What the new normal means for banks

More than 45% of bank executives are unsure how to embrace new-age banking.

The pandemic has ushered in a new era of value-based customer-centric banking, referred to as Banking 4.X, which retail banks now have to navigate to succeed.

The World Retail Banking Report 2021 raised the need for banks to embrace digital transformation and implement cloud-based Banking-as-a-Service platform models to embed banking a customer’s daily life.

A total of 81% of consumers have expressed inclination to switch to new-age financial providers from their traditional banks, provided there is easy access and flexible banking features.

Traditional banks, for their part, have started digitalisation and cost optimisation in response to the pandemic. But 46% of bank executives have said they are uncertain on how they will embrace open banking, orchestrate ecosystems, and become a truly data-driven organization.

“By overcoming outdated legacy mindsets and adopting Banking-as-a-Service, financial institutions will move beyond their core banking products, create new offerings, and provide their customers with personalized experiences,” said Anirban Bose, CEO of Capgemini’s financial services and member of the executive board.

The report said that collaboration with non-financial institution to offer services that integrate traditional banking is key to meeting customers’ need.

“In Singapore, DBS worked to transform one-third of its branch network to offer quicker, socially distanced and more personalized branch services and shift their banking to digital platforms in light of Covid 19 conditions,” the report said.

“Beyond self-service kiosks and digital ambassadors, DBS is now considering additional shared-space opportunities with merchants, hotels and F&B outlets,” it added.

The also report said that platformification has dominated the banking landscape as it turned it into an experience-driven, platform-based approach embedded in the consumers’ lifestyle.

A total of 66% of banks are presently using the Baas platform, whilst 25% are now developing one.

Further, to sustain growth in the long run, the report recommended that banks implement a more customised approach, driven by data. Of the respondents, 85% are willing to share their data to get a more personalised experience.

The report covers insights from 23 markets, including Singapore, as well as 8,500 banking customers and over 130 senior executives.