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Hybrid Banking And Hybrid Customers - New Trend in Financial Services?

English monk and poet John Lydgate is attributed with saying, “You can please some of the people all of the time, you can please all of the people some of the time, but you can’t please all of the people all of the time.” Hybrid banking challenges that statement by combining the power of digital service with brick-and-mortar banking.


What Is Hybrid Banking?

Hybrid banking is the amalgamation of digital and in-house services to create a customer-centric banking ecosystem that allows clients to access services no matter which method they choose to use. But what does this mean in practice?

The methods you use to create this structure may vary but can include:

• Online sign-up and know-your-customer (KYC) services before accessing in-house banking.

• In-house onboarding, with KYC, completed digitally via a smartphone.

• In-house banking powered by online loan origination software.

• Or something else entirely.

Essentially, hybrid banking can be any combination of services delivered digitally or in a brick-and-mortar facility, making it more accessible to clients. 


Responding To Modern Market Demand

With investment in digital strategies in the banking world accelerating at a rapid pace — 41% increased contactless payments, 23% introduced digital ID and verification, and 34% implemented fully digital processes due to Covid-19 as of summer 2020 — banks are finding themselves in an entirely new financial service arena in terms of market demand. Increasingly, clients are seeking the flexibility to get service in a way that works for them, whether that be in-house, at home or from a holiday location. Essentially, the world of the local bank just got a whole lot bigger.

In addition, traditional facilities are facing new competition in the form of neobanks, which seek to democratize finance and move it away from being a centralized structure and offer mobility to bank anywhere.

Coupled with the general reduction in the number of brick-and-mortar branches, it might seem that traditional banks are at a crossroads ­— to go digital or get out of the market. However, this isn’t the entire story.

Digitization is inevitable. Yet, fully digital isn’t necessarily what the modern customer wants. Looking at the stats, it’s clear there remains a level of mistrust for neobanks. Highlighting this, fintech app Plum states that 91% of its customers link a brick-and-mortar bank to the app.

Furthermore, a survey by Accenture shows that 24% of European respondents don’t trust neobanks at all, compared to 15% of digital offerings from traditional providers and 6% from a brick-and-mortar bank. On the flip side, 25% reported having a lot of trust in their bank, 7% said the same about digital banking services, while just 4% had a lot of trust in neobanks. This shows that while digital is taking hold, neobanks have a long way to go before they become the new normal.


What The Hybrid Model Means For Banks Today

So, what benefits does the hybrid model bring to banks today, and why could integrating hybrid as a strategy spell success for the future?

• Offering complex products at competitive prices. Digital systems are generally more cost-effective than manual alternatives. By automating, you can complete complex processes more quickly and accurately. Take loans, for example. These are complex financial products that require precise calculations to ensure they are financially viable. However, automation allows you to automatically calculate risk, complete KYC and offer a competitive loan to your client much faster than doing so manually.

• Capitalizing on capital and resources. Get ahead of the neobanks by using the resources you have available — finances, structures and client trust — and build an ecosystem that allows your clients to have their needs met all in one place.

• Taking advantage of remote working for business benefit. Don’t push to return to the pre-Covid-19 world. Instead, accept that change is here to stay, and banking has to adapt. What this may mean for your adopted hybrid model is more staff shifting to customer service roles while working remotely. In terms of business, this could lead to improved customer service, workforce satisfaction and boosted productivity.


Meet The Needs Of The New Hybrid Customer Of Tomorrow

That said, the new era of hybrid banking doesn’t exist in a vacuum. Instead, it is fueled by market demand and a new type of banking consumer: the hybrid customer. The banking world’s updated client is one who expects flexibility, customer service and personalization, no matter whether they come to an in-house branch or access services online. Here’s how to meet these needs:

• Provide the flexibility to bank from anywhere. No longer is a simple balance checking app the gold standard in banking. The new hybrid client demands more services be available digitally to meet their needs, and their hybrid banking needs extend to all areas of financial management.

• Increase accessibility. The world is diverse. Hybrid banking can bridge the gap and offer service access that reaches across barriers, whether this means helping the unbanked become banked or delivering to an individual with a disability who cannot access a brick-and-mortar facility. The banking world needs to take into account that clients come from all different backgrounds and adapt their services to it.

• Merge the online and the office for efficiency. By taking a combined approach, you tick all the boxes for your clients. This means they are able to mix and match when it comes to how they use your bank, giving them great flexibility allowing maximum efficiency in their lives. This also gives you a competitive advantage over other providers that fail to expand their offerings.


Hybrid Banking Is Evolving Alongside The Hybrid Consumer: What Does This Mean For Your Business?

For future-looking banks, discounting the effects of the coronavirus crisis as short-term change is short-sighted. Instead, seek the long-term perspective and look at the elements of society and business that are here to stay: increased flexibility, personalization and a rise in digital services. By switching to a hybrid model, you could capitalize on the best of both worlds and maybe even please all of the people, all of the time.


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Dmitry Dolgorukov

Dmitry Dolgorukov



Member since

19 Mar 2018


Vilnius, Lithuania

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