In the digital era, many consumers complete nearly all of their financial administration via online means, and only set foot in a physical branch for a specific reason.
In 2020, as many as 1.9 billion individuals worldwide actively used online banking services, with this number set to reach 2.5 billion by 2024.
Traditional banks, which for decades relied on the in-person experience with customers, are now left fighting for relevance – writes Eric Megret-Dorne, Head of Card Issuance Services and Service Operations at Giesecke + Devrient.
The need to provide customer convenience online implies that it’s also a simple process to open a new account, meaning that face-to-face processes need to be sped up to remain competitive in comparison.
However, many FinTech customers also continue to use physical bank cards, with these providing the basis for digital payments and offerings.
With this in mind, how do banks now offer the right balance between digital and physical banking to meet the individuals needs of each customer? The answer is a blend of both: “phygital”.
The drivers behind a phygital future
Banks are accelerating their digital transformation strategies to keep up with FinTechs and new players like digital-only banks entering the market. As personalised experiences expand, the payment world has been forced to leverage new technologies and customise its products and services to both strengthen customer relationships and enable long-term growth.
The Covid-19 pandemic has only served to accelerate this trend, as branches typically had to operate at a reduced capacity due to social distancing requirements and consumers embraced online banking to avoid both the virus and potentially long queues.
While the global health emergency has made the digital shift more noticeable, consumers were already coming around to the benefits of digital experiences, including contactless payments. However, as restrictions ease, some consumers want to return to the physical touchpoints they missed out on, meaning a digital-only approach won’t suit everyone.
Personalised cards on the table
To strike a phygital balance, financial institutions deploy branded personalised bank cards with a bespoke design that can be activated digitally, allowing online tools to enhance the physical experience.
Many digitally-focused consumers may find the traditional card activation process, where the PIN number is sent via mail, a cumbersome one. Bringing the PIN into the digital age will enable a more seamless experience.
Greater automation in the card issuance and activation process can also be positioned right at the intersection of physical and digital. Self-service kiosks can allow customers to print their own cards, shortening the time between acquisition and card issuance, while still allowing for expertise in the branch should they need it.
It’s one of many ways to ensure a multi-channel approach that can win over different customers and keep them satisfied in the Payment 4.0 era.
Embracing big data and new technology
Phygital strategies also allow banks to exploit customer data, an invaluable resource. This provides the insight to understanding purchasing behaviours and habits, which banks can utilise to improve their offerings and provide a unified brand experience, both online and physically. Using all omnichannel data is then possible as part of a hyperpersonalisation strategy to provide real-time services.
Digital solutions can help banks maximise their user experience and lead to growth. Biometrics and computer vision (CV) technology can be used to identify customers as they enter a branch. At home, VR can facilitate a virtual bank branch, while AR can be utilised to provide customers with details regarding their card product or banking service.
AI can enable hyperpersonalisation via analysis of data and the subsequent offering of context-specific and relevant services. Additionally, the retail sector has successfully utilised loyalty programs to provide digital benefits to consumers, such as offers from partner companies, and this is also now making its way into the finance industry.
Strengthening payment security
Successful phygital strategies require strong levels of digital security to give consumers the same peace of mind as when they complete physical transactions. Consumers are now demanding more transparency and security when it comes to the way that information is stored and collected. Simultaneously, consumers want greater personalisation via digital methods and sustainable services.
To strike the right balance, tokenised infrastructure, where safe provisioning of payment credentials and securing of customer payments across all touchpoints can be utilised. This is particularly crucial as regulations such as PSD2 and SCA demand strong authentication requirements.
In terms of consumer benefits, the use of a token allows card details to be automatically updated for subscription services when an existing one expires for example, without comprising on security. Use of multi-factor authentication can also add another layer of security for consumers, which can be a mix of a password and verifiable human biometrics such as fingerprints or facial recognition.
Let’s get phygital
Every end user has unique preferences when it comes to banking, particularly as new channels have opened up as the industry moves towards digitalisation. It’s crucial therefore that banks utilise the right mix of phygital strategies to meet the requirements of both digitally-savvy consumers, those who prefer in-person touchpoints and anyone that prefers a mix of the two.
Doing so will power personalisation opportunities, help data to be utilised in new ways, facilitate the use of emerging technologies to further enhance the customer experience and ensure that the data of users is kept safe and secure from cyber threats.