Many banks appear unhealthy and out of shape as they emerge from the global financial crisis. As they recover from this experience, they must embark on a new fitness regimen that includes a diet restricted by tighter regulations. Battling toward a healthy future, banks must act today to redefine their business models, restore client trust and understanding, and reform their risk management culture.

As the world recuperates from its recent economic malaise, bankers face a host of questions as they seek to improve the industry’s health and foster long-term growth. In addition to determining how to strengthen their financial fundamentals and create new avenues for sustainable revenue and profit growth, banking leaders need to address client trust and insight while simultaneously developing strategies to better manage risk.

With many economies moving toward recovery, now is the time for banks to chart their course to a new reality. Where should they begin? Managing future growth while, at the same time, strengthening the balance sheet is one of the most important immediate challenges for banks. Cutting costs alone will not suffice. Banks should find new, sustainable sources of revenue and profit.

To drive long-term success, today’s banks need to focus on their business models and make changes that enable growth, reduce costs and concentrate on those areas in which the organization wishes to excel. Each bank should determine its own specialization strategy and build the business model to support it. Banks must concentrate on decreasing complexity and increasing efficiency.

Along the way, some banks will become candidates for mergers and acquisitions, such as smaller banks that lack economies of scale. At the same time, some larger banks, whose size has created extreme complexity, will divest divisions. While some of these divestitures will be required by regulators, large banks should consider divesting low performing divisions to maintain their focus and fitness.

In addition to business model health, banks must address the declining health of their client relationships. Our research indicates a clear trust gap between banks and their clients. Clients overwhelmingly believe banks operate primarily in their own interests rather than those of their clients – and, surprisingly enough, many bankers agree! To rebuild client relationships and reestablish trust, banks must understand what clients want, what they need and for what they are willing to pay.

One way to do this is by employing a new approach to client segmentation – one based on what clients’ value rather than on traditional attributes like age, health, stage of life, etc. Such segmentation will lead to a healthier, more sustainable relationship with clients and, in turn, a more profitable one. Smarter banks will increasingly invest in customer analytics to gain new customer insights and effectively segment their clients.