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Phygital Banking: A New Experience?

Phygital banking

The banking sector is one sector that has witnessed a massive transformation in the last few years. Technology has played an effective role in this transformation. However, it hasn’t eliminated the need for a physical bank as we see consumers still willing to visit a physical branch.

Therefore considering the changing consumer behavior, neither only digital nor only physical banking would satisfy customers. Here in this article, we shall look at a term that may be new to you- “Phygital Banking.”

What is Phygital Banking?

The term Phygital banking is a combination of two words that is Physical and Digital. It is a form of banking that combines the advantages of digitalization with the comfort of a physical bank branch. It is a disruption model that combines convenience banking, mobile banking, internet banking, personalized banking, and so on. 

Phygital mode of banking employs both the human workforce as well as a disruptive technology to serve customers. It emphasizes on being inherently digital in both digital and physical channels backed by humans. 

What is the need for Phygital banking?

The banking sector has been progressing in terms of technology, and all, therefore, digital customers want real-time solutions for their problems. This expectation is driven by digital. However, it is fit to mention here that only the digital approach may not serve the customers entirely.

This is because you would be reluctant to put all your hard-earned money to a bank that is present only virtually and not physically. If a bank has many branches in operation, it boosts the confidence of customers on that bank. As per a survey report, 75% of customers still want a physical branch despite using mobile banking.

 So there is a need for this form of banking to run a successful banking business and to gain a more extensive market share. Phygital is making its inroads into banking operations because banks have realized that it is a lever that connects two essential aspects of banking that is customer confidence and experience. The success of this baking depends on consolidating the experiences of traditional banking and modern banking to make the journey of customers seamless and complete.

Impact of Covid-19 on Phygital experiences

Due to the Covid-19 and social distancing norms being followed across the country, people have shifted to the digital landscape. There has been a significant rise in the usage of digital banking during the lockdown. Many customers have started using digital banking, which they were reluctant to earlier.

User experience is helping in online banking transactions in a way that phygital has emerged as a reform to create an engaging customer journey. Therefore we expect Covid-19 to accelerate Phygital experiences.

Various banks and digital payments wallets have reported a jump in its usage during the lockdown. As per data, the payment mode of UPI is making the highest contribution of 43%, followed by cards, including debit and credit cards.

What are the advantages of Phygital banking?

The addition of human interaction to digital transformation has raised the expectation of taking banking to a new level.  Many banking businesses have either modernized their legacy systems or are building innovation-intensive technology platforms.

In this segment, we shall take a look at its advantages:

Phygital banking
  • Increases customer value and reduces costs

Banks continue to invest in raising new capabilities, and amidst that phygital mode of banking has reduced costs, and it delivers increased value to customers. It has automated repetitive backend and frontend tasks, and it has also helped in reducing the time to process documents or even in opening a bank account.

  • Improves customer experiences

Digital customers who are used to quick process want instant and easy access to all the options, whether digital or physical. Phygital banking provides them with a viable solution in which they can easily shift their choice of engagement with banks. They can use digital facilities or talk to bank staff to resolve their queries.

  • Provides customer satisfaction

Another advantage of Phygital is that it allows traditional visits to a bank branch for those customers who cannot keep up with digitization in banking, and in this way, banks ensure trust and comfort that ultimately leads to customer satisfaction.

  • Access to a wider market

Digital banking is not widely adopted by people in rural areas. This is due to a lack of knowledge and faith. Phygital can be the solution to it, especially at a time when the world is discussing open banking regulations so that banks can be more transparent and secure. Phygital banks build a connected ecosystem that helps them in finding prospective customers and gives access to a wider market.

  • Improves the Customer-Bank relationship

It provides facilities that strengthen the relationship with customers. It ensures the existence of branches and builds trust and facilitates the experience that makes the customers satisfied.

Phygital is the way forward

If we look at the prospect of banking, phygital could well be the most acceptable and safest mode of banking for many consumers as it provides comfort factor as well as efficient digital banking practices. Banks are expected to leverage the trust of a physical network and the power of digital to equip the customers to manage their money.

If banks can amalgamate the two well, this hand-holding will enable the customers to bank confidently without any apprehensions. The cost-efficient, scalability, and the fact that it removes the barriers in banking, thereby allowing more people to bank, will cause more adoption of this form of banking in the future.


Digital and physical are two aspects of banking where extremism of one is of no use, but as stated earlier, the amalgamation of the two will help us. The transformation of physical banks into phygital is essential as phygital banking will establish humanized digital experiences.

Read our article:Digital Payment System & UPI Payment Gateway

Ashish M. Shaji

Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.

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