Home / Industry / Banking /  Pandemic has accelerated the shift to digital banking

A shift is taking place—possibly for good—in the way people do banking, with a majority adopting digital and other channels to reduce their dependence on brick-and-mortar branches.

Speaking at Mint’s CXO panel discussion on 15 September, digital heads of banks and non-banking companies said that they see a redefinition in the purpose of branch banking.

“Ninety-five percent of transactions moved out of branches post-covid. Unless there is a great need for customers to visit branches, we don’t see it happening. We have also seen fast adoption of WhatsApp banking and conversational banking bots," said Deepak Sharma, chief digital officer at Kotak Mahindra Bank.

“It’s not just digital channels. All channels like conversational, voice-based see a significant shift. Very soon, we will see this while doing small businesses transactions and loan origination. Even after we come out of covid, this shift in habit that we see will continue," he added.

But bankers don’t see a closure of branches. Instead, they expect cuts in the size of branches and most transactions to move outside, leaving only the bigger ones to take place inside branches.

“I think branches are here to stay. But the role, shape and size of interactions will see significant change. Covid has accelerated digital adoption. When ATMs came, people said tellers and branches will go; when e-banking came, people said the same about branches. The question is, how do they co-exist. There will be more face time, quality conversations in the branches," said Jai Pawani, chief operating officer, HSBC India.

Even the insurance sector, which has traditionally been a people-centred business, has seen a dramatic shift in the way it does business.

“Insurance has been a traditional way of business, with agents meeting people as trust has to be built. Covid has changed the mindset. We started emphasizing on onboarding customers using a tab, it has helped us to move seamlessly," said Sankaranarayanan R., chief technology and data officer at India First Life. “Digital enablement of traditional channels has happened. It is all about adaptation and changing the mindset. In the next one year, digital sales may move to 80% from traditional sales. We were behind banks. Now we are moving ahead of banks."

Experts also said that customers, especially micro, small and medium enterprises, will see the biggest shift from cash to digital.

“Banks are working with non-banks like accounting platforms, inventory and supply chain management platforms to see how we can get data to build either credit underwriting or transaction processing or reconciliation. Next year to two years, if any segment will see significant leap, it would be SME," said Kush Mehra, chief business officer, Pine Labs.

While the impact of the pandemic on branch banking is visible, fintech companies are cautiously optimisticon how this pandemic may impact their business. “As roles of physical touchpoints change, getting the algorithm to adapt is what will be key for the next six months," said Mithun Sundar, chief executive, LendingKart.

ABOUT THE AUTHOR

Gopika Gopakumar

Gopika Gopakumar has worked for over 15 years as a banking journalist across print and television media. Her expertise lies in breaking big corporate stories and producing news based TV shows. She was part of the 2013 IMF Journalism Fellowship Program where she covered the Annual & Spring meetings of the International Monetary Fund in Washington D.C. She started her career with CNBC-TV18, where she also produced a news feature show called Indianomics and an award winning show on business stories from South India called Up South. She joined Mint in 2016.
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