By Eric Megret-Dorne, Head of Card Issuance Services and Service Operations at Giesecke + Devrient

Digital banking has become increasingly ingrained in people’s everyday lives. Today, 73% of people globally use online banking at least once a month. Traditional bricks-and-mortar banks, which have long relied on the in-person experience with customers, are now having to step up their offering. With new ways of working blurring the work-home boundary, banks must ensure a fast, seamless connection between face-to-face processes and virtual customer experiences.

However, this does not mean that physical and digital banking are in competition with each other. In fact, many continue to use physical bank cards, with 1.12 billion in circulation in 2021, which provides the basis for digital payments and offerings. As a result, the benefits of digitalisation should converge with the comfort of physical touchpoints to create a holistic, “phygital” experience.

The path to phygital

Banks are accelerating their digital transformation strategies to keep up with the fast pace of fintech innovations. To meet the changing needs and preferences of customers, the payment world is leveraging new technologies to create personalised experiences through a range of different channels.

While the digitalisation of banking has been underway for quite some time – particularly for younger generations – events such as the Covid-19 crisis forced banks and customers of all ages to use digital tools and processes to compensate for branch, office, and call centre closures. With branches worldwide typically operating at reduced capacity due to social distancing requirements, consumers embraced online banking to avoid both the virus and potentially long queues.

However, some consumers still enjoy physical touchpoints, meaning a digital-only approach won’t suit everyone.

Striking a balance

It’s all about options – consumers now want to freely switch between traditional and digital channels without being forced into one. But how can banks achieve this phygital balance? One way is to equip physical channels with digital capabilities, so that online tools can augment the physical experience. For example, personalised bank cards with a bespoke design can be activated digitally, offering customers an extra layer of convenience. Having to wait for a new PIN to arrive in the mail is a common bugbear for consumers, so bringing card activation processes into the digital ecosystem will ensure a more seamless experience.

Greater automation in the card issuance and activation process enables the benefits of digital to be integrated into the physical banking experience without being intrusive. For instance, self-service kiosks empower customers to print their own cards, reducing the time between acquisition and card issuance, while still allowing for in-branch expertise if needed.

The personal touch

Phygital strategies also give banks a range of valuable data insights that can help them better serve their customers. This includes data on purchasing behaviours and habits, which can then be utilised to improve banks’ offerings and unify the physical and digital brand experience. Using omnichannel data helps to build a hyperpersonalisation strategy to provide real-time services.

In this way, digital solutions help banks maximise their user experience. Whenever a consumer interact with a bank, it creates data and behaviours. With fragmented databases, legacy systems and real-time data created by interactions with third-party partners through Application Programming Interfaces (APIs), it is not always easy for banks to streamline this data from different sources. By understanding patterns in that data and behaviours, banks can tailor and personalise unique experiences for each and every user.

Where security meets innovation

With big data opportunities abound, banks should be mindful of their consumers’ security concerns. Customers are now demanding much more transparency when it comes to how information is stored and collected. At the same time, they still desire greater personalisation via digital methods. Therefore, any successful phygital strategy requires a robust digital security to ensure customers have the same peace of mind as when they complete physical transactions.

To close the gap between innovation and security, banks should utilise tokenised infrastructure, which ensures the safe provision of payment credentials and securing of customer payments across all touchpoints. This is particularly important as regulations such as PSD2 and SCA demand strong authentication requirements.

The use of a token greatly enhances the consumer experience. For example, it allows for card details to be automatically updated for subscription services upon the expiry of an existing one, avoiding any service disruption.  Multi-factor authentication can also ensure an additional layer of security, as it combines a password with verifiable human biometrics such as fingerprints or facial recognition.

Best of both worlds

Every consumer has unique preferences when it comes to banking. Therefore, banks must evolve by bringing both physical and virtual touchpoints into a ‘phygital’ world. Only a phygital approach can meet the needs of all end users – whether they favour an in-person experience, an online one, or a blend of the two. The holistic data insights, personalisation opportunities, and optimised security ensured at every touchpoint are also critical in building future-ready banks.

The company’s expanded authentication offering optimizes authorization, security, and end revenue

Adyen (AMS: ADYEN), the global financial technology platform of choice for leading businesses, announces that it has further advanced its digital authentication solution, with ongoing pilots realizing a conversion uplift of up to 7%. Engineered to optimize authorization and therefore end revenue, the company’s expanded capabilities include Delegated Authentication, Data-Only, and Trusted Beneficiaries functionalities. By turning regulatory challenges into opportunities, Adyen’s authentication ecosystem combines security and seamless checkout experiences to drive growth for digital businesses.

“Adyen continues to expand the capabilities of our single platform,” says Trevor Nies, Global Head of Digital Strategy at Adyen. “Our recent authentication innovations show how we’re continuously finding new avenues to help our digital customers grow. As a partner, we identify opportunities to address and simplify regulatory challenges on behalf of global businesses. Our Delegated Authentication, Data-Only, and Trusted Beneficiaries functionalities are the latest ways we are embodying this mindset of turning complexity into conversion, which greatly reduces friction for our customers.”

In regions where Strong Customer Authentication (SCA) is required , Adyen has implemented its Delegated Authentication technology as an additional option to streamline authentication while remaining compliant. While many digital authentication flows are full of friction including redirects, Delegated Authentication allows Adyen to fully authenticate the consumer on behalf of the issuer, providing a streamlined cardholder experience while remaining within the merchant checkout page. To maintain the highest security standards while providing ease of use, Delegated Authentication enables shoppers to utilize two-factor authentication, leveraging biometric checks such as fingerprint recognition and facial scans, and device bound credentials. Delegated Authentication has been expanded from only web browser users to include iOS and Android users.

To further cater to customer needs in regulated markets, Adyen has advanced its Trusted Beneficiaries functionality. Through Trusted Beneficiaries, shoppers in the checkout stage are given the option to simultaneously add a business to their list of trusted companies. After designating a business as ‘trusted,’ shoppers will not need to be re-authenticated when purchasing from them. This again brings added convenience to the consumer and increased conversion to the business.

Even in regions where strict authentication regulations are not in place, Adyen is using its global expertise to improve authorization rates using its Data-Only feature. When a transaction is executed where customer authentication is not mandatory, such as in the US or Brazil, Adyen can share authentication data with schemes in order to help them make more informed authorization decisions. By using Data-Only, businesses have been able to broaden their decision-making resources and increase conversion while reducing fraud.

In line with the company’s long-held approach to building upon its single platform, Adyen is committed to continuously broadening its global authentication capabilities. As the technology evolves, businesses can rely on it to optimize authorization in both mandated and non-mandated markets. With Adyen’s expanded solution already driving noteworthy conversion uplift in ongoing pilots, Adyen looks forward to further demonstrating the value of authentication as a strategic revenue driver.