Kotak Mahindra Bank plans to limit its offline expansion to 50 branches in FY23, says Puneet Kapoor, President-products, alternative channels, and customer experience delivery, Kotak Mahindra Bank Ltd.
“Our internal data reveals that only two per cent of individual customer transactions happen in a branch environment, while 98 per cent of transactions happen in a non-branch environment. Limiting the expansion is a conscious strategy,” Kapoor told BusinessLine. The bank believes that while digital expansion is ideally preferred, physical expansion cannot be ruled out for now. At present, the bank has 1,702 branches across the country.
A non-branch environment can be bucketed into four parts. It is either done via the use of plastic on an ATM or on a device. Or it is happening through voice, which is in the 24/7 phone banking interfaces that banks have, or it happens digitally, which is either on the mobile app or net banking, explained Kapoor.
Consumer needs are evolving in a more geographically agnostic way and many don’t prefer to come to a physical branch; they are able to manage their daily financial affairs without any limitations, added Kapoor, “In this case, how many physical branches does the bank really need?”
Decline in physical expansion
Moreover, the bank’s physical expansion has been declining over the years. According to Kapoor, “the number of new branches is reducing, and more so in the last two years because of lockdown and accessibility issues. The present expansion is mostly around geographical locations with more business customers as their transactions in a non-branch environment is relatively more.”
As far as its digital business is concerned, Kotak is focusing on two areas: improving the onboarding process and enhancing customer experience.
“We will open up an account aggregator and are working with the entire ecosystem and the stakeholders on how we can really make that into a genuine platform.” Kotak is one of the private banks to be a part of the account aggregator.
An Account Aggregator (AA) is a type of RBI-regulated entity (with an NBFC-AA licence) that assists individuals to secure and digitally access and share information from one financial institution with any other regulated financial institution in the AA network. Data, however, cannot be shared without the individual’s permission.