In response to post-crisis regulatory reforms, the European banking sector has under-gone significant changes that have led banks to reconsider their strategies, structures andoperations. Based on a sample of over 3,000 banks from 32 European countries duringthe period 2010–2017, we identify banks’ business models based on cluster analysis andtrack their evolution. We then apply a logistic regression and find that banks with higherrisk and lower profitability are more likely to change their business model. Employinga propensity score matching approach, we investigate the effect of migration on bankperformance and find that changing the business model affects banks positively (i.e. mi-grating banks increase their profitability, stability and cost efficiency). The effect of mi-gration differs depending on the target business model. When switches are a consequenceof being acquired or motivated by regulatory compliance, the positive impact remains.