As the digital and physical worlds continue to intertwine, banks will need to find ways to seamlessly connect the two.

In 2015, Amazon did a very weird thing: it opened a physical bookstore in Seattle. The move signaled a new commitment to brick-and-mortar retail experiences from the online giant. After acquiring Whole Foods and opening more physical bookstores, Amazon now operates around 600 retail locations. Yet Amazon’s move into physical retail has not been entirely smooth. Media reports suggest that Amazon is not building some planned stores.

Amazon’s experience with physical retail is emblematic of the “phygital” experience for many retail organizations, including banks. After the euphoria of the rush to digital wore off, many banks reaffirmed the importance of physical branches to their business. Seamlessly integrating physical and digital remains a big challenge for banks.

Yet that is precisely what consumers are coming to expect. The 2019 Fjord Trends report highlights cutting-edge developments in “phygital” retail that are shaping the expectations of banking customers:

  • The Alibaba-owned Hema supermarket chain in China, where all transactions are app-based and powered by data. Payments are facilitated with facial recognition.
  • Nike’s flagship New York City store, which aims to make physical shopping as convenient as shopping online with two different offers. One focuses on customization, with one-on-one consultation and customization studios. The other, a “Speed Shop” within the shop, targets those who prize convenience above all else.
  • The American retail chain Kohl’s is now using insights from online sales to meet demand for localization. Kohl’s uses its physical stores to fulfill online orders, and partitions online orders geographically to inform in-store product choice. Over 95 percent of its store assortment is now localized.

These examples point to a future of retail that is diverse, imaginative, and experience-led. Banks need to be thinking about marrying their digital and physical retail efforts to offer an experience that is at least on par with what consumers can find elsewhere.

These examples point to a future of retail that is diverse, imaginative, and experience-led.

Of course, banks and other financial services organizations have not been letting the grass grow under their feet on “phygital” innovation. Some notable examples from the last year include:

  • Iyo Bank’s chatbot, which completely automates some common customer service calls. The bot, which Accenture helped develop and was launched late last year, lowers the time to open a savings account from 45 minutes to six.
  • HSBC unveiled facial recognition for corporate customers in May of last year
  • Peopay, the mobile banking app from Bank Pekao that uses customer biometrics for logging in and confirming transactions.
  • Google and Mastercard partnering to develop two-way tracking conversion that connects offline behaviour with online marketing.

Developments like these are just the tip of the iceberg. To truly take advantage of the opportunity of digital-physical retail interactions, banks will need to fundamentally rethink the approaches and tools they use to design spaces along the following lines:

  • Let online behaviors inform offline experiences—not the other way around. Behavior data gathered online has a richness and accuracy that offline data often struggles to match. Start your retail thinking in the digital space and then transition to physical.
  • Mind the gaps. The goal is seamless integration between online and offline experiences. Partnering with organizations that can help you tap into your target market is an important step here.
  • Create a connected ecosystem. Analyze all the services and experiences offered in your space, and connect those to your customers’ mindsets. This is what should drive your decisions when creating retail space whether online or off.

This is an exciting time for retail in banking, as digital innovations mix with physical retail in a way that could define the next generation of sales in the space. I’d love to hear how your organization’s journey is going. My contact information can be found at the top of this page.

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