Private banks are expanding their brick-and-mortar branches even as the push to go digital gathers steam in the banking sector.

Major banks, including ICICI Bank, HDFC Bank and Axis Bank, have also been focussing on ramping up their physical presence while keeping themselves updated when it comes to digital banking solutions.

For ICICI Bank, according to its CEO Sandeep Bakhshi: “Digital transformation remains a cornerstone for driving business and improving efficiency, but focus is also expanding its physical infrastructure.”

The bank, which plans to open about 450 branches this year, has already opened 346 branches in the second quarter ended September 30.

HDFC Bank’s reach has also gone up significantly. It added 489 banking outlets in the last one year, taking the total number to 5,314 as on September 2019, from 4,825 in the year-ago period.

Axis Bank added 190 branches to its network across the country, the highest in the last 24 quarters. It now has 4,284 domestic branches and extension counters against 3,879 a year ago.

Rural business

The increasing potential in rural business for banks, especially in agriculture, micro-small and medium enterprises, higher ‘congestion’, and competition of financial services in urban areas, are driving the expansion of physical branches.

Already semi-urban and rural areas figure prominently on the radar of banks. In terms of banking units’ mix, HDFC Bank, for instance, has a 48 per cent presence in metro and urban areas and 52 per cent in semi-urban and rural areas. ICICI Bank’s strategy for rural business involves a comprehensive approach to cater to the needs semi-urban and rural areas. “Outreach in rural areas is supported by a network of branches, on-field staff, and business correspondents providing last-mile connectively,” said Bakhshi.

Public sector banks, which have a strong presence in rural areas, however, have been reworking their strategies in the light of recent developments. “The recently-announced merger of banks by the government has actually put a stop on expansion as rationalisation of branches and staff is a natural consequence of amalgamation,” said a senior official a public sector bank.

Enthusiastic private banks are now cashing in on the gap in rural areas, he added. The new branches that are being opened by private banks in rural areas are swanky and attractive unlike public sector banks.

They have been coming up with contemporary designs, dedicated space for transactions, and modern ambience to attract more customers.

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