MUMBAI: Even as many younger executives see an exponential rise in use of technology in banking senior bankers at a seminar here said while the character of a bank branch will change, its future still remains reasonably safe.
Over the past year, the retail electronic segment grew 60% in volume and about 50% in value. The NEFT volumes and value grew by 67.7% and 50.9%, according to RBI data.
The number of debit cards has grown to 400 million, and those of credit cards to 20 million, according to H R Khan, a Deputy Governor of RBI. Yet, of the 900 million mobile connections that India has only 40 million actually use mobile banking.
“Ninety per cent of banking transactions are done from outside a branch but most customer acquisitions are done through feet-on-the-street,’’ said Shanti Ekambaram, president- consumer banking at Kotak Mahindra Bank. “Gen-Y doesn’t need a branch and senior citizens like the feel and security of a branch. The future of branches will be different in different pockets.’’
SBI and Citigroup has started the so-called digital branches, which aim to conduct transactions digitally instead of using the paper. Such branches save on the costs of real estate as also officials, and are faster for conducting business.
“Branches will exist in the future. Customers’ requirements drive the need for branches,’’ said James Berry, chief information officer at Standard Chartered Bank, suggesting that the future may see more `hybrid branches’ rather than pure digital or brick-and-mortar branches. Logically, after a while customers can ask banks to lower charges since digital services lower infrastructure costs.
Yet, a country like India where more than half the population doesn’t have access to financial products and branches, banks will open more branches at least over the next three years, said R K Dubey, chairman and managing director of Canara Bank.
Rajiv Anand, group executive, retail banking for Axis Bank, said use of mobile phones for communicating transactions would reduce the need for passbooks, paper and processes involved, thereby reducing costs. This could be critical in rural and semi-urban areas where bank accounts could keep smaller amounts.
Services such as wealth management would surely keep branches in business as would safety deposit vaults, for which there is an insatiable demand from Indians, mostly to keep their gold, said Ekambaram. Surely, there is no counter that.