Phygital Banking and Customer Experience in Commercial Banks in Kenya

Abstract

In present day, banks operate in very dynamic and competitive business environments. To sustain their operations, banks must therefore differentiate themselves by consistently providing exceptional customer experience. This is because their survival solely hinges on how their customers perceive the quality and experience created by their products and services. With the current proliferation of technology witnessed globally, phygital banking has emerged as a model that can be used by banking to build and sustain superior experience for their customers. Nevertheless, this banking model and its impact on customer experience remains empirically unexplored. It is for this reason that this study was carried out. The objective of this study therefore, was to assess the effect of phygital banking on customer experience among commercial banks in Kenya. The following research questions were to be answered; (1) What is the effect of informational phygital channels on customer experience among commercial banks in Kenya? (2) How does transactional phygital channels affect customer experience among commercial banks in Kenya? (3) To what extent does advisory/supportive affect customer experience among commercial banks in Kenya? This study was anchored on the theory of customer experience and the unified theory of acceptance and use of technology model. The study adopted a descriptive survey research design. The study targeted employees placed at the sales and marketing and customer care departments in the head offices of all the 40 commercial banks in Kenya. The study also targeted customers visiting the main branches of these banks in a day approximately, on average. Stratified sampling technique was used in selecting the employees while the bank customers were sampled using simple random sampling. The study used primary data which was gathered using structured questionnaires. To analyze the data, descriptive analysis and inferential analysis were conducted. A multiple linear regression model was used to link the study variables. The study results were presented using tables. The study established that commercial banks in Kenya had exploited informational phygital channels, transactional phygital channels and advisory/supportive phygital channels to a moderate extent. The study also found that informational phygital channels, transactional phygital channels and advisory/supportive phygital channels as constructs of phygital banking had a positive significant effect on customer experience in commercial banks in Kenya. Of the three constructs, transactional phygital channels had the largest effect on the customer experience of these banks. All the three constructs combined explained 70.8% of the variation in customer experience in these banks. The study therefore, concluded that phygital banking was a significant factor that influenced customer experience among commercial banks in Kenya and therefore, it was prudent for the management of these banks to consider them when evaluating the factors likely to affect the experiences they created for their customers. Several recommendations were made among them; the management of commercial banks in Kenya should exploit the phygital banking model so as to create superior experiences for their customers. The banks’ management through intensive research and development should be cognizant of emerging technologies that allow them to better exploit the phygital concept across all their operations. This should be supported by adequate budgets. The management of the banks ought to also create more avenues for self-service solutions by acquiring diverse devices that support the in branch self-service banking model. The banks’ should also enhance their capacity to exploit video banking across their operations and also enhance the functionalities of different devices used in their branches so that customers can be supported throughout their banking journey.