State Bank of India opened fewer branches in the last couple of years, probably anticipating assimilation of the associate banks into its fold and significant traction in transactions on digital banking channels such as Internet and mobile banking.
Branch network expansion of India’s largest bank hit the slow lane, with the number of branches opened declining from 1,053 branches in FY14 to 464 in FY15 and 451 in FY16.
In the case of the five associate banks too, the number of branches added collectively declined from 599 in FY14 to 446 in FY15 and 244 in FY16.
Now with the Cabinet giving its in-principle approval to SBI to merge its five associate banks with itself, the bank is expected to get into a branch consolidation mode as 6,978 branches will get added to its own network of 16,784 branches. At many locations, associate bank branches and parent bank branches are situated cheek by jowl.
SBI Chairman Arundhati Bhattacharya, in a statement, said, “While the network of SBI (post-takeover of associate bank branches) would stand to increase, its reach would multiply. One can expect significant efficiencies to be created from rationalisation of branches, common treasury pooling and proper deployment of a large skilled resource base.”
Even as the number of branches added has come down, the number of Internet banking transactions at SBI zoomed to 124 crore in FY16 from 64 crore in FY14. Similarly, mobile banking transactions jumped to 14.41 crore in 2016 from 5.74 crore in FY14.
As of March-end 2016, SBI’s Internet and mobile banking users stood at over 2.55 crore (over 2.20 crore as on March-end 2015) and 1.77 crore (1.35 crore), respectively.
In the bank’s annual report, Bhattacharya said, “In the coming year, we aim to build upon this encouraging digital journey. The biggest gain from technological innovation for your (shareholder) bank is that it will improve customer retention and help attract savvier, higher-income and potentially more profitable customers.”
“Younger customers and the “mass affluent” will want the convenience provided by digital banking. They will therefore, migrate to banks that can provide this convenience.”