As digital banking grows, Indian banks opting for smaller branches..

I had blogged earlier about role of branches in digital bankign world. One way forward is that branches role is going to shift from a deposit/credit mobilizer to that of local information aggregator.

Beena Parmar in BL writes on how Indian banks are responding to the new opportunities. They are opening up smaller branches:

With consumers increasingly using mobile phones and the internet for banking services, major banks are reducing the size of new branches. Kerala-based Federal Bank, for example, has shrunk the size of its newly built branches from 1,200-1,800 square feet to 800-odd square feet.

Digital banking has also paved the way for banks to remodel their branch banking by allowing technology to play a major role. ICICI Bank, the country’s largest private bank, said branches would continue to be set up. “Only the size, number of people required at a branch changes. Also, cost of operations is reduced and it helps profitability,” said Chanda Kochhar, the bank’s MD and CEO.

On an average, a branch banking transaction costs a bank about ₹40-50 per customer, while an internet or mobile transaction brings down the costs to ₹15-30 per customer.

Transaction costs getting lower..

According to a report based on an IDC Financial Insights study, more branches across Europe are being refurbished than shut down.

“Branch networks everywhere are being refreshed and modernised, reflecting the continued value banks place in them. There is far more variety in branch size and format these days, with mobile branches, kiosks, and coffee shops replacing the traditional layout,” the report said.

The online world is changing the competition landscape for most businesses including banck branches. You are not just competing with branch of the other bank but coffee shops, internet kiosks etc where someone could be banking digitally. So, the coffee shop becomes like this branch itself.

I was reading about how the branches of one of the British bank played some cricket/football match in the branch for its customers. It tried to become the coffee shop/pub. These are far more interesting things to observe and research..

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