Branch-based banking transactions on the decline

Customers are fast moving to Internet and mobile platforms for their banking transactions and the once-popular branch-based banking is on the decline.

The increase in transactions on these alternative channels is in the range of 20- 40 per cent, as revealed by the third quarter numbers of key public sector banks.

State Bank of India (SBI) saw a steep increase in Internet users from 1.65 crore in the third quarter FY 2014 to 2.10 crore in the quarter ended December, 2014. The compounded annual growth rate of Internet banking users for the biggest public sector lender was 36 per cent during December 2011-14.

The pace of mobile banking use too had gone up by 65 per cent in the same period.

Though specific numbers are not available, large private banks have been able to reduce branch-based transactions. For example, ICICI Bank had only 15 per cent of transactions happening in the branches. The balance 85 pc of the transactions are spread across ATMs, call centres, internet as well as social media and mobile. Out of these, ATMs account for 40 per cent of transactions.

Of late, apart from the net-savvy retails customers, corporate customers also prefer to use net interface.

Corporation Bank has provided a scalable MVC module with add on features which are being used by 9.25 lakh users through Android phones, IOS Phones, Tablets and Ipads. Its mobile banking services are being availed by over 18.75 lakh customers.

The drivers for this trend are many, including the increasing numbers of youngsters among customers, according to R Athmaram, Executive Director, Bank of Maharashtra. By 2020, the average age of Indians will be 29 years. “Naturally, they prefer the Net. The smart phone revolution underway is also adding to use of internet and mobile banking,’’ he told BusinessLine .

Bank of Maharashtra expects to see 75 pc of its transactions in alternative channels in the next 18 months; they are about 45 per cent now. However, the nature of transactions, especially in some public sector banks continue to be basic — checking bank balance and small remittances — while in new generation private sectors banks, remittances have made a significant mark, say experts.