Mumbai: The country’s largest lender, State Bank of India (SBI), launched three digital initiatives on Friday and indicated that it may have to prune its branch network once its associates are merged.
“We are at about 16,800 branches at SBI and overall group is 22,000-plus. In terms of rationalization of branches, corporate branches of associates would fold up into the corporate branches of the parent because basically accounts are common," said B. Sriram, managing director of corporate accounts group at the bank.
“On the retail side, we will have to develop a detailed plan on rationalization of branches. But there are synergies with associate banks. For instance SBBJ covers interiors in Rajasthan while metro areas are with SBI branch network. Rationalization is being looked at," Sriram added.
SBI made its debut on social media banking by launching its platform called “Mingle" through which its customers can transact using Facebook and Twitter. The customers have to register for this service through a simple one-time registration process using either their account number or their ATM/debit card details. For a start, customers can view their account statements and their balance on Twitter. On Facebook, customers can also do fund transfers.
Another initiative is a tie-up with Flipkart through which the bank will extend loans to select customers for purchases above ₹ 5,000. SBI said that at present around one million customers are eligible for such a loan. Once customers shop on Flipkart, they can opt for equated monthly instalments (EMI) at the check-out and for this the customers would not need a credit card, only an SBI account.
When asked about the credit risk, SBI officials said that the risk will lie with the bank but due diligence on borrowers’ credit repayment is already in place as these would be existing customers of the bank. “This is a pre-approved credit. We have currently one million customers whose credit risk assessment has already happened," said Rajnish Kumar, managing director of national banking group at SBI.
As the banking sector opens up to more competition with the entry of payments banks and small finance banks along with two new universal banks, the move towards a digital ecosystem has hastened with top lenders launching several initiatives that seek to enhance existing customers’ experience and attract more.
The drive to dominate the digital space could prompt lenders to relook at their existing branch network as brick and mortar touch points may lose significance as customer adopt digital channels.
SBI will bring into its fold more than 6,000 branches once its five associates merge. This would be at a time when the bank is seeing a large part of its transaction traffic moving to digital channels.