Economies periodically undergo fundamental shifts in the way in which they operate. Prior to this year, we saw “social” and “sharing” economies; however, the COVID-19 pandemic and associated restrictions have brought forth the rise of the “isolation” economy. This economy is characterized by communications and business increasingly moving to a digital format. Given that physical analogues that were previously in common use are likely to take some time to recover (if they do at all), it seems probable that the “isolation” economy is ushering in a new cohesive physical/digital hybrid experience – the phygital experience.
Under this new normal, consumers will carefully pick and choose how to spend their time interacting with businesses, including financial institutions. This means that a smaller network of branches providing a wider variety of services and experiences (potentially even beyond finance) will likely come to dominate our future. In fact, we’ve already seen many financial institutions experimenting with these new-style branches, modelling them on coffee shops or technology retailers for example. Of particular note in this regard is Barclays’ 25 Eagle Labs, which converted a series of closed branches in the UK into entrepreneurial shared-work, mentoring, networking and maker spaces. Of course, they also provide SME banking advice. Going forward, it will be much more important to get ever-more limited physical interactions right, and a sound phygital strategy will be key to long-term success.