PHYGITAL BANKING: WAY AHEAD FOR INDIAN BANKING INDUSTRY
BANKING FINANCE|November 2021
The banking sector has witnessed a massive transformation in the last few years. The shelf life of physical banks has reduced immensely.
Nilotpal Banerjee

In last 5 years or so the internet explosion in India marked the watershed moment which initiated the radical shift of things from physical to digital. Increasing numbers of Fintech apps and neo-banks have more or less replaced traditional banking, at least in urban India.

Phygital Banking:

The word Phygital is a blend of two words i.e. Physical and Digital. So phygital Banking is a form of banking that combines the comfort of digitalization with the trust of presence of a brick and mortar bank branch. It is a model that integrates convenience banking, mobile banking,internet banking and personalized banking with visiting a branch for cash withdrawal/deposit, locker operations and any other such requirement. Phygital Banking is making inroads to take banking operations to a new dawn.

Need for Phygital Banking

The banking sector has been progressing in terms of technology and therefore, digital customers want real-time solutions for their problems. The Covid-19 pandemic is ushering in a new, digital-oriented way of life for many people. Under lockdown restrictions, digital became the primary channel for retailers, doctors, governments, property, auto sales and banks. Now, the consensus is that many consumers will take a long time to return to regular physical engagements and some may not come back as this has become the new normal.

But banks should not be tempted to ditch their physical presence altogether. This is because one would be reluctant to put all the 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. A good portion of customers still want a physical branch despite using mobile banking. However a hybrid of offline and online engagement is the best way forward.

Though the online payment platforms like GPay, PayTM and many others have acquired a good market share in online payment industry but they do not have a robust grievance redressal mechanism and many customers are not happy with the way the failed transactions are being addressed. As they do not have any physical presence to go to, it adds to the misery of the customers and people started to loose trust in them.

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.

Advantage of Phygital Banking:

Enhanced customer experiences

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