gambit Financial Solutions supports financial institutions in operationalising this transition. Through a modular white label investment platform, Gambit enables banks and wealth managers to centralise portfolio construction, standardise governance, and deploy consistent investment logic across channels and geographies.
By embedding portfolio optimisation methodologies, automated rebalancing, and rule-based allocation within robust digital wealth management solutions, Gambit allows institutions to scale advisory services without increasing cost-to-serve. The platform integrates seamlessly with existing banking wealth management software, enabling institutions to preserve their brand, distribution strategy, and client relationships while modernising their advisory operating model (Gambit Financial Solutions, 2025).
Conclusion — redefining resilience through scalable advice
Deposit-led growth remains essential, but it is no longer sufficient to ensure long-term resilience. In an environment shaped by external volatility, technological disruption, regulatory complexity, and shifting client expectations, fee-based investment services provide a complementary and structurally resilient path to growth (McKinsey, 2025; PwC, 2024).
Institutions that succeed will look beyond traditional balance-sheet metrics. They will industrialise investment intelligence, embed model portfolios across channels, and leverage digital wealth management platforms to scale advice responsibly (Accenture, 2024; BCG, 2024).
By transforming institutional investment complexity into scalable, governed advisory systems, banks can convert balance-sheet strength into predictable, sustainable fee-based growth.
This document is a Marketing Communication intended solely for professional audiences within authorised financial institutions. It does not constitute investment advice, legal, tax or compliance guidance. Gambit Financial Solutions provides IT solutions to financial institutions and is not a regulated firm that offers MiFID services such as investment advice, portfolio management or order execution. All data sources cited are publicly available.
Sources:
-
Deloitte — 2026 Banking and Capital Markets Outlook — analysis of industry performance, profit drivers, and strategic pressures in banking.
https://www.deloitte.com/us/en/insights/industry/financial-services/financial-services-industry-outlooks/banking-industry-outlook.html -
McKinsey & Company — Global Banking Annual Review 2025 — discussion of profitability pressures, technology investment, macro volatility, and strategic re-orientation.
https://www.mckinsey.com/industries/financial-services/our-insights/global-banking-annual-review -
McKinsey & Company — Global Banking Annual Review 2024 — commentary on competition from wealth management and technology impact on margins.
https://upgrade.mckinsey.com.br/industries/financial-services/our-insights/global-banking-annual-review -
McKinsey & Company — Global Banking Annual Review 2023 — evidence of balance-sheet transitions and the limits of traditional banking models.
https://www.mckinsey.com/industries/financial-services/our-insights/global-banking-annual-review-2023 -
European Central Bank (ECB) — Financial Stability Review — overview of systemic risk, interest rate impacts, and macro pressures on banking earnings. (Review referenced implicitly but can be accessed directly via ECB policy pages.)
https://www.ecb.europa.eu/pub/financial-stability/fsr/html/index.en.html -
ECB — Guide to Internal Models (CRR3 Implementation) — updated supervisory expectations for internal models impacting capital and risk management.
https://www.bankingsupervision.europa.eu/press/other-publications/publications/html/ssm.faq_guide_internal_models_2025~baf433d505.de.html -
Accenture — Banking Digital Transformation — insights on technology disruption, AI impact, and the need for digital investments in banking.
https://www.accenture.com/be-en/insights/banking/global-banking-industry-outlook -
PwC — Banking Industry Trends (Belgium) — discussion of AI’s role in automation, client engagement, and operational efficiency in banks.
https://www.pwc.be/en/news-publications/2024/banking-industry-trends.html -
PwC Global FinTech Report — trends in automated advisory, digital platforms, and hybrid advisory models shaping investment services.
https://pwc-financial.relayto.com/e/global-fintech-report-yj3nv1l2 -
OECD — Behavioural Insights in Finance — research on retail investor behaviour and the challenges in moving from savings to long-term investment.
https://www.oecd.org/finance/financial-education/behavioural-insights.htm -
Morningstar — Mind the Gap Investor Behaviour Report — evidence on why many clients avoid active investment decisions.
https://www.morningstar.com/lp/mind-the-gap -
PwC — Asset & Wealth Management Trends — trends on advisory scaling, cost-to-serve challenges, and the digitalisation of wealth services.
https://www.pwc.com/gx/en/industries/financial-services/asset-wealth-management.html -
McKinsey — Economics of Wealth Management — framework for industrialising advice and scalability in advisory delivery.
https://www.mckinsey.com/industries/financial-services/our-insights/the-economics-of-wealth-management -
Natixis Investment Managers — Wealth Industry Survey — insights on institutional use of model portfolios and standardised investment frameworks.
https://www.im.natixis.com/en/insights/wealth-industry-survey -
Morningstar — Model Portfolio Landscape — analysis of productivity and scalability benefits from model portfolios.
https://www.morningstar.com/lp/model-portfolios -
EFAMA — Asset Management in Europe Reports — evidence on how model portfolios and asset allocation support fee-based revenue growth.
https://www.efama.org/Publications -
BCG — Future of Wealth Management — perspectives on hybrid advisory models combining digital scale with human trust.
https://www.bcg.com/publications/wealth-management -
Investopedia — Robo-Advisory Overview — basic framing of digital advisory technologies and their role in scaling investment guidance.
https://www.investopedia.com/terms/r/roboadvisor.asp -
Academic — AI in Financial Institutions (2025 Survey) — broad perspectives on AI opportunities and risks in finance (supplementary context).
https://arxiv.org/abs/2504.21574
