Phygital banking – the key to the perfect customer experience

The way we bank has changed considerably, with people seeking the flexibility of digital, but with a human touch at key points of customer interaction. To solve this, Mehdi Heidari from G+D advocates for phygital banking, a concept that offers the best of both worlds.

As today’s bank customers increasingly want digital experiences, financial institutions should rethink how to adapt their customer journey. The future belongs to so-called phygital banking, where physical and digital services complement each other to create a whole new experience that adapts individually to every life situation and user behaviour.

The world of financial institutions is divided: on the one hand, there are branch banks, which are characterised by physical proximity and a strong relationship of trust with the customer. On the other hand, there are neo-banks, offering exclusively digital services, providing convenience and a great customer journey. Both have their advantages and disadvantages. Customers like to carry out transactions via an app but may feel they miss the in-person advice of the bank manager when it comes to major financial decisions. The task for the banking sector is therefore to balance physical touchpoints and digital services in a way that fulfils the wishes of individual customers.

Phygital banking overcomes these challenges. The term ‘phygital’ stands for the convergence of the physical and digital worlds in which banks combine analogue and virtual business activities into a new, customer-oriented mix. Through a cohesive, unified customer journey across physical and digital channels, banks remain relevant to their customers. However, it is not just about adding a mobile banking app to complement physical touchpoints, but a completely new way of thinking that provides a seamless digital experience. This fosters brand popularity and increased activity across all channels, bringing opportunities to increase revenue.

Customers today expect brands to always be available, to communicate in a personalised way, and at the same time to offer an immersive experience. It is precisely these desires that must form the basis of a phygital customer journey, where customers move freely between platforms, apps, websites, payment systems, third-party services, and new sensory experiences such as VR, AR, and the Metaverse that stimulate them emotionally. It makes no difference to users what the technology behind a service is – the main thing is that it all works in real-time and offers great value. Incidentally, banks can learn from retail here – for example from Amazon and its cashierless stores, which use technology to remove queueing at checkouts. The focus here is on the experience, not the payment process.

Banks are also aware that it is about more than money and payments. Phygital banking needs to create the optimal foundation for customers' financial lives. In this context, the payment card plays an important role in the customer experience, seamlessly merging the two worlds. With even digital players like PayPal, Apple, and most neo-banks issuing cards, we can see how traditional ways meet the new technologies. The payment card is a tangible symbol of the trusting connection between the bank and the customer. At the same time, it represents the entry ticket to the digital world. It gives consumers access to a vast network of services and applications. New personalised designs and functions that emphasise the user's lifestyle and values also ensure that the card does not go out of fashion. Chip and PIN offers security, and contactless enables a seamless customer experience.

Phygital banking creates a particularly smooth customer experience during the process of issuing a new card and waiting for it to arrive. Banks also need to take into account the growing importance of digital-first experiences when defining their customer journey.

The boundaries between real and virtual offerings need to be almost invisible, with a smooth transition between the physical and digital parts of the journey. After a payment card is approved, for example, it should immediately be useable from the digital wallet or mobile banking app of the customer. Even the delivery of the card to the cardholder can also become a surprisingly attractive experience. The card design could, for instance, serve as the key to an augmented reality experience or to personalised offers viewed from a mobile device that fulfil real customer needs or trigger new ones.

Banks go one step further when they offer instant issuance of new cards via a self-service terminal, which attracts customers to a branch and creates another point of interaction where brand values are built. Banks can get even closer to consumers with small mobile locations exactly where customers need them: at the airport, in shopping centres, or in hotels. At so-called bank kiosks, customers order, print and activate the new payment card on the spot – with, without or while creating a new account and the related onboarding.

Developing a captivating experience around the issuance of bank cards is just one example of how to implement the concept of phygital banking. It's about being open and creative, putting the customer at the centre of every activity and recognising their needs before they arise. The focus is not on blindly chasing every trend, but on keeping a finger on the pulse. It is an important step to make the boundaries between the real and the virtual truly invisible and thus create the conditions for the next evolution of digital services.

About Mehdi Heidari

Head of Product Management Digital Issuance at G+D

Mehdi Heidari, an experienced product marketing and sales professional has spent over 25 years creating innovative ideas in the tech industry. Since joining G+D in 2016 as Director of Business & Market Development & Product Management, he has focused on studying digital banking trends and consumer behaviour. He has introduced several globally recognised solution concepts using emerging technologies and has been granted a patent for his visionary AI banking idea.

About Giesecke+Devrient

Giesecke+Devrient (G+D) is a global security technology group headquartered in Munich, Germany. As a reliable partner for international customers with the highest standards, G+D's solutions safeguard the essential values of this world. The company develops customised technology with passion and precision in four core areas: Payment, Connectivity, Identities, and Digital Infrastructures. G+D was founded in 1852. Today, G+D is represented by 89 subsidiaries and joint ventures in 33 countries. Further information: http://www.gi-de.com