Page 41 - Banking Finance April 2019

ARTICLE

commission on remittances and services of the branch etc. overheads of RTL, bank should encourage using Digital
While arriving / forecasting BEP of the branch, business Banking products instead of branch banking.
potential, market share etc are to be studied. If more
educated public in the proposed location, there is no need to Channel-wise Costs figures
hire big branch premises. For example, in IT parks location, To control the cost and also to arrive cost-benefit-analysis
staff of IT companies is well educated and technical savvy, of various channels of the banks, banks have to be develop
thereby they use alternate delivery channels like Internet channel-wise costs reports i.e., Internet banking, Automated
Banking and Mobile Banking etc. So while selecting new
Teller Machines, Mobile Banking, Central Processing Centres
branches the bank should study projected digital banking (for advances) etc. Through this data banks can take cost
customers vs. non-digital banking customers. If digital banking control measures in various channels of banking operations
customers are more, small premises area is sufficient.
and popularize the best channels both from bank and
customers point of view.
Capital Expenditure for interior design
of the branch Parking space and Customer space

Choosing the correct premises i.e., location and size of the While selecting branch premises, parking space is an
premises not only reduces the rent to be paid to the landlord important aspect. Particularly high net worth customers
but also other costs like electricity and taxes paid to prefer to visit the branch when adequate space of parking is
municipal corporations. For new or shifting (from one place available. In busy / commercial places adequate parking place
to other) of premises, bank incurs lot of capital expenditure is a problem. Thereby it is a disadvantage position to
like counters, electrical appliances and air conditioning popularize bank products including locker business of the
system etc. In business processing re-engineering centres branch etc. If customers visits to the branch is more, up-
(back office operations are shifted to central processing selling and cross selling of the bank products are possible. On
centres like retail and MSME advances), thereby by branch account of cross selling and up-selling business of the branch,
operations space should not be more than 25% of the total RTL can be recovered through additional business of the
premises and customer's space is around 75%. These branch. There by RTL may not be a burden to the bank.
standards will improve the customer satisfaction thereby
business levels of the branch will increase. Documents Archival Centres (DAC)

While selecting a bank branch, provision for additional space
Digital Banking for storage of old records, vouchers, documents etc are to
Banks and Government of India are encouraging Digital be made. After migration of branches from traditional
Banking, it not only reduces the cost of bank operations but banking to core banking system, paper transactions at
also customer convenience i.e., 24 x 7 banking. All most all branches are gradually decreased. Like introduction of green
customers who are having bank accounts are having mobile channel (i.e., NO withdrawal for cash transactions, by using
phones, this is a big opportunity for the banks to shift the POS Machines at the branches). And in some banks loan
customers from the traditional banking channel (i.e., branch security documents are migrated to Retail Assets, Small
banking) to internet / mobile banking system. Thereby Medium Enterprise Loans, and Liability Processing Central
substantial cost reduction will happen in banking operations Processing Centres (accounting opening forms).
and also optimum utilization of Information Technology
Costs (IT Costs) incurred by the banks. Thereby volume of paper documents / old storage records
reduced at branches and no provision is required for storing
Banks are spending huge amount on IT and of records and vouchers etc. In some branches left with huge
telecommunication systems. Digital banking reduces the idle space or surplus space on implementation of above
circulation of money with the public and thereby there is initiatives. The branch heads and controllers should review
cost reduction to the regulator in printing of currency and the position and choose alternate premises or de-hire the
forged notes problem can be avoided. Here lot of customer excess space to the landlords. Some banks established
education is required particularly regarding various risks in "Documents Archival Centres (DAC)" at outskirts of the City /
digital banking system. This is one way to reduce the Town (where low cost rent premises is available), at periodical

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