By Ganesh Vasudevan

Is the bank branch dead? While the pandemic has accelerated the adoption of digital technologies especially in the BFSI sector creating a perception that the days of the physical bank branch may be numbered, the reality is far more complex. Customers of all ages still prefer human interaction and personalization at key financial moments in their lives that a digital interaction is unable to offer.

In fact, many customers want the human experience to be blended with digital speed and convenience.

According to an IDC research, by 2024 50% of in-branch transactions in Asia Pacific region will be initiated as prestaged transactions or appointments for specialists that start on digital platforms and fulfilled on bank-owned technology and locations. Prestaged interactions at bank-owned locations will expedite in-branch transactions while providing the customer with the convenience of using digital self-service tools available from online and mobile solutions.

Data suggests that during the pandemic, the number of Bank branches have actually increased in number, fuelled by the customer need for personalisation, empathy and a sense of trust and reassurance that a physical interaction can provide.

Branches are here to stay!

It is thus safe to say that the branch network is here to stay as there has been a steady growth in branches during the last couple of years (Fig 1).

(Fig 1 – Source: IDC Analysis)

While top private sector banks have increased their branch network by around 12% during 2019-21, large public sector bank branch networks increased by over 43%, primarily owing to the amalgamation exercise. Interestingly this growth in branch network has positively impacted the balance sheet of the banks, with net profit/ branch increasing by over 80% in 2021 for private sector banks, and by over 18% for public sector banks. This increase in branch network has largely remained steady during the last decade, and there has been no apparent radical reduction in the growth of branch network any year (Fig.2).

(Fig 2 – Source: World Bank & RBI)

While the significance of the branch network continues to remain, it can’t be disputed that the pandemic has brought the focus back on branch strategy owing to an accelerated shift to digital channels and rising expectations of the consumer.

The best response to deal with such disruption isn’t to cut back bank branches in an ad hoc manner, but in transforming the branch network into experience stores by leveraging technology so as to provide a positive and personalised blended experience to the customer.

Path to a future branch network

Customers prefer digital when transacting routine matters but prefer the human touch at critical times. So it is vital for banks to seize this opportunity to look beyond the traditional service delivery model of branches and focus on integrated engagement with the customer by converging the digital and physical experience through their branch network.

Not surprisingly, banks in India are reimagining their branch network strategy with calibrated expansion focused on customer centricity. HDFC Bank has identified ‘Re-Iimagining the branch channel’ as one of their key strategic pillars, similarly, Axis Banks ‘Branch of the Future’ initiative aims to re-think branch layout and design, digitize activities of bank staff and enhance customer self-service.

According to IDC data, the technology spending by banks in India to deliver omni experience engagement will grow at CAGR of 21% to over $ 535 Mn by 2024.. Branch channel will become the convergence point for digital and physical engagement while providing the customer with an experience that they’ll come back for.

It is important to note that in the absence of a clear understanding and agreement on the definition of branch transformation across the industry, it may be difficult for bank executives to decide the right approach for their bank. However, there are four key aspects to think about as each bank begins its journey towards branch transformation – reimagining the branch design and footprint, optimizing the customer journey, empowering the branch staff and leveraging the power of data. These aspects need to be augmented and orchestrated using appropriate technologies like digital identity, contactless engagement, conversational bots, and video-based interactions as bank branches re-invent and transform them into an experience center (Fig. 3).

(Fig 3 – Source: IDC Analysis)


Branch banking will not die any time soon. However, the traditional definition and purpose of branch banking has become obsolete and needs to evolve. Besides being a symbol of trust, bank branches will be the only channel for banks to differentiate themselves from the challenges of Fintechs.

Banks need to pay attention while designing their branch strategy and customer engagement by leveraging appropriate enabling technologies. Whether it be Near-field communication (NFC), Bluetooth, facial recognition, and beacon technologies, banks need to leverage new modalities of engagement to allow their customers control and choice for seamless interactions across digital and physical channels.

The author is Research Director, IDC Financial Insights

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