{"id":5088,"date":"2020-07-09T19:55:25","date_gmt":"2020-07-09T19:55:25","guid":{"rendered":"https:\/\/bengalnewstimes.com\/?p=5088"},"modified":"2020-07-09T19:55:25","modified_gmt":"2020-07-09T19:55:25","slug":"banks-move-branches-rethink-strategy-to-cut-costs-amid-covid-spread","status":"publish","type":"post","link":"https:\/\/bengalnewstimes.com\/?p=5088","title":{"rendered":"Banks move branches, rethink strategy to cut costs amid Covid spread"},"content":{"rendered":"<p><\/p>\n<div>\n<div class=\"article-image\">\n<figure><img loading=\"lazy\" decoding=\"async\" class=\"lazy lazy-hidden size-full wp-image-2018919\" data-lazy-type=\"image\" src=\"https:\/\/images.financialexpress.com\/2020\/07\/1-272.jpg\" alt=\"The average banking customer, too, is now averse to making any physical contact with her bank.\" width=\"660\" height=\"440\" srcset=\"\" sizes=\"auto, (max-width: 660px) 100vw, 660px\"\/><noscript><img loading=\"lazy\" decoding=\"async\" class=\"lazy lazy-hidden size-full wp-image-2018919\" data-lazy-type=\"image\" src=\"https:\/\/images.financialexpress.com\/2020\/07\/1-272.jpg\" alt=\"The average banking customer, too, is now averse to making any physical contact with her bank.\" width=\"660\" height=\"440\" srcset=\"\" sizes=\"auto, (max-width: 660px) 100vw, 660px\"\/><noscript><img loading=\"lazy\" decoding=\"async\" class=\"size-full wp-image-2018919\" src=\"https:\/\/images.financialexpress.com\/2020\/07\/1-272.jpg\" alt=\"The average banking customer, too, is now averse to making any physical contact with her bank.\" width=\"660\" height=\"440\" srcset=\"https:\/\/images.financialexpress.com\/2020\/07\/1-272.jpg 660w, https:\/\/images.financialexpress.com\/2020\/07\/1-272-300x200.jpg 300w, https:\/\/images.financialexpress.com\/2020\/07\/1-272-620x413.jpg 620w, https:\/\/images.financialexpress.com\/2020\/07\/1-272-401x267.jpg 401w, https:\/\/images.financialexpress.com\/2020\/07\/1-272-440x293.jpg 440w, https:\/\/images.financialexpress.com\/2020\/07\/1-272-80x54.jpg 80w, https:\/\/images.financialexpress.com\/2020\/07\/1-272-313x209.jpg 313w\" sizes=\"auto, (max-width: 660px) 100vw, 660px\"\/><\/noscript><\/noscript><span class=\"article-caption\">The average banking customer, too, is now averse to making any physical contact with her bank.<\/span><\/figure>\n<\/div>\n<p>In an increasingly-digitised world, banks have for years now been reorienting their outreach strategies away from purely branch-driven models towards digital channels. This process may now be getting accelerated as Covid pushes them to cut back on branch rentals.<\/p>\n<p>The average banking customer, too, is now averse to making any physical contact with her bank. Small wonder then that banks have begun to reduce their branch footprint and seem to have no qualms moving to smaller and less-prominent locations. They have also started to rethink parameters which determine location of a branch.<\/p>\n<p>In the last few weeks, large banks such as <a target=\"_blank\" href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/bank-of-baroda-stock-price\/\" rel=\"noopener noreferrer\">Bank of Baroda<\/a>, <a target=\"_blank\" href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/icici-bank-ltd-stock-price\/\" rel=\"noopener noreferrer\">ICICI Bank<\/a> and Bank of India have either moved to or started looking for new locations for some of their existing branches in parts of Mumbai, its adjoining regions and Kolkata. There is a clear drive to lower rental costs through such exercises.<\/p>\n<p>Ramesh Nair, CEO &amp; country head, JLL India, said many banks have gone back to their landlords to reduce rentals. \u201cWhat is happening is that they are trying to reduce occupancy costs rather than give up branches. This is something which has emerged post Covid and it is happening across the spectrum in terms of locations,\u201d Nair observed.