Consumers Expect a Phygital Customer Experience: How Banks Are Meeting the Challenge

Consumers Expect a Phygital Customer Experience: How Banks Are Meeting the Challenge

Is there a single industry that hasn’t been impacted by digital disruption? Brick and mortar retailers are fighting for survival. Healthcare providers are offering telehealth services to meet consumer expectations for on-demand medical attention. Online courses have become commonplace within the education sector. The fact is, we now expect a ‘phygital’ customer experience at every turn, where physical and digital experiences are interchangeable. Banking is an industry that touches the vast majority of consumers, in one way or another, and the impact of digital disruption on how financial services are delivered is monumental. Here’s a look at how banking is evolving to meet the ever-increasing expectations of the phygital customer experience. Lessons learned from transformations in the financial services field offer valuable takeaways for marketers in any discipline.

Optimizing Omnichannel Experiences

For traditional banks, the volume of digital transactions is growing year over year. To keep pace, industry leaders are rapidly expanding their technological capabilities. At the same time, they’re streamlining the number of branch locations to strike the right balance between physical and digital interactions.

Some, like PNC, have launched nationwide digital services as a way to expand their reach beyond their existing regional markets without needing to first invest in physical branch locations. Meanwhile, the role of the traditional in-branch bank teller is also evolving. At Regions, teller positions are redefined as universal bankers, offering customers knowledgeable financial advice ranging from everyday banking needs to lending and retirement planning consultation.

All customers are not alike. One key to designing the right mix of physical and digital offerings in any category is to develop a deep understanding of the differing needs of your customer base. Marketers often rely on customer segmentation research and market analysis to guide them when creating new phygital experiences to meet their customers’ needs and expectations.

Enhancing CX Through Digital Services

As if creating an effortless phygital customer experience isn’t enough, digital disruption also brings competitive threats from new players entering the market. The growing crop of fintech companies with CX-enhancing digital services is putting significant pressure on traditional banks to quickly adapt.

Take for example peer-to-peer (P2P) payment providers like PayPal and Venmo who’ve been encroaching on traditional banks’ domain by stealing potential revenue in the form of reduced interchange fees and displacement of deposits. Even major retailers are slicing themselves a piece of the financial services pie. Starbucks, whose proprietary payment app was used by over 23 million consumers in 2018, is reaping the benefits by gaining valuable insight into their customers’ purchasing behaviors. That data is being used to create personalized offers based on purchase history and product preferences. Plus, by simplifying the purchase process, the company generates greater brand affinity.

Instead of trying to beat them at their own game, many banks are choosing to form strategic partnerships with new competitors. For instance, check to see if your bank’s mobile app is already integrated with Zelle, a popular P2P payment platform currently partnering with over 200 financial institutions. By offering Zelle’s service as a standard mobile app feature, banks are able to deliver an enhanced customer experience without the need to develop proprietary software in house.

No discussion about the effects of digital disruption in the marketplace would be complete without mentioning the US’ largest retailer. Amazon first began offering financial services as early as 2006 with its acquisition of a P2P mobile service. Since then, the retailer has developed a wide array of financial services for its customers, from small business loans, to cash deposit services, and credit cards offering substantial cash back on Amazon purchases. Future ventures include the potential to offer checking account services in partnership with select banks as well as insurance products covering consumer goods purchased through Amazon – also in partnership with existing insurers.

Step Up Your Phygital CX Game

As new competitors continue to enter the financial services industry, traditional banks will be pressured to offer a simplified phygital customer experience and create new ways to meet customers’ financial needs. That said, banks have a competitive advantage over fintech and retail competitors by virtue of the wealth of customer data potentially available. The banking industry is well positioned to develop new services by analyzing their customers’ banking behaviors and offering personalized consultation to those interested in improving their financial health. Consumers are already showing interest in receiving automated recommendations on account options, retirement planning, and asset allocation for wealth management.

As the banking industry adapts to the realities of the phygital world, they are redefining how customers interact with their brands and how to meet their expectations in both a physical and digital way. With customers’ permission, the resulting explosion of data from digital interactions can enable banks to reinvent the physical CX and delight customers in new and innovative ways. Marketers across the board can learn from the banking industry and be inspired to meet their customers’ expectations for seamless, phygital customer experiences. Marketers need to be watchful of technology developments, not only in their own field, but across industries to anticipate change and learn from both missteps and successes in other categories.