24/07/2024 8:33 AM


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The World Retail Banking Report 2021

What will the post-pandemic world look like for retail banks?

With low interest rates, closed branches, increased risk of SME bankruptcies, consumer delinquencies, and eroding market share, traditional banks are ready to innovate to maintain and grow business.

Customers, some of whom banks may have previously overlooked, want to be treated as unique individuals. They also want to count on their bank, as their trusted financial partner to support their lifetime needs beyond simple transactions.

The World Retail Banking Report 2021 details a wide range of innovative responses to today’s what’s-next environment and outlines strategies and a road map for building the requisite business capabilities to keep pace with ongoing, full-throttle transformation.

One thing is certain, the days of quick fixes are over. In today’s time-is-money climate, stop-gap solutions offer few guarantees aside from siphoned budgets.

Pandemic realities have revealed that banks must align their priorities and mentalities with customer lifecycle needs to create long-term business value. And that means transforming the banking core to enable operational excellence and insightful management of compliance and customer expectations.

World Retail Banking Report

Banking 4.X

About 18 months ago, industry frontrunners began making way for Open X ecosystems that enabled them to share resources and data to accelerate innovation and deliver superior customer experience.

Then, the catalysing impact of COVID-19 forced firms to actively prime for open-platform-banking. Time has come for Banking 4.X – a boundary- busting era in which banking is embedded into customers’ lifetime experiences and made invisible.

Optimised to withstand financial and non-financial threats, resilient and agile Banking 4.X platforms will help client interactions evolve from delivery of transactional services to more high-impact, trusted, and personal advisory support.

Full adoption and enthusiastic support of cloud, versus slow migration, is a conspicuous Banking 4.X trend.

That’s because reshaped distribution models – embedded finance enabled by Banking-as-a-Service and data-driven customized approaches – offer incumbents access to a broader customer base and novel monetisation opportunities.

BaaS and data centricity are key pillars enabling financial institutions to champion inclusion by nimbly modifying their products and approaches to meet the needs of unbanked, underbanked, and vulnerable populations. A path to long- term growth that also meets a societal and governmental ask across the globe.

World Retail Banking Report 2021 – Key Findings

Pandemic fallout catapults banks to the brink of a new era

VUCA challenges intensify sector issues.

  • As operational costs soar and revenues languish, firms consider cost
  • IT transformation and budgets slashed to offset rising workforce and customer service
  • Banks scale back non-core business and exit low-performing geographies to become lean, and
  • Faced with an increasing disconnect between their priorities and customer expectations, banks are actively realigning investments in growth

Banking 4.X takes off in 2021…fasten your seatbelts.

  • As the banking industry transitioned from Banking 0 era to Banking 4.0, which saw open banking make way for Open X ecosystems that enabled an eXchange of resources and data to eXpedite innovation and deliver superior customer eXperience.
  • Welcome to Banking X, which will shatter traditional industry boundaries as firms become virtually invisible, and banking – and other valuable services – are embedded for convenient access within consumer lifestyles. This is the new Open X accelerated by lockdown!

Banking 4.X is an experience-driven, platform-based optimum channel banking resilient to financial and non-financial threats, built around long-term, sustainable growth where human interactions evolve from servicing to advising.

Banks unlock new value by leveraging ecosystem capabilities

Open ecosystems create new value streams via Banking-as-a-Service (BaaS) platforms.

  • Embedded finance, enabled by BaaS, offers traditional banks access to a large customer base, new data sources, and monetization opportunities.
  • A BaaS approach, strategically defined and powerfully deployed, well supported by the management, and enriched by the right mix of partners and products, is the recipe for maximum benefits.
  • A BaaS platform model powered by a data-centric approach can help firms champion financial inclusion by modifying offerings and approaches, becoming more accessible and economical for the underbanked/ unbanked – all while positioning the business for long-term growth.

A robust digital foundation is essential to convert BaaS potential to reality.

  • Transform the banking core to enable operational excellence and insightful management of compliance and customer expectations:
    • Migrate to the cloud – from IaaS to PaaS, SaaS, and BPaaS.
    • Optimize internal API networks to eliminate silos, sync operations, build plug-and-play capabilities.
    • Extend APIs externally to power collaborations and push new business frontiers.
The Banking 4.X WOW factor can amplify value

Customers are still frustrated by cross-channel friction, despite bank efforts to deliver an omnichannel experience.

Banking interactions are shape-shifting as customers demand intuitive, integrated, omnichannel experiences that are intelligently personalised and on-demand accessible – anywhere, 24/7.

  • As frontrunners transform to Banking X, they will keep customers at the heart of the journey by tracking behaviours and sentiment through smart data analytics.

The key to Banking 4.X success? Harvest customer behaviour to hyper-personalize engagements.

  • Leverage AI to orchestrate data ecosystems and mine and derive contextual high-impact insights.
  • Transformation moves beyond digital channels as banks reimagine branches as experience centres.
    • Branches connected to society and synchronized with digital channels offer a consistent omnichannel experience with an emphasis on financial
    • Deploy intelligent assistants and self-service kiosks to support bank staff, so employees focus on value-added services instead of transactional activities.
    • Customers are offered experiences beyond usual transactions in Banking X branches.
  • Building an overarching digital and technology-agnostic CX layer will offer consistent, secure, and superior experience across the banking ecosystem.

Previous edition of the World Retail Banking Report can be found HERE

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