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PHYGITAL IN BUSINESS
The truth is that both the digital and the physical world are indispensable parts of life and business.
The real transformation taking place today isnt the replacement of the one by the other, its the
marriage of the two into combinations that create wholly new sources of value. There is a great
reversal of roles that seems to have taken place: instead of the former digital adaptation and
appropriation of material things (think of the folders and the trash can on your laptop screen as a very
basic example), we see a new, physical manifestation of digital concepts and functions has
beginning to emerge. Cross your middle and index fingers on both hands for instance, and you have
just signaled a Twitter hashtag, specifying the general topic you speak about. What is that, if not a
human gesture generated by lines of computer code? This is what Phygital is, and it is likely to
reshape not only the way people live, but the way companies operate.
Customer expectations have placed tremendous pressure on business leaders to change the way
they set their strategies and run their organizations. New requirements to incorporate information and
interactivity quickly drive up costs and complexity. Business leaders have long used information
technology to improve productivity and efficiency, reach new markets and optimize supply chains.
Whats new is that customer expectations have also changed. People everywhere are using social
networks to find jobs and restaurants, lost friends and new partners and, as citizens, to achieve
common political goals. How can businesses best respond to this shift? How can they take
advantage of the opportunity to innovate and grow? And how can they do all this cost efficiently?
Companies with a cohesive strategy for integrating digital and physical elements can successfully
transform their business models and set new directions for entire industries. They do this by
focusing on two areas.
BANKS NEED TO BE
Intuitive: 54% of consumers are interested
in banks locating discounts
These 2 visual guides put the phygital consumer on the epicenter of the phygital transformation
strategies and they apply to all organisations no matter the industry they belong. Customer
expectations have changed because customers have changed themselves. For the last decade,
marketers were trying to decode and behaviorally analyse the digital consumer but right now we
should talk about phygital consumers. Consumers who expect services that not only cover both their
online and offline needs but also combine them in a way that the consumer experience improves in
each interaction and touchpoint.
You look out for me and recognize me as a valued customer both online and offline.
I can easily find simple, clear product and service information both online and offline.
I can apply for a product or service through one channel and seamlessly finish the transaction on
another.
I can buy the same products at the same price, regardless of how or where I go.
I can access all my accounts on any device.
I can do most of my day-to-day banking through digital channels.
I can make purchases, payments and transfers quickly through my smartphone.
My interactions are efficient, secure and fastone and done with minimal paper.
I can easily share feedback, including on social media platforms, and my bank will resolve the
issue quickly.
Take a step back. Think for a while what kind of needs banks served up until now, how these needs
have evolved during the years and whether these needs are being served not by traditional banking
competitors but by new entrants in the financial
industry. How could someone define the retail
banking industry? Its about serving consumers
needs that have to do with money or is it about
maximizing their revenues? Someone could say
In many countries, particularly those where infrastructure challenges loom large, banking by mobile
phone is making rapid headway. Just consider the success of Safaricoms M-PESA mobile payment
service in Kenya, which now boasts more than 17 million usersmore than half the East African
countrys adult population.
Right now, telecom providers, with their vast distribution networks, dominate such services. But
some innovative banks have opted to partner with them for a piece of the action. For example, ICICI
Bank, a leading provider of mobile banking services in India, has forged a network of partnerships
with telecoms including Chennai-based Aircel and the United Kingdoms Vodafone Group to reach
rural and unbanked customers.
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being close to a shopping center or train station, for instance. Finally, they apply behavioral science
to lay out and design the store.
In aggregate, the branch network will undergo substantial change. While many banks are cutting the
number of branch tellers and assistant managers, between 50% and 75% are expanding specialist
and relationship adviser roles. Theyre also plowing money into technology to promote a more
seamless experience across channels; depending on the technology, 40% to 60% are adding inbranch tablets, video teller
machines, smart ATMs and
the like.
In a few places like
Singapore, more versatile
ATMs make customers lives
easier by allowing them to
To deliver a differentiated, seamless experience to customers, most banks will need to make
substantial improvements to their IT infrastructure. CBAs effort to build digital innovations around
home buying and other experiences, for instance, was premised on its long-term commitment to
investing in customer record migration and integrationinfrastructure that allows a single view of the
customer from any
channeland the
reconstruction of its core
IT platform for one-anddone processing.
Joined-up IT capabilities
are becoming a
competitive advantage for many banks that invest in technology. Fragmented infrastructure remains
a pervasive problem for the retail banks on our benchmarking panel. Standard services might be
available online and through mobile, but for even slightly more complex transactions like sending
funds abroad or prepaying a mortgage, customers still have to go to a branch. to endure a slow,
clunky, multistage experience.
The Phygital transformation entails a few essential characteristics of IT infrastructure:
Joined-up customer data that creates a holistic data file for each customer
A single view of the customer so frontline employees can see the entirety of a customers
relationship
Technology that supports one-and-done processes and a real-time processing engine, rather than
batch processing, to speed up outcomes for customers
Building these kinds of capabilities usually involves a multiyear roadmap of changes to systems and
infrastructure thats expensive and hard to deliver. A few banks have chosen to replace their core and
single-view systems all at once, but most are staging the transition. Others are exploring outsourcing
and cloud-based capabilities to achieve their IT goals at a lower cost; roughly one-quarter of our
benchmark banks have used the cloud, and 60% plan to expand their use of cloud computing in the
future.
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BIBLIOGRAPHY
1.Altimeter Group Digital Transformation Report
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