The global pandemic has been a moment of truth for the global banking industry. Banks world over have been under great pressure in the last two years facing varied levels of impact. Customers are today demanding intelligent interactions and want convenient access to banking services anywhere, anytime, and on-demand.
Improving customer experience has become one of the top goals in the strategic planning of financial services companies. Changing customer trends are forcing banks to deliver superior customer experiences, leading to Banking 4.X, marked by hyper-personalized engagements and strategically relevant products and services.
This transformative shift in the Open X ecosystem are pushing banks to enter a new era of Banking 4.X. Thus the focus now is on making financial services more accessible, offering hyper-personalization and experiential banking to the customers.
Understanding Banking 4.X
Banking 4.X is experience-driven, platform-based, optimum channel banking that is resilient to financial and non-financial threats, built around long-term, sustainable growth where human interactions evolve from servicing to advising.
Banking 4.0 – which really marked a shift from product-based banking to service-based operations, has been instrumental in making banking more customer-centric. It made way for Open X ecosystems – where entities collaborate seamlessly and enabled an eXchange of resources and data to expedite innovation and deliver superior customer experience. Banking 4.x can very well be the evolution of Open X, where banking is invisibly embedded in everyday life. Let us go on to understand this term more elaborately…
Banking 4.X v/s evolving customer expectations
Customers today opt for new-age banks due to easy access and flexible banking in addition to value-added services they offer. With new players emerging, customers are witnessing a new era of open banking. This trend has been a cause for concern for traditional banks.
To address the growing customer churn, traditional banks are focusing on how they can add value to their customers to retain and engage them. Digital transformation therefore became a strategic priority for all banks and they have realised the importance of being data-driven.
Banking 4.X is increasingly being looked upon as the most effective way to unlock new value by leveraging ecosystem capabilities. Open ecosystems create new value streams via Banking as a Service (BaaS) platforms where smart data analytics track behaviours and sentiments of the customers.
New-age banking has redefined the entire banking experience for a customer. Neo banks, which offer all the banking services that the physical banks offer, have attracted over 39 million customers worldwide in the last one decade, according to a report.
Re-aligning the technology roadmap
By increasing IT budgets and ensuring robust technology in place and embracing digital transformation, retail banks are taking a leap towards Banking 4.X to offer integrated banking with fully digital capabilities, reduced branch network, and customer-centric intelligent transformation.
With most customers demanding an omnichannel experience, banks are expected to deliver excellent customer experience by efficiently capturing customer data for personalization, and reimagining branches as experience centers.
To succeed in Banking 4.X, financial services firms must embrace digital transformation and adopt cloud-based BaaS platform models, which utilize APIs to embed banking in everyday life, making it more accessible and inclusive for banking customers. Not just moving beyond their core banking products, they must create new offerings and also provide their customers with personalized experiences.