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Branch banking faces sunset as customers fancy automation

George Smith Alexander

Branch banking is facing sunset as customers fancy machines, phone and Internet.

New private sector banks have been witnessing increasing use of direct banking channels such as automated teller Eighty-six per cent of cash withdrawals from UTI Bank are done through ATMs. The number of ATM transactions at the bank jumped from 1,75,000 in September 2000 to 10,00,000 in March 2001.

"In the savings account segment, 90 per cent of the withdrawals are through ATMs," said UTI Bank's vice-president (marketing), Hemant Kaul.

The average ATM transactions for HDFC Bank, which was at 1.3 million in October 2000, have rose to 1.5 million in March 2001. The number of net banking, which was 3.6 million in October, increased to 8.2 million in March, while dealings through phone rose from 357,000 to 500,000 during the period.

At ICICI Bank, the number of calls received for phone banking in October 2000 was 1,90,185, while in March this year it went up to 3,65,332. ATM transactions at the bank rose from 2.1 million in October 2000 to 3.9 million in March 2001.

These new generation banks have set up direct banking channels, which are cheaper than branch banking, in order to take the bank closer to the customer.

Says HDFC Bank vice-president (head-retail marketing) Mudit Saxena, "We are seeing a 10 per cent rise in the usage of direct banking channels every month. The growth in the direct banking channels exceeds that in the branch banking channels."

The average age of an ATM user is around 35. "The younger generation customers prefer the direct channels compared to the old generation who still prefers visiting branches as they have more spare time," Saxena said.

Among the banking channels there is high preference for ATMs, followed by phone, Internet and mobile banking, Saxena added.

The ATMs are used for cash withdrawals, balance statement and bill payment facilities, while phone banking is used for cheque book requisition, payment stoppage, balance enquiry etc.

"If branch banking costs us Re 1 per customer, ATMs cut the cost to 50 paise and deals via Internet reduces it to 20 paise," Saxena said.

Adds ICICI Bank's senior executive vice-president Mohan N Shenoi, "There is an obvious saving in costs. If these customers walk into the branches, we would have had to take bigger premises and need more staff to take care of them."

ICICI Bank has around 530 ATMs followed by UTI Bank (340) and HDFC Bank (225).

Shenoi said: "The transactions through ATMs in smaller towns is picking up fast. The transactions per ATM in small towns are around 150-200 per day, while in bigger cities it is 200-300 per day. Tourist locations are also seeing transactions through ATMs picking up because of the usage by foreign tourists through the Visa network."

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