Page 39 - Banking Finance August 2023

FEATURES

Bank branches are

irreplaceable

n July 19, 1969, the then government, headed global digital banking survey conducted by the Deloitte Cen-
O by Indira Gandhi, nationalised 14 major commer- ter for Financial Services, branches remain the most pre-
ferred channels worldwide for new product offerings.
cial banks in the country with the aim of extend-
ing banking facilities to unbanked and
underbanked areas. The benefits of this move have been In India, 57 per cent of customers rely on branches for home
evident on multiple fronts, including a significant increase loans and rural customers heavily depend on branches for
in the number of branches, especially in rural areas, and jewel loans. The availability of safety locker facilities within
substantial growth in deposits and credit during the post- branches also attracts numerous customers, considering
nationalisation period. India's significant market for gold and jewellery. Many bank-
ers aver that customers still prefer to visit branches at least
Over the past decades, the number of branches of all sched- once a month.
uled commercial banks has witnessed a substantial increase,
from 8,321 in 1969 to 162,904 in 2023. However, the Covid- Although the RBI asserts that "cash is king but digital is di-
19 pandemic, the rise of AI-based fintech services, and the vine," India continues to be a cash-oriented economy. The
entry of non-traditional players have redefined the role of evidence lies in the numbers, with the currency in circula-
branches and raised the question of whether there will be tion experiencing a substantial rise from Rs. 16.73 trillion in
a need for branches in the future. 2016 to over Rs. 33 trillion by 2023.

With the stupendous rise in digital banking transactions, With the increase in cash circulation for retail business units,
which have grown more than four times during 2018-2022, maintaining a relationship at the branch level becomes in-
tech protagonists even raise a question: Do we need brick evitable for depositing significant amounts of cash at the
and mortar banking? Customers meet most of their bank- end of the day. Frequent failures of cash deposit machines,
ing needs through mobile and internet banking, branches particularly in public sector banks (PSBs), are another un-
will lose their identities in the long run, they argue. derlying reason for branches becoming cash hubs. However,
technological advancements expected soon, such as India
However, the reality differs. Despite the reliance on digital Stack and an open network for digital commerce, may
transactions, many customers still prefer to visit branches change this trend.
for a human touch and value the social aspect of in-person
interactions. There are other reasons behind the need for branches.
People across the globe, be it in developed or developing
While digitalisation has transformed most deposit-oriented nations, prefer bank branches due to the trust factor. Ac-
services, banks continue to offer branch-specific products, cording to a global survey conducted by Accenture, nearly
particularly complex ones. Physical interaction remains cru- two-thirds of the 49,000 bank customers surveyed, irrespec-
cial for individuals seeking big-ticket loans. According to a tive of geographies and age groups, pointed out that the

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