Branch expansion loses pace to tech, but some banks ride rural themes

Jaipur: The spread of digital transactions and online banking has slowed down the growth of branch expansion with only 194 outlets getting added in Rajasthan during the two- and half-year period ending September 2022. The 47 banks operating in the state including government, private lenders, rural regional banks, and small finance banks had a network of 8,153 branches in March 2020 which inched up to 8,347 by the end of September 2022, as per the latest data available with the State Level Bankers’ Committee .
While the industry attributed the tepid growth in brick-and-mortar branches to the rise in digital transactions and online banking, there are some banks which continue to expand their physical network.
Prateek Sharma, branch banking head, central India, HDFC Bank, said, “For us, the physical branches remain as relevant as they used to be. That’s the reason we have gone from 197 branches in the state in March 2020 to 318 by the end of September 2022. As of first week of March, our branch count has crossed 400 mark and we will exit the year at 425 branches.”
Sharma said that the digitisation, online banking has not stopped people coming to banks for products like loans for housing, car, education loans, deposits and many other services the banks offer.
“Yes, there was a thinking that the penetration of online banking and digitalisation would render the physical branches irrelevant. Of course, they have made life simpler, and customers should use the online services. But we always believed that brick-and mortar branches have a bigger role to pay, especially in semi-urban and rural areas,” said Sharma.
While people in rural areas do use smartphones for online purchases, personal engagement is the way when it comes to banking. Additionally, Sharma said, the economic activity in the rural areas expanding due to the booming hospitality sector, dimensional stone business, textiles, and agriculture.
“People in rural areas still walk miles to reach a bank branch. And there are regions where the local economies are showing momentum, be it mining, hospitality, or agriculture. Identifying those areas and reaching out to those people is what we are focusing,” said Sharma.