Introduction to Banking 4.0

Customer expectations for banks are changing. According to a survey based on customer service expectations, it has been observed that the level of expectations for service continue to rise, and the quality of your customer service can make or break a company. The motto of Banking 4.0 “Banking Everywhere, Never at a Bank” This is all about friction-less financial services which are fully integrated into digital processes, enabling entirely new business models. This radical transformation will bring great opportunities to the banking sector as well as great risk and fear of failure. The opportunities derive from the technology is that it enables banks to deliver the same set of services in a different and more customer centrist way. On the other hand, the fear is that Banking 4.0 is available for everyone, hence the debate around cannibalization of banks by Fin tech companies.

Building digital-first experiences is critically important. If banks are not allowing digital guide everything they do, they will continue to be irrelevant for customers. Moreover, banks are not able to build quality products and services fast enough to compete with competitors which are specialized in one area.

Traditional banks support a large number of branch networks, large staffs and expensive legacy systems. This legacy banks will have to change or die. Financial Institutions are determined to change their operational structure on the accessibility of financial services. For instance, customers do not prefer to repeat their information for additional products or different types of transactions interactions with the bank. Hence, customers expect things to be done remotely, i.e. requesting for e-statements, money transfers and investment on a click of a button. A large number of customers prefer to transact through their mobile apps.

The good news is that in this era of banking 4.0, banks can create a 360-degree customer view by assimilating data from different sources. As such banks will have a good knowledge of customer life events. The insights thus generated could enable banks to push the right products at the right time with the optimal pricing. By adopting the concept of banking 4.0, banks can help undeserved customers who do not necessarily have the same access and ability to create a perfect picture of their financial health.

Prof. Priyanshu Singh

Assistant Professor, LIM