<\/p>\n<p>There is more to the phenomenon than just cost control. Branch rationalisation ties in quite neatly with banks\u2019 long-term strategic goals of greater digitisation. A senior official with a large public sector bank (PSB) said most PSBs are now targeting cost-income ratios of between 45-50%. For most state-owned banks, the ratio is well over 50%. \u201cSince digital usage has gone up so much, wherever possible and wherever feasible, banks are moving to smaller spaces. Footfalls have come down and the digital footprint has increased,\u201d he said.<\/p>\n<p>Those who have been able to get good deals on rentals are also relooking the parameters dictating branch expansion. Virat Diwanji, group president \u2013 retail liabilities &amp; branch banking, <a target=\"_blank\" href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/kotak-mahindra-bank-ltd-stock-price\/\" rel=\"noopener noreferrer\">Kotak Mahindra Bank<\/a>, told FE that while a majority of the lender\u2019s existing landlords have agreed to reduce rents, consumer behaviour has changed such that branch planning must be rethought. \u201cIn the pre-COVID-19 world, branch location would have been decided based on data on deposit\/advances growth, socio-economic data of the geography, customer servicing requirements, etc. However, the Covid-19-led lockdown has significantly changed consumer behaviour,\u201d Diwanji said. The bank will continue to monitor and assess the new normal and will add to its geographic footprint \u2014 branches, ATMs or \u201cphygital\u201d branches \u2014 accordingly, he said.<\/p>\n<p>Indian banks\u2019 experience on this count is in line with that of their counterparts across the world. Consulting firm Capgemini carried out a survey for the 2020 edition of its World Retail Banking Report and found that 57% of consumers now prefer internet banking, as compared to 49% before Covid, and 55% prefer banking mobile apps, up from 47% previously. This change in customer behaviour has led to some banks putting branch expansion on hold.<\/p>\n<p>In its annual report for FY20, <a target=\"_blank\" href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/axis-bank-ltd-stock-price\/\" rel=\"noopener noreferrer\">Axis Bank<\/a> said despite being focused on growing the retail business, it will have to put branch expansion on hold. \u201c\u2026given the uncertainty induced post Covid-19, we may delay branch network expansion in the immediate near term even as we continue to engage in optimisation of the branch formats to deliver enhanced productivity, led by automation and digitisation of service operations,\u201d Axis Bank said in the report.<\/p>\n<p><a target=\"_blank\" href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/hdfc-bank-ltd-stock-price\/\" rel=\"noopener noreferrer\">HDFC Bank<\/a>, the country\u2019s largest private lender, has also spoken of the retail branch banking business \u201cbeing re-imagined through the levers of digital paperless processes and big data analytics\u201d. From choosing products based on consumption and spending patterns arrived at by using data analytics to going completely paperless with documentation, the bank said its focus is on leveraging technology to deliver \u201can omni-channel experience.\u201d<\/p>\n<p>The increasing reliance on digital channels is not without its risks, chief among which is the heightened threat of cyber attacks. Moody\u2019s Investors Service recently said the growth in online banking and remote work since the onset of the pandemic have increased banks\u2019 dependence on digital technology to serve customers. It has also expanded their use of virtual private networks (VPNs) and similar applications and services to support their remote work forces, all of these put these institutions at a greater risk of cyberattacks.<\/p>\n<p>In order to mitigate this particular challenge, banks will also have to adopt a stringent set of norms, Moody\u2019s said. Banks mitigate cyber risk through three primary mechanisms. \u201cThe first is strong corporate governance, including enterprise-wide cybersecurity frameworks, strategy and policy enforcement and improved reporting. The second is risk prevention and response and recovery readiness. And the third is information-sharing with other banks, adoption of international standards and regulatory oversight,\u201d the ratings firm said in its report.