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” by Brett King, is all about frictionless 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 centric way. On the other hand, the fear is that Banking 4.0 is available for everyone, hence the debate around cannibalization of banks by Fintech companies.
Building digital-first experiences is critically important. A report from EY found that 64% of people using Fintech prefer digital channels to manage all aspects of their lives. 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. Instead, the key to building better customer experiences is by embracing bank platformication- whereby banks integrates with a wide variety of applications and services which will meet the needs of their customers.
The traditional core banking system is a multi-million-dollar investment and has eventually tied banks not only to a vendor product but also constrained their speed of innovation. In response to the evolving customer expectations, traditional incumbents realized that operating in the same way would not be option. Fortunately, digital innovations have forced traditional banks to come out of their comfort zone and up their digital game. In fact, Banks can learn from Fintech companies here. Fintech firms have arguably been the biggest factor of this shift in the banking customer experience. Statistics shows that 1/3 of consumers across the world are now using at least one Fintech app to do their monetary transactions. It has been noticed that customers value these new apps as they are digital- first- experiences. In this new digital age coupled with smart phone penetration, more and more people are shifting towards digital banking.
According to King, 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 off 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 underserved customers who do not necessarily have the same access and ability to create a perfect picture of their financial health.
Partnering with NanoBNK
Banking 4.0 is actually a good news for banks. This new trend can shed the legacy systems which are holding them back. NanoBNK can partner with Banks to help build their systems and applications which will attract, win, retain and increase customer lifetime value.