Article at a glance:

Can banks grow beyond M&A?

While bank mergers will pick up again, few deals are going to create the value seen in the 1990s. Instead, banks will have to find new ways to boost earnings, such as developing more compelling value propositions to compete with the nonbanks and specialists that have been gaining ground in many markets. Banks will also have to raise their performance the old-fashioned way—by improving productivity. This approach will become vital as their payments businesses shrink with falling usage of checks.

The take-away

CEOs who expect a recovering economy to bring back the merger heyday of the 1990s actually face a more diverse and complex agenda. New growth and productivity initiatives will replace megadeals as the cornerstone of most banks’ strategies to create value.