The evolution of customer expectations has redefined engagement across industries, including banking. McKinsey reveals that more and more customers expect the levels of satisfaction they receive from leaders such as Amazon, Apple, and Google—and they expect this from even the sleepiest corners of markets across all industries. This is not just a call for banks to improve; it’s an urgent imperative to evolve from transactional service providers to trusted partners, delivering value at every touchpoint and anticipating customer needs in new, innovative ways.
Complicating this landscape is the rise of fintechs, neobanks, and big tech firms that leverage technology to deliver hyper-personalized services at scale. Additionally, modern customers demand integrated experiences that blend financial, lifestyle, and advisory services tailored to their unique context, segment, and life stage. Banks that successfully innovate will unlock significant benefits: customer loyalty, accelerated growth, and stronger shareholder returns.
To remain relevant in 2025 and beyond, banks must focus on nuanced customer segments, tap new engagement channels, and build hyper-connections. For banking leaders, the road ahead demands bold innovation and a relentless commitment to exceeding expectations.
Nuanced customer segments: Redefining value
Nuanced customer segments have always existed in banking, but their importance is rapidly increasing. Traditionally, banks have categorized customers broadly—retail, corporate, and high-net-worth individuals. However, within these groups lie sub-segments with distinctive needs: gig workers, global immigrants, tech-savvy seniors, and Generation Alpha.
In corporate banking, sustainability-focused enterprises and digital-first startups are reshaping the demand for tailored solutions. Similarly, wealth management is witnessing the rise of next-gen wealth inheritors and impact investors, pushing banks to develop bespoke advisory services.
Consider the gig economy, which now represents 12% of the global workforce and is expected to have a market size of $1,847 billion by 2032. Generation Alpha, expected to exceed 2 billion by 2025, is growing up as digital natives with distinct engagement expectations. Meeting these demands requires banks to move beyond one-size-fits-all strategies, creating highly contextualized and personalized experiences.
However, personalization at scale remains a critical challenge. Legacy infrastructure, complex regulatory environments, and high innovation costs hinder banks' ability to meet niche needs effectively. Fintechs, with their agility, continue to outpace incumbents in delivering solutions tailored to specific segments.
Technology, however, offers a pathway forward. AI, real-time analytics, and cloud-native platforms are enabling banks to craft hyper-personalized offerings efficiently. For example, J.P. Morgan introduced a new service tier—J.P. Morgan Private Client—designed for customers with $750,000 or more in deposit and investment balances, filling a gap between Chase Private Client and J.P. Morgan Private Bank. This tier provides tailored wealth management services while addressing a previously underserved segment.
To sustain success with these nuanced customer segments, banks must prioritize new avenues of value creation and delivery. Internally, banks must empower employees with tools to rapidly configure tailored products. Externally, they must also collaborate with fintechs and ecosystems to co-develop unique offerings. On the delivery channels end, banks need to continue embracing emerging channels to deepen engagement. Strategic collaboration with established ecosystems that already command strong reach in these segments on an ongoing basis will also be critical. These partnerships can help banks achieve the scale and depth needed to foster meaningful relationships with these segments.
Emerging channels: Where banking meets daily life
Emerging engagement channels are not entirely new, but their mainstream adoption is transforming how banks interact with customers. Voice assistants, social messaging apps, and IoT-enabled devices are opening new opportunities for onboarding, servicing, and delivering products.
Voice banking, for instance, is on a growth trajectory, with transaction values projected to reach $2.99 billion by 2028. Similarly, social commerce is expanding at a CAGR of 31.6% from 2022 to 2030, creating dynamic platforms where banks can engage customers, market products, and embed financial services.
Wearables and IoT devices are also reshaping transactional banking. ING’s FINN-Banking of Things and BMW’s in-car payment pilot showcase how banks can create frictionless, context-aware experiences. These advancements allow customers to manage their finances on the go, seamlessly integrating banking into their daily lives.
The growing importance of these channels demands a robust omnichannel strategy. Banks must align their offerings with customer behaviors and expectations, leveraging real-time analytics to craft personalized, consistent experiences across touchpoints. For instance, Union Bank of India’s WhatsApp banking platform offers over 65 services in seven languages, reaching millions of users with tailored interactions.
Emerging channels are not isolated touchpoints but integral components of a broader engagement strategy. Banks must embed financial services into customers' everyday lives while maintaining robust data privacy frameworks.
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Hyper-connection: Building seamless customer journeys with AI
The McKinsey Global Institute estimates that generative AI could add between $200 billion and $340 billion in annual value to the global banking sector. This underscores the transformative potential of AI and data platforms in creating hyper-connected customer journeys.
Hyper-connection is about building seamless, personalized, and omnichannel experiences. Next-best-action models powered by behavioral analytics allow banks to anticipate customer needs—whether suggesting investment opportunities, offering tailored loans, or creating bespoke savings plans. AI-driven dynamic pricing strategies adapt fees and rates based on individual profiles, ensuring competitive and relevant offerings.
Omnichannel engagement is critical to creating connected customer journeys. By integrating data from multiple touchpoints, banks can deliver real-time, context-aware interactions. For example, RBC’s NOMI Budgets leverages AI to analyze individual spending patterns, recommending personalized budgets that make financial management intuitive and effective.
While the promise of AI is vast, scaling these initiatives presents challenges. Robust data infrastructure, governance frameworks, and compliance with evolving regulations like the EU’s AI Act are critical to success. Transparent and ethical data practices will be key to maintaining customer trust while balancing innovation with responsibility.
For banking CXOs, investing in advanced AI and data platforms is no longer optional—it is foundational. These technologies redefine customer engagement, set new standards in hyper-personalization, and meet rising expectations in an increasingly digital world.
The road ahead: Redefining customer engagement
As we move into 2025 and beyond, customer engagement will be defined by banks' ability to innovate, adapt, and deliver value in increasingly personalized ways. Success will hinge on understanding nuanced customer segments, leveraging emerging channels, and building hyper-connections with customers.
For banking CXOs, the mandate is clear: embrace bold strategies, invest in scalable technologies, and foster collaborative ecosystems. By doing so, banks can transform customer engagement into a competitive advantage, ensuring long-term relevance in a dynamic financial landscape.
