The Hindu Business Line : Clicks overtake bricks at ICICI Bank

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Chennai Feb. 23 At some point during the last few months, something interesting happened at ICICI Bank. Something that startled even its e-savvy chief executive officer.

Transactions done by the bank's customers over the Internet exceeded those done by them at the branches. And by a significant number, according to Mr K.V. Kamath, Managing Director and CEO.

Transaction details

In the year 2000, 94 per cent of the transactions happened at the branches. It was early days for Internet banking. Just 2 per cent of transactions were over the Net. In fiscal 2006, transactions at the branch were down to 22 per cent of the total while Net banking transactions rose to 18 per cent. That number seems to have gone up further during the last few months.

Says Mr Kamath, "Technology is proving to be a winner. The customer is signalling to me that he or she is comfortable using technology. We have more transactions on the Net than in the physical space (branches). I would not have thought it possible just 3 years ago."

Branch expansion

This pro-technology behaviour of customers gives him the confidence to say ICICI Bank's future branch expansion will happen - but in a measured way. And stress the competitive advantage — transaction costs for ICICI Bank are at one-tenth those of global banks.

At HDFC Bank too

Similar trends in customer behaviour are visible at its closest private sector rival HDFC Bank also. Branch transactions that accounted for 43 per cent of all transactions in fiscal 2001 came down to 23 per cent in fiscal 2006. In the same period, Internet transactions rose from about 3 per cent to 16 per cent.

According to the Internet & Mobile Association of India (IAMAI)'s report on online banking, there are about 4.6 million users of online banking services in the country. That number is expected to treble in the next fiscal. The convenience factor — saving time and doing it at the click of a mouse — at any time, is what draws Net users into the fold.

According to the IAMAI, about 40 per cent of the transactions on the Net take place during non-banking hours - i.e. between 6 p.m. and 8.a.m.

More Stories on : Private Banks | E-Commerce & E-Business | ICICI Bank Ltd

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