A young couple having a mobile phone and a credit card in their hands
#Payment Technology

The future of banking: phygital use cases

7 Mins.

The way we bank has changed considerably, with people seeking the flexibility and the agility of digital, but with a human touch at key points of customer interaction. By going phygital, banks can offer the best of both worlds.

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.

Card issuance and activation on the go

A woman pays with her smartphone in a shop

The end of many pandemic-enforced border controls has meant that millennials and Gen Z have been getting back to doing something that they love: traveling.3 Generally speaking, people are more mobile than ever before, whether it’s for work, migration, tourism, or educational reasons.4

For example, let’s look at an example persona: Matthew, a consultant who is regularly required to travel nationally and internationally for both work and leisure. When someone like Matthew is constantly on the go, obtaining and activating a new bank card can be a less-than-streamlined experience. Waiting for a card to be delivered can be annoying at the best of times, but it’s even more complicated when you’re in a hotel or a coworking office space on the other side of the country or world. And cards are here to stay: 92% of traditional banks and 80% of neobanks believe that physical payment cards will remain as relevant as ever in the years to come.

Self-service kiosks are nothing new in banking, and have been used for years to allow people to make deposits or service their accounts. Card-issuing kiosks enable people to take things a step further by printing personalized cards instantaneously, enabling customers like Matthew to be served from an airport, a shopping mall, or a supermarket, without having to wait for a delivery or look for a local bank branch. 

But what about card activation? Legacy activation processes such as interactive voice response (IVR), phone, or mail-based services pose security risks and are no longer adapted to increasingly mobile lifestyles. By combining digital, app-based PIN delivery or renewal processes with innovative card issuance solutions, banks can provide customers with a convenient, safe, and streamlined way to access banking services, even from the most far-flung locations, while helping improve the bank’s bottom line.

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.

  1. COVID-19 boosts digitalisation of retail banking, Deloitte, 2020

  2. Banking on empathy, Accenture, 2021

  3. Millennials are making travel a priority more than previous generations – that’s not a bad thing, cnbc.com, 2019

  4. People on the move, Eurostat, 2020

  5. Best of both worlds: Balancing digital and physical channels in retail banking, McKinsey, 2022 banking

  6. How consumers are embracing sustainability, Deloitte, 2021

Published: 02/02/2023

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