Banking 4.0: where do humans stand in this new revolution?

Siddharth Pant

The pandemic has truly turned a lot of elements and services that were convenient into absolute necessities. Banking that majorly involved people visiting brick and mortar outlets now attracts digital traffic and requests. To give you some perspective, the global value of digital transactions during the pandemic (2020) was around $5.2trillion.

In the evolution of the BFSI sector, we stand today at the dawn of what we call Banking 4.0. Similar to the buzzword Industry 4.0, which is marked by the arrival and influence of emerging technologies like Artificial Intelligence (AI), Machine Learning (ML), data science, cloud computing, cybersecurity and more, Banking 4.0 also witnesses the emergence of these new-age and in-demand technologies in its operations and infrastructure.

So, what is Banking 4.0 all about? More importantly, do humans have a place in it? Let’s find out.

Evolution of banking
● Banking 1.0: the conventional banking model that involved physical outlets and branches with customers experiencing a very analog way of transactions.

● Banking 2.0: From needing a teller or a clerk, Banking 2.0 introduced to the world of self-service banking with the early adoption of the internet.

● Banking 3.0: Adding a layer to self-service banking, this era utilises digital technologies and devices such as portable gadgets and apps to deliver a whole new range of banking experiences. This is also the time of personalised banking.

What is Banking 4.0?
Completely digital, mobile-first and less overhead are what would define Banking 4.0. For the uninitiated, the book by Brett King is even titled Banking Everywhere, Never At A Bank. This means customers will no longer experience generic products that follow a one-size-fits-all approach but more personalised services and offerings tailored to meet their individual demands and expectations.

Imagine the most personalised credit system that offers you buy-now-pay-later options based on your credit score, transaction and purchase history, payscale and more. Or, insurance premium options based on your driving history and record.

This also means a more proactive approach to solving real-life concerns and quick resolution of conflicts through increased usage of AI, ML and data science. Digital first will no longer be on paper at policy levels but across actions and implementations as well. This translates to the fact that the BFSI will witness more applications of AI to not just optimise customer experiences but make their administrative processes, systems and workflows more airtight.

Where do humans stand in this revolution?
While at the outlook, it might appear that there is no place for humans in this ecosystem, it is actually the contrary. When typewriters were replaced by first generation computers, there was a wave of fear among people that their jobs were at stake. A similar situation followed when spreadsheets arrived. The underlying point here is that emerging technologies have created more job roles that are niche as compared to destroying existing ones. This has forced people to transform and to acquire new skills, which prove to be lucrative and beneficial in the longer run.

Also Read | Data and Analytics in Banking 4.0: The key differentiators

With respect to Banking 4.0, the ecosystem would need professionals who have skills and expertise in

● Data science to uncover crucial customer and operational insights
● Building and deploying AI/ML models and implementing automation
● Architecting banking services on the cloud and at scale
● Building a cybersafe environment for customers using airtight cybersecurity measures and practices
● Using blockchain to secure and protect data through decentralised identity and other privacy mechanisms.

Besides, human capital is required for organisations to seamlessly transition from existing (and legacy) systems to advanced systems, scaling systems for smooth operations and bringing in a digital-first culture. All this will be a herculean task without sufficient human involvement.

Final thoughts
Right now, we are in times of rapid change, which leads to reflection on where the skills and competences of our workforce need to be in this evolution. With the role of humans evolving, are we prepared enough to take up new roles and responsibilities? Are organisations planning on talent transformation of their existing talent pools? Are we geared to define the banking experiences of tomorrow, today?

Written by:- Siddharth Pant, Head of Data Sciences (Academics And Operations), UNext Learning

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