Branch banking waning on digitisation push

Visiting a bank branch for carrying out transactions seems to be moving down the agenda of many a customer, thanks to the digital revolution.

Branch-based banking is taking a back seat now with more than 70 per cent of transactions on an average taking place via digital mode, going by data from major banks.

For State Bank of India, it has been a fast journey from cash to digital. Branch-based transactions declined to 21.60 per cent of total transactions at the end of the first quarter of the current financial year compared with 29.49 per cent in the year-ago period.

Instead of going to a branch, customers are increasingly using ATMs, cash deposit machines, Internet banking, point of sales terminals, kiosks and mobile banking. Mobile banking alone had recorded transactions amounting to ₹63,448 crore, with active participation from retail customers.

For ICICI Bank, transaction volumes through digital channels continue to grow with Internet and mobile channels accounting for 61 per cent of transactions in the first quarter.

For HDFC Bank too the share of internet and mobile transactions of retail customers is over 70 per cent. Same is the case with many other public sector branches.

Increased use of smart phones coupled with higher acceptance of online payments from cinema tickets to public utilities and travel are driving growth in digital banking, say bankers.

However, there may be rural-urban differences in branch-based transactions to some extent.

“Though we cannot get exact numbers as of now, it can safely be presumed that branch-usage levels in rural areas could be a little over 50 per cent on an average if we take transactions of entire banks,” a top official of SBI told BusinessLine .

But the business correspondents/bank mitras who received a shot in the arm with implementation of Prime Minister’s Jan Dhan Yojana is fast changing the banking landscape in rural areas, he adds. However, brick-and-mortar branches will continue to be required.

According to RBI data, as part of a roadmap for covering all 4,90,298 un-banked villages with population less than 2,000 by March 31, 2016, 4,50,686 villages (91.9 per cent of the target) had been covered by 14,901 branches, 4,15,207 villages through BCs and 20,578 villages through other modes such as ATMs and mobile vans.

“Keeping in view the necessity of brick-and-mortar branches for promoting banking penetration and financial inclusion, a roadmap for establishing such branches in villages with population above 5,000 but without a bank branch of a scheduled commercial bank was rolled out in December 2015.

“SLBC convenor banks have been advised to ensure opening of bank branches under this roadmap by March 2017,” the RBI said in its annual report for 2015-16.

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