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#Digital

Transforming customer experience with phygital

Global Trends
6 Mins.

Digital banking services have been adopted en masse since the start of the pandemic – but this doesn’t mean the end for physical customer touchpoints like bank branches, for example. With a phygital approach, banks can unite digital transformation with in-person operations to create a multichannel, customer-centric approach that allows customers and banks to communicate using any preferred channel

As the second half of 2021 brings increased vaccination rates, life may soon return to a level of normalcy. Nonetheless, neither consumers nor corporations will be quick to abandon the changes they made during 2020. So while social lives may pick up, many of the digital habits formed over the past 18 months will remain. And it will be up to every industry to integrate digital and physical touchpoints and converge the new phygital reality in the name of customer-centricity.

This is particularly true for the banking sector, for which undergoing a phygital revolution is tricky. It poses many challenges that need to be addressed – and the right strategy to address them. For example, many banks are grappling with the future of their branch network, at a time when the need to cut costs is coinciding with an increase in the number of customers who chose digital banking services.

Creating a customer-centric culture

“Banks today typically do not know their customer very well.” So said PwC in its 2021 Financial Services Survey. Now, more than one year and a global pandemic later, are they performing any better? Not in the UK, according to the country’s Institute of Customer Service (ICS), which recorded a decrease of 1.5 percentage points in customer satisfaction at banks during 2020.1 Of course, COVID-19 provided unprecedented challenges to all businesses.

“Organizations that fail to deliver an excellent customer experience risk losing customers for the long term – and those that continue to blame poor service experience on the pandemic will lose trust and goodwill“
Jo Causon
CEO of The Institute of Customer Service

Jo Causon, chief executive officer of the ICS, warns against using the past 18 months as cover for poor performance. “Some of those struggling to adapt to the new environment have used the pandemic as an excuse for basic service failures. For a time, this was understandable and justifiable,” she says. “However, customer patience has worn thin, and as we move out of lockdown, discerning customers will become increasingly less lenient. Organizations that fail to deliver an excellent customer experience risk losing customers for the long term – and those that continue to blame poor service experience on the pandemic will lose trust and goodwill.”2

Unsurprisingly, COVID-19 saw a surge in the global digitalization of banking, although as Deloitte discovered, not everyone wants day-to-day financial communications to stay exclusively online in a post-pandemic world. In Switzerland, findings show that customers want online banking to form part of a range of services. This research highlights the need for an integrated, multichannel approach to banking – and underlines the importance of both online and in-person transactions going forward.3

Euromonitor International’s recent research agrees: customers crave the convenience of the pre-pandemic world, with older consumers in particular preferring to speak to human representatives. At the same time, 87% of consumers own a smartphone, and 46% value online experiences.4 It’s all about finding the right balance to meet customer service expectations.

As the world slowly returns to normal, banks have to move quickly, offering ever-greater availability, empathy, personalization, and speed across a range of platforms that are expected by an increasingly demanding and diverse customer base.

Embracing big data

From AR to VR, a range of digital solutions can help banks to maximize growth over the coming years, and it’s not just a case of improving things online. In brick-and-mortar banks, technologies such as biometrics and computer vision (CV) can be employed to recognize customers visiting a branch. At home, virtual reality (VR) interfaces can create a virtual bank branch, providing customers with personalized and instantaneous information via virtual assistance on their mobile devices. Furthermore, with the help of a mobile app, augmented reality (AR) can provide customers with information regarding their card product or banking service – or simply about nearby ATMs and branches, further improving their experience and satisfaction.

Benefits of phygital solutions

A woman is sitting at a dining table with a laptop and financial statements. Calculates and pays taxes and bills online.

Uniting physical and digital experiences can have myriad benefits for banks and financial institutions. For example, as customers increase their use of online banking for simple transactions, overhead costs decrease and employees can be trained to manage specific customer requests in person. Moreover, the time it takes to process requests – from opening a bank account to handling documents – is drastically reduced thanks to enhanced digitalization and automation. By adding physical interaction to digital solutions, banks gain access to a wider market. Managing customer relations across all touchpoints means that communication – and thus customer relations – improves.  And, with improved availability and unified messaging, trust levels increase, strengthening the relationship for both the brand and the customer. In addition to that, banks will obtain further insights into their customer groups.

From a user perspective, customer experience is maximized with seamlessly integrated multichannel banking. Personalization adds to customer satisfaction, while high levels of availability – such as access to banking services via smartphone, a PC, in person, and so on – ensure that communication is transparent, information is available in real time, and overall enjoyment is maximized.

While the benefits of a phygital banking approach are evident, how does the financial industry make headway in realizing its potential?

Convego® Relate: improving customer relationships

Often, the first formal communication a customer receives from a bank is card issuance. And first impressions count. Convego® Relate is one way issuers can provide an integrated experience. As a fully customizable solution, it keeps customers in the loop at all stages of card issuance – a critical touchpoint – and provides personalization experiences that enable banks to leverage customer relationship management all along the issuance journey.

Research has found that customers are 80% more likely to buy when a brand offers a personalized experience. By providing targeted, tailored communications, brand value increases and customer relations improve – as do revenues.5

The future is phygital

The phygital banking revolution is transforming finance as we know it. Banks that embrace and enable it will increase competitive advantage, leveraging digital solutions to provide an integrated, immersive, customer-centric banking experience. By communicating with customers more easily and quickly across multiple channels, banks have an opportunity to improve customer trust, while also increasing profit and growth, and setting themselves up for the future.

The global pandemic has accelerated the phygital revolution, but the approach has been long awaited. At a time of constant change, this new style of bank and customer interaction is as close to a constant as the industry can expect.

  1. CBI/PwC Financial Services Survey, Q1 2021 Results

  2. Institute of Customer Service, The pandemic is no longer an excuse for poor customer service, 2021

  3. Deloitte, Digitalisation of banking: Will the move to online banking continue after the COVID-19 pandemic?, 2021

  4. Euromonitor International, Top 10 Global Consumer Trends 2021

  5. Epsilon, New Epsilon research indicates 80% of consumers are more likely to make a purchase when brands offer personalized experiences, 2018

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