Data in the Evolving Financial Services World: Banking Profitability

Observations by a C-Level Advisor and Independent Industry Analyst

Preface

This research document is part of a series created for the Greenleaf Group to highlight the importance of data and its use across financial services organizations. See the About Greenleaf section below. This report focuses on data monetization and its role in driving profitability in the banking industry.

Introduction

This is the fifth installment in my series on data management, valuation, and value creation. In the first four installments, I focused on Life Science companies.[2-5] Now, I turn my attention to the financial services industry. I have been fortunate to work in both sectors and have gained insights that apply across these fields. Financial services, like life sciences, have become heavily reliant on data; data is now a vital part of the industry, driving everything from risk modeling and fraud detection to payments innovation and highly personalized customer experiences. However, as data volumes increase—and regulatory expectations rise—so do the challenges of managing, protecting, and deriving value from data.

I’ve worked with property and casualty insurers, employee benefits carriers, and international commercial banks. Across these organizations, the real opportunity isn’t just collecting more data but transforming it from an operational byproduct into a strategic asset that manages risk, drives competitive advantage, and supports long-term growth. This challenge mirrors what’s seen in the life sciences industry, though from a different perspective.

Commercial Banks

Commercial banks make money in eight basic ways [6]:

1. Net interest income on Loans - essentially paying less for the funds they loan to customers, and what the customer pays in interest.[7]

For example:

• The bank pays the depositor 1% interest on money deposited as savings

• The bank lends the money out at 6%

• The bank earns 5% on the difference, called net interest margin (NIM

2. Fees for Services – Banks charge fees for a variety of services. Bank fees are a significant source of revenue for financial institutions and can vary by service, making it essential for consumers to understand and monitor these charges. Fees vary by service and can add up quickly, especially for consumers. [8] These include:

• Checking and account maintenance

• ATM usage

• Wire transfers

• Overdraft Fees

• Mortgage origination

• Loan servicing

• Wealth and asset management

• Safe deposit boxes

• Merchant services (card processing for businesses)

3. Credit Card Revenue – Credit cards generate three types of income. Consider American Express. Although not technically a commercial bank, the company operates as a credit card issuer, and its business model is emulated by commercial banks. American Express earns most of its revenue from discounting merchant transactions. The company also generates income from cardholders through interest, annual fees, and conversion fees. American Express’s spend-centric model incentivizes card usage with special offers and rewards. Despite higher merchant fees, many businesses accept Amex to reach affluent cardholders. American Express continues to expand its premium consumer base and strengthen its global network. [9]

4. Investment Income – Banks invest money in:

• Government and corporate bonds

• Securities (Common stock and bonds)

• Money markets

• Other banks’ loan and investment portfolios

Morgan Stanley, for example, is one of the largest commercial banks in the world. Institutional securities, wealth management, and investment management drive Morgan Financials. Institutional securities are a significant revenue source, with services such as investment banking and financial advice. Wealth management generates stable revenue through services such as brokerage, lending, and retirement planning. Investment management focuses on asset management for institutional clients and contributes a smaller share of revenue. [10]

Banks also operate trading desks (in market-making, derivatives, and foreign exchange) – potentially very profitable but also high-risk. The 2008 financial crisis was mainly due to the widespread use of credit default swaps, a form of financial derivative. [11]

5. Wealth Management & Advisory Services – for high-net-worth customers. These services include:

• Financial Planning

• Investment management

• Private banking

• Trust services

• Merger and acquisition advisory services (large banks) [10]

6. Loans and credit products – for both consumers and businesses, earning interest and fees on all these products. These include:

• Home and Commercial Mortgages

• Personal loans

• Auto loans

• Small business loans

• Corporate lending

• Lines of credi

• Student loans

7) Treasury & cash management services - for businesses, providing recurring revenue. These include:

• Payroll processing

• Fraud protection

• Cash concentration

• Account reconciliation

• Lockbox services

• Short-term liquidity solutions

8) Foreign Exchange (FX) and International Banking - the foreign exchange market sets the exchange rate for many global currencies. Banks profit in FX by:

• Charging for foreign exchange conversion fees

• Selling currency at a markup (arbitrage)

• Facilitating international payments

• Offering hedging financial instruments (for corporations) [12]

As this list illustrates, the range of products offered by commercial banks is diverse and complex. In the era of Bitcoin and artificial intelligence, financial services organizations face new challenges, requiring me to focus intensely on executive-level cybersecurity strategies. Instead of focusing solely on network configurations or endpoint security, I highlighted organizational structure, risk management, and the reasons behind protecting information. Financial institutions—more than any other industry—depend heavily on data integrity and customer trust as key assets. Understanding the economics of cyber risk is essential: what are the financial consequences of inadequate information protection? What tangible value do secure data assets provide? [13]

As in the life sciences, the answer becomes clear when examining the modern balance sheet. For most global companies—including banks and FinTechs—the primary asset class is intangible assets. Under IFRS, intangible assets are “non-monetary assets without physical substance,” yet they hold future economic value and are often the most strategically important assets in financial services.

