Retail banking is an important segment within banking. Branch Banking (BB) is an important part of retail banking, but the Indian banking sector is biting this important segment through conservative modus operandi and nasty strategy. There are no innovative ideas to direct this segment. The banking sector is making different channels to source Current Account (CA) and Saving Account (SA).
All leading banks:
- make similar features of products.
- give similar service and technology. There is only a little difference, which does not impact the quality over all.
- have the same modus operandi.
- have a small percentage of new customers in branch banking. Their biggest chunk is existing customers, who keep moving from here to there.
- have a high attrition rate in BB due to high pressure to sell CASA and cross sale.
- give high pressure from top to bottom hierarchy to sell CA and SA. In these segment, shouting and humiliation are key instruments.
- have high liability risk when everyone chases numbers in CASA and cross sale.
- have a history of mismanagement of branch staff. Banking products and cross sales are the reasons behind mismanagement. Branch mangers pressurise the staff, including operational staff, tellers (who manage cash of the branch with low salaries. Sometimes, they lose cash. Often, an amount larger than the monthly salary has been lost) due to sales pressure.
Is There A Solution?
- The term ‘branch manager’ is deteriorating day by day. So, I think it should vanish. Machines should be installed for cash, cheque book and other services in the branches. We are moving towards the Artificial intelligence (AI) era. AI is sufficient to provide fast and exact service to customers.
- Digital banking can also help out in this way.
- Banks should focus on payment services. They should invest in this area because this can shift customers from BB to digital banking.
- API (Application Program Interface) is changing day by day. It is becoming strong day by day. This makes gateway payments easy. I don’t know if any bank has its own gateway except for HDFC Bank.
- Who is driving fast digital banking? Who will win, which speed is very fast? But is it very important? This kind of banking bears high risk. So, banks should strengthen the risk part. Every account or product which has been sourced digitally should check from the risk department before on-boarding it to the bank.
- There should be no compromise with risk and compliance part in digital banking.
- The operation and service of branches should be centralised.
- Digital sales can give prosperity to bank.
If all the above is ensured, cost will decrease in a big way. So, features of minimum balance will not exist. Every customer today exists only on the basis of good service, strong operating system and excellent features of product.
- Banks will focus on banking product rather than cross sales. Cross sales can destroy banking.
- The need of the hour is to shift from traditional banking to innovative banking. We are not doing well in bond market.
- Sales should focus to acquire good and new customers only.
- Training and compliance should be key part of sales.
- Bubbles are lying in every bank. They are not capable of identifying and removing this bubble. If this bubble is big, then banks will face a huge loss.
- Branches only have hard core sales segment, which drive themselves and acquire good customers. Hierarchy should be less in this segment. Sales is not responsible for anything else except quality sourcing and service.
But it is sad to know that leaders in banking are not this way. The way that that the current leaders are driving can destroy BB. So, I can select the title, “Don’t bite the hand that feeds you”.
With Regards,
Ajay Kumar
You are welcome to share your comments on my mail id: ajay.mrim@gmail.com