Last week BBVA chairman and CEO Francisco Gonzalez came out and said that 50% of retail banks could disappear if they fail to face the new digital reality.

This research by McKinsey shows that by offering new digital products and avoiding margin compression inflicting by more technologically-inclined competitors, banks could improve their profit by up to 40%.

For me, the threat is binary. How does a retail bank compete in a world where they offer a commodity product and their costs are structurally an order of magnitude higher than a critical mass of competitors? The answer is that they don't; they innovate or die.