The concept of ‘phygital’ has emerged as a transformative force within the business landscape. It revolves around seamlessly integrating physical and digital experiences for merchants and consumers alike. These interactions hold the potential to add value by enhancing digital interactions through personal engagement and tangible enhancements.
Following the completion of the online journey, customers smoothly transition to offline experiences, for example receiving an issued physical bank card.
Amidst the disruptions caused by the Covid-19 pandemic, which limited physical interactions and disrupted supply chains, phygital emerged as a natural response. The adaptation is already underway. According to GlobalData research, in the years 2022-2023, over 43% of consumers seek user-friendly digital banking platforms, while 24% still prioritise convenient access to physical banking branches.
Despite the march towards digitalisation, physical interaction remains pivotal in consumer life, especially for SMEs and the retail sector. Projections indicate that by 2026, 24% of global retail sales will occur exclusively online, while the remaining 76% will still seek in-store experiences. Global Data's surveys affirm this trend, revealing that more than 30% of consumers prefer inspecting products in-store before making a purchase.
The phygital market is poised to exceed USD 200 trillion within the next five years. Crafting an effective phygital strategy is crucial for neobanks, traditional banks, retailers, and SMEs to capture and retain customers and talent in this evolving retail landscape.
The implementation of mobile apps empowers customers to place orders irrespective of their location or time constraints, eliminating the need for queuing. This expedites order fulfilment and offers digital management for SMEs, reducing idle waiting times. Banks and fintechs can capitalise on loyalty programs, enabling customers to accumulate rewards through digital transactions. The benefits and applications of phygital are many, including:
By seamlessly merging the strengths of physical and digital realms, companies are not only meeting customer expectations but also staying ahead in an ever-evolving marketplace. Let's explore how businesses are hopping on the phygital hype train to redefine customer experiences and drive growth.
Providing a seamless personalised digital payment process and centralising orders and payment options on a single platform is essential. Selecting the right technological platform empowers customers to choose their purchasing channels and preferred payment methods. McKinsey reports that 71% of consumers expect personalised services, with over 75% becoming frustrated when unmet.
Phygital developments bridge the gap between digital and physical realms, enabling proactive customer engagement and creative service offerings. Targeted interactions predictively engage customers, addressing needs and presenting upselling opportunities.
This approach is particularly advantageous in countering shipping delays resulting from supply chain issues. For instance, Walmart's Scan & Go system empowers consumers to scan items and pay using their phones while shopping, or the Starbucks app that enables customers to order and pay through their phones, reducing waiting times.
Digitising transaction recording and supply chain data enhances transparency, security, and speed. It facilitates error-free goods tracking, reducing fraud risks. Suppliers gain the ability to trace product origins and monitor the journey to the consumer.
While scanning QR codes via mobile phones is convenient, filling out online forms for account sign-ups or purchases remains a pain point. Over 37% of users abandon forms requiring additional data like mobile numbers. Enhancing onboarding experiences is crucial, achievable through strategic partnerships and integrations.
Extension of services to physical locations through kiosks. These kiosks rapidly issue cards and offer diverse functionalities such as utility payments, consultations, and loans. For banks, this attracts tech-savvy consumers, broadens networks, and reduces operational costs.
Deploying chatbots or IVR systems for common queries frees physical resources for complex issues, enhancing efficiency and customer satisfaction.
Phygital harmonises digital and physical realms, forging a novel consumer experience. Virtual experiences hold potential, but they must seamlessly integrate with the physical —whether in banking, retail, transportation, or other sectors. The essence lies in providing personalised experiences that cater to individual needs.
Drawing on vast market knowledge, BPC embodies the principle of bridging real life with digital which perfectly reflects the phygital concept. Within the BPC SmartVista Marketplace ecosystem, you'll find a wide array of examples illustrating the digitisation of processes, transactions, and tasks. These instances work together to elevate different aspects of businesses, creating a more enriched experience for your customers.
Imran Vilcassim, a seasoned expert, presently holds the position of Global Solutions Consultant for Digital Platforms. His extensive background in both technology and business has played a pivotal role in advancing BPC's initiatives in Digital Banking, Marketplaces, and E-government concepts within the digital domain and customers minds. Imran adeptly applies his expertise to navigate the ever-evolving convergence of technology and business dynamics.
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