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#Payment Technology

Finding a balance between digital and in-person banking

Global Trends
6 Mins.

As banks’ digital transformation strategies speed up, it is important that their branch networks and business processes evolve, too.

When Amazon ushered in the e-commerce revolution by disrupting bricks-and-mortar booksellers in the 1990s, it would have taken a brave person to bet that Jeff Bezos would open a physical retail store. But fast forward to today and the company has opened nearly 100 bookshops, grocery stores, and pop-ups at retail locations around the world.

Woman is ordering food from her mobile

The most recent openings are two Amazon Fresh stores in London, which sell a range of food and drink items. What sets them apart from your average supermarket is what the Seattle-based company calls Just Walk Out Technology.1 Once a basket has been scanned in the Amazon app, computer vision, sensor fusion, and deep learning technology enable customers to pick up what they want to buy and leave the store without having to visit a checkout. “No queues, no checkout. (No, seriously.),” the company says.

Amazon Fresh’s mixture of physical space and digital technology is the archetypal example of what is termed “phygital.” It is a trend that is gaining traction across different sectors. Mercedes-Benz, for example, offers virtual reality test drives in some of its showrooms, allowing customers to try out a range of different cars in a variety of settings.2 

Online banking meets in-person transactions

How will the phygital revolution affect the banking and finance sector? Similar to 20th-century booksellers, traditional banks are being disrupted by digital-native challenger banks. N26 in Germany and Starling in the UK are just two companies following a path similar to Amazon’s. The difference this time is that incumbents have acted more decisively to acquire digital banks or launch their own versions. Technology has even tempted venerable investment banks such as Goldman Sachs to launch online savings accounts for consumers.3

COVID-19 has turbocharged banks’ digital transformation strategies, leading to a number of different digital services being introduced to complement existing physical infrastructure. Self-service digital kiosks, for example, have been installed inside bank branches to enable customers to carry out transactions at a time that suits them. Digital versions of collateral, payment cards, and PINs that were traditionally only available in physical form have also been rolled out. At the same time, banks’ internal processes have evolved to incorporate digital technologies. Indeed, it is now possible to make the entire customer journey in banking a phygital experience thanks to adaptive and frictionless services, such as updating a customer about the status of a new or replacement debit card via their mobile phone before the card arrives in the post. 

“Banks must break out of the traditional branch model and focus on how to deliver specific, high-value, physical interactions and experiences that can complement a digital banking core.“
Mohit Joshi, Infosys President, and Markos Zachariadis, University of Manchester’s Chair of Financial Technology and Information Systems

Bank branches must evolve

A post-pandemic world entails fundamental changes to the physical part of banks’ business – the branch network. In an article for the World Economic Forum, Mohit Joshi, President of Infosys, and Markos Zachariadis, University of Manchester’s Chair of Financial Technology and Information Systems, wrote, “We believe that banks must break out of the traditional branch model and focus on how to deliver specific, high-value, physical interactions and experiences that can complement a digital banking core. In true complementary fashion, digital technologies should also be used to augment physical experiences and make services faster, more secure, and more convenient.”4

They suggest a range of options, from making branches more like coffee shops or co-working spaces, to creating branded booths that are co-located in other businesses. The most appropriate option will depend on whom banks need to serve, where these people reside, and the services they require. Elderly customers in rural locations with limited connectivity will require more physical space than city-based Gen Zs and millennials who want to manage their bank accounts on mobile devices, for example. 

“In the future, the bank branch will be a lot like going to the dentist or seeing a doctor — you’ll make an appointment to go in and discuss something,” says Mike Carter, Executive Vice President of advisory firm Strategic Resource Management.5

Proof point: the smart way of card issuance

Banks have a plethora of options when it comes to digital technology that also contributes to an improved personalization in banking. Physical processes, products, and services can be complemented or replaced to create a phygital experience. Branches can offer self-service solutions that enable customers to pick up new or replacement cards at a time of their choosing. The card issuance process can be taken a step further with digital native solutions. Platforms, such as G+D Convego Connect APIs, enable cards to be requested, issued, and used entirely digitally.

Application programming interfaces, commonly known as APIs, are the technology behind the digital revolution. They are a set of software functions and protocols that enable new processes and use cases to be created, and different apps to interact with each other. In the card issuance example, banks can use dedicated APIs to engage with customers by providing real-time updates about the status of their card, or by sending personalized notifications concerning PINs.

Like Amazon, banks will have to find the balance between physical experiences and digital technology that suits the demographics and behavioral characteristics of their customers. Enhancing the customer experience by making it more digital with smart issuance technology is one way to get this balance right. As the majority of banks are not digitally native, transforming internal processes – such as automating card stock control – will be a necessary part of this journey. Working with an issuance partner that is able to provide the appropriate level of flexibility is key to a successful outcome.

  1. Your new London Amazon Fresh stores. Now open. Amazon, 2021

  2. VR eMotion Seat System,, 2020

  3. Online Savings Account,, 2021

  4. “Phygital”: a banking strategy for the new isolation economy, World Economic Forum, 2020

  5. Banks accelerate new branch strategies in increasingly digital post-COVID world, S&P Global, 2020

Published: 22/04/2021

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