How Are Universal Banks Shaping the Global Financial Landscape?

Highlights:

• An introduction to universal banking
• Diverse role of these financial institutions in the banking sector
• Key alliances made by industry leaders in 2025

Universal banking systems comprise of financial institutions offering a wide array of financial services, including retail, commercial, and investment services. These banks function as a “one-stop-shop" for various financial needs and are common in some European countries like Switzerland. In the United States, universal banking became more prevalent after the Gramm-Leach-Bliley Act (GLBA) of 1999, which removed restrictions that previously prevented commercial banks from providing investment banking services.

Universal banks provide a wide range of financial services such as credit, loans, deposits, asset management, investment advice, payment processing, securities transactions, underwriting, and financial analysis. These financial institutions allow banks to offer a multitude of services and enable them to choose a subset of banking solutions. Also, they integrate the functions of both commercial and investment banking, offering a full range of financial services in one place. These specific services include deposit accounts and a wide variety of investment and insurance services. Deposit accounts within a universal bank include savings and checking. Bank of America, JPMorgan Chase, Barclays, and Deutsche Bank are some popular examples of universal banks that provide a range of banking services, from industrial banking to investment banking.

Core functions of universal banking

The universal banking industry has experienced prominent growth as it allows customers to manage their finances under one institution, creating a long-term relationship with them. Universal banks serve as intermediaries between savers and borrowers by accepting deposits and providing loans and credit facilities. They offer various deposit products, including savings, checking, fixed deposits, and money market accounts, allowing customers to safely store funds and earn interest. These financial institutions also provide personal, business, and mortgage loans.

On the other hand, these banks facilitate capital formation and corporate finance through investment banking activities. This includes underwriting securities such as stocks and bonds for corporations and governments, helping them raise capital. They offer advisory services on mergers and acquisitions, IPOs, and debt restructuring. In addition, these banks also offer services such as credit cards, housing finance, auto loans, insurance, retail loans, factoring, merchant banking, mutual funds, underwriting, investment advisory, payment processing, securities transactions, asset management, and financial analysis. They also provide payment and settlement, mutual funds, depository services, wealth management, portfolio management, bancassurance, and NRI remittance services.

UBS and Microsoft joined hands to revolutionize banking infrastructure

In January 2025, UBS, a leading Switzerland-based universal bank, partnered with Microsoft to use its Azure AI solutions across five divisions to enhance client advisory services and operational efficiency. Through this collaboration, the bank aimed to develop UBS Red, an AI assistant powered by Azure AI Search and Azure OpenAI Service, that gives advisors instant access to investment insights and market intelligence. In addition, the institution has also introduced an AI Hub and data mesh framework to support the broader implementation of AI across its operations. This alliance has represented a significant Ujjivan Small Finance Bank's strategy to grow its portfolio and global reach step toward the adoption of AI, offering a model for other institutions that are looking to embrace digital technologies.

Ujjivan Small Finance Bank's strategy to grow its portfolio and global reach

Simultaneously, in January 2025, Ujjivan Small Finance Bank (SFB) announced its vision to apply for a universal banking license by March 2025. Through this initiative, the bank emphasizes diversifying its business mix and enhancing its secured loan portfolio to meet regulatory requirements. It also aims to strengthen its position in the competitive banking sector. By applying for this license, the bank plans to actively increase its secure loan offerings, aiming for a balanced mix between secured and unsecured loans. This further allows the bank to expand its reach into housing finance, MSME loans, and vehicle financing.

On the other hand, with the increasing importance of robust digital platforms, the bank aims to invest in upgrading its digital and IT infrastructure to meet regulatory standards and improve customer experience. In addition, it plans to extend its geographical reach and diversify its product lines to cater to a wider customer base, thereby minimizing concentration risk and enhancing financial inclusion.

Endnote

With the evolving landscape of the global banking industry, universal banking systems play a key role in offering comprehensive financial services under one roof. Furthermore, the rising adoption of mobile banking technologies is expected to open wider opportunities for the sector in the coming years. In addition, continuous technological advancements, such as the integration of AI, ML, and blockchain technology to streamline operations, enhance security and offer innovative products are predicted to create a robust, risk-free environment for universal banks in the future.

Stay in touch with our esteemed analysts to gain more insights into the upcoming trends in the universal banking industry!

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