Phygital is the way forward for Alfa-Bank - Transactions & Technology -
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Transactions & Technology
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Vladimir Verkhoshinskiy, CEO of Alfa-Bank, explains why embracing the 'phygital' concept, combining a digital and physical presence, is key to the award winning Russian lender's development. 

Alfa-Bank CEO

Vladimir Verkhoshinskiy, CEO, Alfa-Bank

From the first days of its 30-year history, Alfa-Bank has been one of the leaders in the Russian banking market. How do you manage to compete with those players that enjoy the strongest state support?

One of our strong points is the capacity for updating and introducing innovations in all spheres of our activity. Alfa-Bank's outstanding corporate culture, created and nurtured by its founders, promotes this. Innovations, bold decisions, responsibility and brightness – these are the qualities, which characterise every one of Alfa-Bank’s 23,000 employees.

This is paying off: we launched Russia’s first internet bank, then the first mobile banking application, we were among the first to develop contactless payments and the first to offer digital delivery, i.e., the option of ordering a card through an application and immediately uploading it to ApplePay/GooglePay.

We have deeply robotised our back office and continue to invest in RPA technology. We offer our large corporate customers powerful blockchain platforms for cash management and trade finance, and we have every reason to believe that soon this will completely change the rules of the game in this segment. Now we are the first in the Russian banking market to focus on a new paradigm of phygital banking.

What do you mean by phygital banking?

Despite the development and general popularity of digital technology, people live in the physical world and cannot get along without face to face human contact and without physical services (taxis, delivery of food and goods, etc.). Today, the possibility to visit a bank’s office is still very important for 80% of a bank’s clients. People want to discuss complex products, big decisions and emerging problems with other people.

There are examples of banks in Russia that started as 100% digital, but over time reached the ceiling of their digital growth and had to build physical infrastructure, increasing the number of agents on their staff and call centres. Indeed, digital technologies are the best way to achieve business efficiency, but focusing on developing online services, banks and companies from other industries have created an environment in which face to face human contact has become so much more valuable for clients. So now we are witnessing a situation in which, in the era of digital technologies, the possibility to provide a quality face to face contact to customers has become a competitive advantage.

How does Alfa-Bank plan to implement this concept?

In Alfa-Bank’s strategy until 2021, we have outlined the three main areas where we aim to achieve an undisputed lead. First, it is the best mobile application in Russia, a centre of interaction with individuals and business owners, which will comprise the bank’s widest possible range of products and services, including those available only in branches today. Second, doing away with paper in bank branches and in the customer experience. We want to save the customer the trouble of providing any paper documents. And finally, the transformation of branches (about 430 throughout Russia) into a new-generation network. The latter is the most important component of a phygital bank. Our phygital offices should become a combination of the best digital and best physical customer experience.

Technology alone and advanced concepts are not enough to achieve our goals. In addition to improving internal processes, complex IT algorithms and platforms, we will reconceive the role of our employees, our approach to their development, training and motivation.

What is, in your view, an ideal phygital bank?

This is the place where every second of interaction with the bank brings the client pleasure and benefit. Imagine that one needs to get a complex product from the bank. One can inform the bank of what he or she needs using the mobile application, contacting the call centre or addressing the bank’s website. The bank, for its part, prepares whatever is required and invites the customer to the branch. When entering the branch, the customer is recognised by the CRM-system, which greets them by name and calls the relevant employee, who is ready to provide any assistance. The employee advises the customer on all related nuances, finalises the process using a mobile workstation, and the customer approves the transaction in their mobile application, where they can also assess the bank’s service. The customer does not even need to produce a passport, as everything is signed with a digital signature. Not a scrap of paper is used, not a second is wasted. 

Of course, the ultimate solutions and the technological stack will depend on the results of tests, pilots and customer experiences that we are actively launching and measuring. Nevertheless, this is the strategic vision and the new phygital experience that Alfa will offer its customers over the next 2-3 years.

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