Think about your biggest competitors. If the first names that come to mind are other financial institutions, you might be looking in the wrong direction. The true competition is no longer in the branch across the street, but on your customer's cell phone, where giants like Apple, Amazon, or Google are winning the battle for their daily lives.
According to various estimates, the volume of Apple Pay transactions will surpass that of a global network like Mastercard in the coming years. Every time a payment or an instant credit goes through their platforms, your bank loses data, relevance, and, most importantly, the direct relationship with the customer.
They’re not trying to be a bank, but playing a different game where banking runs the risk of becoming an invisible and easily replaceable piece. In this scenario, Banking 4.0 is the strategic answer to go from being a product provider to a life enabler.
What is Banking 4.0 really?
Banking 4.0 is summarized in a powerful idea proposed by Brett King (2018): “Banking everywhere, never at a bank.” It's about dismantling the idea of the bank as a place you go to, to turn it into a service that lives with the customer invisibly.
But don't be confused. It's not about having the best app, but about being present at the moment of need. A tangible example is the ability to make withdrawals from bank accounts directly at the checkouts of a well-known retail store. The financial service is there, integrated into a daily activity, without friction. That's Banking 4.0 in action: services are integrated so fluidly into people's lives that they become invisible and accessible 24/7.
This is how the journey from the branch to invisibility has been
To understand the magnitude of this change, just look back and see how we got here:
- Banking 1.0 (until the 70s): The bank was a building. Everything required a physical visit.
- Banking 2.0 (70s - 2007): ATMs and basic online banking arrived. The service expanded, but was still tied to fixed points.
- Banking 3.0 (2007 - 2017): The smartphone era. Apps became the center of strategy and user experience (UX) a priority.
- Banking 4.0 (2017 - present): Driven by fintechs and accelerated by the pandemic, this stage breaks channels. Banking becomes invisible, integrated into daily life.
Today, there’s already talk of Banking 4X or Open X, a phase of total hyper-personalization where financial and non-financial services merge to create truly ubiquitous banking. The evolution, clearly, will not stop.
Principles of Banking 4.0 that are transforming everything
Operating in this new paradigm requires adopting a set of rules that are the pillars upon which relevance is built.
- Hyper-personalization: It’s no longer enough to segment. It's about designing real-time experiences based on the behavior and context of each individual. Artificial intelligence (AI) is the engine that makes it possible, anticipating needs to offer tailored solutions.
- Data-Driven Focus: The use of Big Data and predictive analytics is key to understanding the customer. However, more than 60% of AI projects fail due to poor quality or fragmented data. Therefore, adopting models like Data Mesh, which treats data as a product and decentralizes its ownership, is fundamental to building a solid foundation.
- Simplicity and invisible experience: The best interface is the one that doesn't exist. The goal is to eliminate friction until the service is naturally integrated into the customer's journey, as happens with embedded finance or Banking as a Service (BaaS).
- Agility and continuous innovation: The ability to respond to change must be trained. The next step is ceasing to be a "feature factory" to become a "value factory," where success is measured by customer impact, not by completed tasks.
What are the benefits of Banking 4.0?
Adopting this model is a business decision with a measurable and tangible impact for everyone.
- Efficiency and cost savings: AI and automation could generate savings of up to USD$1 billion by 2030.
- Superior customer experience: Hyper-personalization converts. Increases of up to 800% in onboarding conversions and 30% in cross-selling have been registered. Emotional connection becomes the new currency of loyalty.
- New business models: Banking 4.0 opens the door to concepts such as Embedded Finance, BaaS, and Fintail (the union between fintech and retail). This is where Open Finance ecosystems, enabled by secure APIs, become strategic to monetize capabilities in third-party environments.
Challenges of Banking 4.0 to consider
The path to Banking 4.0 is full of opportunities, but also challenges that cannot be underestimated.
- The productivity paradox: Despite a global investment of USD$600 billion, banking productivity has fallen by 4%. The reason is that spending has been "additive" (buying tools) instead of "transformative" (redesigning processes from the ground up).
- The talent and culture gap: 88% of executives consider the lack of technological talent as the main obstacle. Hybrid profiles and a culture that genuinely embraces change are needed.
- Data governance: AI is only as good as the data that feeds it. Without a single customer view and efficient data governance, personalization is an impossible dream.
- Enhanced security: As banking becomes more open, cybersecurity becomes the foundation of digital trust. Technologies like AI must be able to detect fraud with unprecedented precision, while standards like FAPI (Financial-grade API) ensure that connections are robust and secure.
Keep in mind that the compass is in value, not in spending
The transformation towards Banking 4.0 is inevitable. However, success will depend on the vision to use it as a catalyst for deeper change: improving people's lives.
It's about moving from a product-focused approach to a radically customer-centric one, from operating in silos to building open ecosystems, and from long-term planning to experimenting and learning in short cycles.
The opportunity is in our hands. The question is no longer whether Banking 4.0 will arrive, but are you prepared to build a bank that not only competes, but leads in this new ecosystem?
