The development of digitalization will further squeeze the living space of banks, so transformation and innovation of risk management is imminent for the traditional lenders, McKinsey & Company said on Thursday. 

In the face of the severe global economic pressures, the importance of bank's risk-management capabilities has become increasingly prominent. Banks are facing woes from concentration of rising bad loans and problematic assets, according to a report released by the consulting firm.

For banks, if they can better integrate the big data and new technologies brought by the current digital wave, they will definitely stay in stronger shape and may create additional values, the report said. 

Affected by multiple factors such as the downturn in the real economy and the acceleration of interest-rate marketization, the growth rate of China's banking industry has also slowed down to some extent. 

In 2018, the annual growth rate of banking-industry revenue was only 7 percent, a record low since 2010. At the same time, the overall net profit growth of banks slackened, and the return on capital showed a downward trend for the past eight consecutive years. 

In the first quarter of 2019, the net interest margin of the banking industry dropped to 2.17 percent, and the average net interest margin of the top 40 Chinese banks dropped to 1.91 percent in 2018. 

As of the end of the first quarter of 2019, the non-performing loan ratio and non-performing loan balance of China's commercial banks both increased significantly. The non-performing loan ratio has risen to 1.80 percent, and the non-performing loan balance exceeded 2.1 trillion yuan ($294 billion).

John Qu, senior partner at McKinsey & Company, said that digital risk control can help banks save 20 -30 percent of risk operational costs by improving credit-management efficiency and reducing compliance losses. But the greater value of digital risk control is to collect bad assets and prevent new risks, thus creating direct economic value for banks.