Banks added just 1,383 branches in FY2021, the lowest in a decade, as banking through alternative channels such as digital and commercial correspondents (BCs) gained ground in the past. in the midst of the Covid-19 pandemic.
Banks expanded their branch network by 7,728 in FY20, according to RBI data.
Another reason for the decrease in branch additions in FY21 is that five major public sector banks (PSBs) – Bank of Baroda, Punjab National Bank, Canara Bank, Union Bank of India, and Indian Bank – decided to consolidate their branches following the merger of certain PSBs with them.
At the end of March 2021, the network of offices of scheduled commercial banks had grown to 1,54,485 from 1,53,102 at the end of March 2020, according to data from the RBI.
As alternative banking channels gain popularity as they bring the convenience of banking services to customers’ fingertips (mobile and internet banking) as well as home banking through POs, banks will slow branch expansion. physical to save on costs, say industry experts.
EASE of banking
The latest Enhanced Access and Service Excellence (EASE) report highlighted that thanks to improved digital channels, most in-branch services are now accessible to customers from home and mobile, including in local languages.
This allowed convenient access to banking services, including during the nationwide lockdown imposed due to the pandemic.
“Encouraged by the convenience and quality of the experience on these channels, many PSB customers have increasingly adopted them for their daily banking needs. “Seventy-six percent of all financial transactions between PSBs are now carried out through home and mobile channels such as mobile banking apps, online banking platforms, call centers, etc. Says the report.
In addition to increasing the widespread use of technology, the Covid-19 pandemic has fueled the proliferation of digital payment methods, propelling the country towards ‘less cash’ alternatives.
Mobile banking
“The Bank’s mobile application will be the main interface for clients. Apart from a few services that are better provided in branches, customers will increasingly use cell phones to meet banking needs.
“The goal is to have a good mix of physical and digital infrastructure. The Bank plans to significantly expand its presence at all locations with new POs and lighter formats, â€said Sanjiv Chadha, Managing Director and CEO of Bank of Baroda, in the FY21 annual report.
As part of the integration of Vijaya Bank and Dena Bank with BoB, the latter merged or rationalized 1,310 branches and 1,135 ATMs in fiscal year 21.
Rajkiran Rai G, Managing Director and CEO of Union Bank of India (UBI), highlighted the cost synergy that can be achieved through optimization of physical network distribution through merger / rationalization of branch networks and ATMs, alignment of employees, among others, in the Bank’s Annual Report.
Following the merger of Andhra Bank and Corporation Bank with UBI, the latter merged 277 branches in FY21.
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