<\/p>\n<div class=\"common-bottom-text\">\n<p>Get live <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/\" target=\"_blank\" rel=\"noopener noreferrer\">Stock Prices<\/a> from <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/s-p-bse-sensex-stock-price\/\" target=\"_blank\" rel=\"noopener noreferrer\">BSE<\/a>, <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/nifty-50-stock-price\/\" target=\"_blank\" rel=\"noopener noreferrer\">NSE<\/a>, <a href=\"https:\/\/www.financialexpress.com\/investing-abroad\/\" target=\"_blank\" rel=\"noopener noreferrer\">US Market<\/a> and latest NAV, portfolio of <a href=\"https:\/\/www.financialexpress.com\/mutual-funds-india\/\" target=\"_blank\" rel=\"noopener noreferrer\">Mutual Funds<\/a>, calculate your tax by <a href=\"https:\/\/www.financialexpress.com\/income-tax-calculator\/\" target=\"_blank\" rel=\"noopener noreferrer\">Income Tax Calculator<\/a>, know market\u2019s <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/nse-top-gainers\/\" target=\"_blank\" rel=\"noopener noreferrer\">Top Gainers<\/a>, <a href=\"https:\/\/www.financialexpress.com\/market\/stock-market\/nse-top-losers\/\" target=\"_blank\" rel=\"noopener noreferrer\">Top Losers<\/a> &amp; <a href=\"https:\/\/www.financialexpress.com\/mutual-funds-india\/equity-funds\/\" target=\"_blank\" rel=\"noopener noreferrer\">Best Equity Funds<\/a>. Like us on <a href=\"https:\/\/www.facebook.com\/thefinancialexpress\" target=\"_blank\" rel=\"noopener noreferrer\">Facebook<\/a> and follow us on <a href=\"https:\/\/twitter.com\/FinancialXpress\" target=\"_blank\" rel=\"noopener noreferrer\">Twitter<\/a>.<\/p>\n<p class=\"telegram-text\"><img loading=\"lazy\" decoding=\"async\" class=\"telegrma_img\" src=\"https:\/\/images.financialexpress.com\/2020\/04\/telegram.png\" alt=\"\" width=\"24\" height=\"24\" style=\"margin: 0px 5px 4px 0px; float: left;\"\/>Financial Express is now on Telegram. <a href=\"https:\/\/t.me\/TheFinancialExpressOnline\" target=\"_blank\" rel=\"noopener noreferrer\">Click here to join our channel<\/a> and stay updated with the latest Biz news and updates.<\/p>\n<\/div>\n<\/div>\n<p><script async src=\"\/\/platform.twitter.com\/widgets.js\" charset=\"utf-8\"><\/script><br \/>\n<br \/><a href=\\\"https:\/\/www.financialexpress.com\/industry\/banking-finance\/banks-move-branches-rethink-strategy-to-cut-costs-amid-covid-spread\/2018917\/\\\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The average banking customer, too, is now averse to making any physical contact with her bank. In an increasingly-digitised world, banks have for years now been reorienting their outreach strategies away from purely branch-driven models towards digital channels. This process may now be getting accelerated as Covid pushes them to [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":5089,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"spay_email":"","footnotes":""},"categories":[36],"tags":[],"class_list":["post-5088","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-banking-business"],"jetpack_featured_media_url":"https:\/\/bengalnewstimes.com\/wp-content\/uploads\/2020\/07\/1-272.jpg","_links":{"self":[{"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/posts\/5088","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=5088"}],"version-history":[{"count":0,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/posts\/5088\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=\/wp\/v2\/media\/5089"}],"wp:attachment":[{"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=5088"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=5088"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bengalnewstimes.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=5088"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}