EXCLUSIVE: The convergence of physical and digital banking

Banking - physical and digital card

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A hybrid approach across physical and digital banking can help financial institutions to prevent fraud and also improve customer satisfaction, says HID.

A new landscape

Post pandemic, financial institutions are in the midst of a revolution that will permanently change how they operate and interact with customers.

Up until recently, digital and physical banking channels remained largely disconnected from one another. However, the pandemic forced customers to change their habits.

Consequently, in today’s physical and digital (or “phygital”) era, many customers now use both channels and there is a significant drop in the number of open financial institution branches.

According to PwC, there are two types of consumers who like using branches: users of digital channels and branches (phygital) and those who are dependent on branches alone.

While PwC observed a decrease in branch-dependent consumers, from 42% before the pandemic to 35%, phygital users rose from 17% to 25%.

To remain competitive, financial institutions must reimagine the role of their branch networking, including how to meet the needs of the growing number of phygital users.

Importance of safety, security and compliance

Regardless of the pressures facing the sector to reinvent how they serve customers, financial institutions must comply with a long list of regulations, including those focused around the need to protect their physical assets, employees and customer data.

With these pressures in mind, financial institutions will need to rely heavily on technology to reconfigure their branch networks, make better use of office space, support hybrid business models and deliver the level of safety and security that customers, employees and regulators require.

It is crucial for banking and financial services to adopt digital identity verification solutions that allow banks and credit unions of all sizes to quickly create an efficient and effective digital onboarding journey for their customers.

There are several best practices to follow in order to achieve the same type of experience during onboarding, starting with taking a mobile-first approach to identity verification and then focusing on how information is requested, documents are submitted and compliance requirements are met and very importantly, how fast validations are processed.

A mobile-first approach is particularly important. Many people, regardless of age, now use smartphones more than their desktop or laptop PC, viewing them as an extension of themselves.

If mobile onboarding is done well, prospective customers know the bank or the credit union is a modern digital organization that can fully support their account management needs in a way that is effective and convenient.

If the mobile experience is clunky or non-existent, however, it makes the institution look inflexible and archaic.

Enhancing the customer experience and preventing fraud

As banking and financial institutions attract customers to their branches and also provide digital experiences, many financial institutions see a need to retain and reconfigure certain branches to meet their customers’ ever-changing needs.

For some customers, digital transactions are a poor substitute for face-to-face interactions, especially when they involve more complex financial matters, such as wealth management, mortgage financing or small business lending.

A customer-centric approach and the delivery of an omnichannel model require embracing technology to enhance and inform every customer interaction.

The right technology can allow financial institutions to reimagine how their branches operate with the customers’ needs at the forefront.

Specifically, mobile access management and geofenced notifications can unlock the power of a financial institution’s mobile app and streamline the customer’s experience while in the branch.

Technology can remove friction in face-to-face interactions, which can be a significant competitive differentiator.

For example, the mobile app installed on the customer’s phone can streamline the check-in process by making it easier for customers to prove their identity.

Geofenced notifications can also notify branch staff as soon as a specific customer enters the branch.

The solution, when integrated with a banking systems and business rules, could provide employees with critical data about the customer.

For example, once a customer arrives in the branch, employees could receive prompts to discuss a significant development in the customer’s life, such as the sale of a business or upcoming retirement.

In busier branches, geofenced notifications can inform the queue management system, minimize wait times and identify high-value customers for premium service.

This approach can ensure regulatory compliance for authorities that mandate queue management systems.

By reimagining the role of branches, financial institutions can increase the frequency of interactions with branch employees, helping them foster stronger customer relationships.

With a deeper understanding of the customer, financial institutions can better use the data to meet their needs and earn incremental revenue.

Using geofenced notifications, a financial institution can deliver targeted messages to a user’s mobile device when near or visiting a branch through the mobile banking app.

Since the customer is in the branch, the messaging can provide specific steps to engage a customer to accept the offer or receive more information.

The “moment of truth” the technology creates can help customers form a positive initial impression or allow them to rethink their view of the institution.

In short, technology can reposition how individuals view branches and the financial institution’s ability to anticipate and meet their demands.

Using technology to gather more profound insights into a customer’s financial needs makes it easier for financial institutions to market products and services in a compelling and engaging way to customers.

For example, more timely and accurate customer data enables financial institutions to predict the customer’s needs at every stage of their life and relationship with the bank.

Furthermore, it allows financial institutions to deliver targeted marketing messages via other forms of technology, such as ATMs, or support the adoption of interactive teller machines.

Technology can also enhance operational risk and security management, which includes requiring robust authentication, promoting mobile and biometric security and providing data to ensure regulatory compliance and prevent fraud.

Banking and financial institutions must invest in the best fraud detection tools and resources.

The best risk management systems (RMS) offer trusted protection that is simpler for security teams to manage and more intuitive for users to navigate.

They facilitate a better understanding of who legitimate users are while keeping fraudsters away.

They also help financial institutions respond to an ever-expanding threat landscape with a single, easy-to-implement technology.

The following are the key elements of a comprehensive RMS solution:

  • Multilayered threat and fraud detection – new risks are emerging all the time. RMS solutions that combine behavioral profiling, pattern recognition and threat analysis are best equipped to handle them
  • Seamless user experience – the best fraud detection solutions are undetectable to end-users, saving them from time-consuming and unnecessary authentication steps
  • Omnichannel analysis – since banking often takes place outside of chipped cards and controlled environments, flexibility is key. Fraud detected on one channel should be leveraged across others
  • Regulatory compliance – rules-based processes make it easy to comply with data protection and central banking legislations
  • Cloud-based infrastructure and application programming interfaces (APIs) – strengthening security shouldn’t come with a lengthy implementation process or compatibility issues


In an increasingly dynamic and competitive marketplace, financial institutions must continually reexamine their approach to access management and how they serve customers.

By implementing mobile access management and geofenced notification technologies, financial institutions can optimize their resources efficiently and interact with customers in a more engaging manner.

As banking shrinks its real estate, dynamic facility occupancy management, access control and geofenced notifications can ensure the intelligent use of the remaining space.

When deployed as part of a customer-centric strategy, technology can eradicate most, if not all, of the administrative burden placed on customers and transform their in-branch experience.

It can also ensure the safety and security of critical assets, including customer data.

By transforming how they interact and anticipate their customers’ needs, financial institutions can increase engagement, loyalty and revenue.

A future-ready access control solution can increase branch efficiency, customer satisfaction and employee productivity while also enhancing safety and security and ensuring regulatory compliance.

This article was originally published in the November edition of Security Journal Americas. To read your FREE digital edition, click here.

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