In banking and FinTech, intangible assets include customer data, proprietary algorithms, risk models, transaction data, fraud analytics, and AI-driven intellectual property. Although these assets are unseen, they are often more valuable than physical infrastructure. They support competitive advantage and regulatory compliance while enhancing the customer experience.

The World Intellectual Property Organization estimates that the global value of intangible assets now exceeds USD 80 trillion. Technology, payments, and financial platforms make up a large part of the world leaders in this category.

Conclusion

For the financial services industry, data is a significant driver of economic value in today’s financial ecosystem. Institutions that excel at creating data value—through analytics, governance, monetization, and AI—will determine the winners in banking, payments, and FinTech over the coming decade.

Financial services firms are exploring new data-driven frontiers across many areas. Below, I focus on two that are changing most rapidly. Additional aspects will be discussed in future posts.

While I highlighted revenue and profitability in banks, nearly every function in financial services is undergoing data-driven reinvention:

1. Algorithmic trading and quantitative strategies

2. Customer Insights, market Intelligence, and personalization

3. Customer onboarding and digital identity

4. Environmental, social, and governance (ESG) – sustainability scoring

5. Financial product pricing models

6. Operational efficiency modeling

7. Payments and settlement optimization

8. Regulatory reporting automation

9. Risk, Fraud, and Compliance Analytics

10. Treasury and liquidity analytics

These topics will be the focus of future articles.

How Green Leaf Consulting Group Assists Financial Institutions

Green Leaf Consulting Group brings hands-on experience helping financial organizations harness the value of data across risk, customer analytics, digital transformation, and strategic decision making.

Looking Ahead

In this series, I will explore additional dimensions of financial data strategy, including:

· Direct and indirect monetization of financial data

· ROI of modern data capabilities

· business value creation through data-driven optimization

· The transformative force of AI

Mastering data assets will define the winners and losers in the evolving financial services ecosystem.

References

1. Services, E.L., Financial Services Graphic. 2024, Elevate Legal Services: https://elawfirm.org/blog/understanding-the-electronic-funds-transfer-act-efta-what-you-need-to-know/.

2. Ferrara, E., Data in the Evolving world of Life Sciences - Part 1, in Greenleaf Insights, M. Miner, Editor. 2025, Greenleaf Group: Ambler, PA, USA.

3. Ferrara, E., Data in the Evolving World of Life Sciences - Part 2: Change and Measurement, in Greenleaf Insights, M. Miner, Editor. 2025, Greenleaf Group: Ambler, PA, USA.

4. Ferrara, E., Data in the evolving world of Life Sciences - Part 3: Compliance, Regulation, and National Security, in Greenleaf, M. Miner, Editor. 2025, Greenleaf Group: Ambler, PA, USA.

5. Ferrara, E., Data in the evolving world of Life Sciences - Part 4: Chaos to Order, in Greenleaf Insights, M. Miner, Editor. 2025, Greenleaf Group: Ambler, PA, USA.

6. Board, F.R., Federal Reserve Board Large Commercial Banks: September 30, 2025. 2025, Federal Reserve Board New York, NY, USA.

7. Mahajan, O., Net Interest Margin - Overview, Components, and Examples, in Wall Street Oasis, W. El Maouch, Editor. 2025, Wall Street Oasis.

8. Kenton, W., Comprehensive Guide to Bank Fees_ Types, Definitions, and How to Avoid Them.pdf>, in Investopedia, C. Potters, Editor. 2025, Investopedia: Investopedia.com.

9. Reiff, N., How American Express Profit: Fees, Interest, and Merchant Revenue, in Investopedia, E. Estevez and M. Rosenston, Editors. 2025, Investopedia: https://www.investopedia.com

10. Jonas, D., Morgan Stanley’s Revenue Streams: Institutional, Wealth, & Investment Management, in Investopedia, T.J. Catalano, Editor. 2025, Investopedia:

https://www.investopedia.com.

11. Liu, J., Credit Default Swap (CDS) - A Major Player in the 2008 Financial Crisis, in Wall Street Oasis, I. Lin, Editor. 2025, Wall Street Oasis: wallstreetoasis.com.

12. Cusimano, J., What Is the Foreign Exchange Market? How It Works & Examples, in Forex Resources. 2024, Satrys: https://statrys.com

13. Institute, C.F. Intangible Assets. 2025; Available from: https://corporatefinanceinstitute.com/resources/accounting/intangible-assets/.