The future of banking: phygital use cases

The pandemic has had a considerable impact on the way people relate to banking services. While digitalization of the banking sector has been on the increase for several years, stay-at-home mandates and restrictions encouraged people to turn to online and mobile banking en masse.¹

However, the increasing popularity of online banking should not lure financial service institutions into the trap of providing only a digital presence at the expense of in-person touchpoints. While digital offers speed and convenience, and facilitates ubiquitous access, people still value a certain degree of in-person contact, e.g. the ability to reach out to local branches and experience the kind of human touch that provides a feeling of safety/trust and the sense that their personal needs are being taken into account. According to recent research, banks with the ability to understand and respond appropriately to a customer’s emotional state financially outperform those that don’t.²

Both traditional banks and neobanks can respond to their customers’ requirements by creating customer-centric journeys that astutely combine physical and digital experiences, depending on customers’ needs and the ability to modulate the level of phygitality they desire. Here, we take a look at how that can work for three different types of banking client.

Premium services and a unified brand experience

Phygital solutions, such as remote issuance and activation of cards, streamline the onboarding process and enable banks to serve customers wherever customers are. But what about customers who want to explore different financial services products, or those who need a helping hand? While digital solutions provide much in terms of convenience, it’s important for banks not to forget the importance of the human touch.

The brick-and-mortar bank branches that used to be found on every town’s main street promoted brand recognition and provided customers with a feeling of trust and familiarity. However, physical locations are expensive to run and often restricted in terms of the services they can offer. What’s more, the number of physical bank branches has decreased significantly in recent years – down by 20% since 2017.⁵

Let’s say Laura, 35, has just opened a premium bank account and is interested in finding out about what kind of investment products her new bank has to offer. Scanning a QR code printed on a mailed piece of collateral can bring up a phygital augmented reality experience that leads her though the various offers, complemented by a chatbot that provides more detailed information about the options she’s interested in. A human representative can then work with her to help her make an insight-driven choice about exactly which products are right for her.

Nowadays, the focus should be on providing banking customers with expertise that fits their specific needs, wherever they are, while maintaining a coherent brand experience through a well-thought-out multichannel approach and well-designed customer experience .

Offsetting CO₂ emissions with phygital eco-innovation

Seamlessly integrated phygital services enable banks to offer a wider range of service options in a diverse range of locations, whether it’s in a shopping mall, at home, or in a bank branch, all while maintaining a unified brand experience across different touchpoints. But the advantages of the phygital approach don’t stop there. Nowadays, brand values are a major differentiator for consumers, who are paying an increasing amount of attention to businesses’ commitments to ethical practices.⁶

By empowering consumers to track and offset their carbon footprint through in-app monitoring of physical-world purchases such as clothing or groceries, banks can provide actionable insights that will enable a greener lifestyle. In turn, this allows financial institutions to uphold their sustainability goals and commitments to environmental protection.

As those examples highlight, an effective phygital strategy involves much more than combining brick-and-mortar locations with an online presence. Greater customer understanding, a well-thought-out omnichannel customer experience that strategically integrates different customer touchpoints, a coherent brand voice, and strong brand values are its essential ingredients.

Published: 02/02/2023