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Branch Banking – Tapping the Goldmine

Two bankers – Divesh Dinkar, GM IT at Bank of Maharashtra and Rajnish Khare, Chief Digital Officer at Union Bank of India, along with Harshal Dunakhe, CEO – Business Automation at Kores (India) Ltd, share insightful perspectives on transforming branch banking services for impact and efficiency. The views expressed by the bankers are their personal views and not necessarily that of their respective banks.

Looking at the news headlines these days, one finds many banks expanding their branch network. One bank did a massive advertising campaign announcing their milestone of 5000 branches. Is it that in the days of digital banking, branch banking is still a gold mine?

The first question in the context of branch banking, particularly for PSU banks, is which are the customers segments that visit the branches to fulfil their banking needs. The answer is retail, micro and SMEs. Typically, traders, partners and proprietors, and to some extent private limited companies, are the branch customers. Further, senior citizens form an important customer group for branches. Financial products related to these segments must be specially packaged for these customers, avers Harshal Dunakhe, CEO – Business Automation at Kores (India) Ltd.

From a product point of view, loan products form a large part of the transactions, from personal to business loans, every loan product sold has some embedded previous relationship with the customer, he adds.

Two important aspects – relationship with the bank, and trust in the bank’s brand, forms the foundation of these customer segments to keep coming to the PSU bank branches.


Even today PSU banks follow a phygital strategy and do not go totally digital. The important question arises as to how they are creating a physical blend to facilitate seamless transactions with speed while maintaining the physical touch at branch.

Rajnish Khare, Chief Digital Officer at Union Bank of India says that by combining digital tools, upgraded physical branches and integrated experiences, PSU banks are facilitating seamless transactions at speed while maintaining a role for customized in-person service focused on specialized products and client relationships. “PSU banks are investing in digital tools and leveraging mobile apps, online banking, AI-enabled virtual assistants and digital kiosks to provide self-service options that complement physical branches,” he says.

He further recommends 2 more options: (i) upgrading branches with faster teller machines, kiosks, chatbots, interactive screens and mobile banking access points (ii) Ensure a consistent experience across channels through integration of systems, data and workflows, which allow customers to start applications online and complete them at branches.

To the same question, Divesh Dinkar, GM IT at Bank of Maharashtra, avers that while digitization is already adopted by most of the customers in the form of UPI transactions, there are a large number of customers who still prefer to visit the branches for service delivery, and these include customers in the rural and semi urban areas, farmers, pensioners and senior citizens. The UPI volume of 84 billion transactions in FY 22-23 accounted for almost 75% of total transactions during the year, and is likely to scale up to 90% by FY26-27.

Dinkar showcases 3 steps PSU Banks have taken to enhance customer service at the branches: “First, banks have deployed ‘Digital Champions’ at branches to hand hold and support the customers in digital adoption. Second, some of the banks have started nudging customers towards digital journey by extending interest rate or processing fee discounts for loans, reduction in service charges for online transactions, etc. Third, PSBs have also opened DBUs (Digital Banking Units) & Digital Galleries wherein manned by one or two staff to extend necessary guidance to the customers for utilization of the services through digital channels.”


As per estimates, a typical in-person transaction in the branches cost Rs96 per transaction, which is reduced to Rs10 for ATMs and less than a rupee for mobile banking and other online channels. PSU banks have consistently been motivating its customers to get them onboarded to digital channels while maintaining strong infrastructure to support the customer’s transaction volume. Consistent reduction in technical declines (TDs) and maintaining the same below 1% would help in seamless transaction services to the customers, says Dinkar of Bank of Maharashtra.

The number of walk-in customers as well the average number of staff deployed at branches in PSBs have reduced by 50% in last 7-8 years. This has reduced the cost to income ratio for PSBs.

Dinker reveals further: “A strong system for handling customer grievances and feedback response systems enabled by the PSU banks contributed to enhanced adoptions of customers on digital channels over the period. The new age apps have created a parallel banking institution in itself with its parent bank. YONO is one such branding as on date. Besides, banks have also prioritized IT spends as well as redundancy of its tech systems to ensure greater reliability and fewer technical declines for seamless banking services.”

Rajnish adds that incentives like cashback and rewards is one technique that is moving customers to these channels. Automating back-office functions like reconciliation to reduce staff workload related to low value transactions is another technique, he reveals.

Harshal indicates that it is important to understand the need first. For the near foreseeable future, branches will be a key touchpoint for the bank. Key parameters of its efficiency remain fundamental, and these include – how long does it take to complete a transaction, how quickly is a request processed at the back end, what is the revenue per customer and the revenue per employee.

Saving costs of operations, increasing revenue per employee is possible when seen together with a meaningful dialogue with the customer who comes to the branch to get more revenue and an express pace of request processing.

Harshal says that Kores India recommends exactly the above and has been building solutions around this concept. Kores Branch Automation Platform (K-BOP) is a common automation layer not only for teller activities but also for many mundane back-office tasks.


Banks are utilizing customer data and insights gained from their different digital banking channels to provide more tailored in-branch experiences. PSBs are segmenting customers based on factors like their account type, balance, demographic profile, transaction history and lifetime value. They then aim to customize the services, advice and products offered during branch visits according to each customer’s unique needs and priorities, shares Rajnish of Union Bank of India.

He then reveals 4 ways banks customize branch banking for high-value customers: “First, assigning dedicated relationship managers for high net-worth customers who understand their financial goals and can recommend tailored investment options. Second, providing priority access and personalized services for customers with higher balances through VIP lounges, rapid queues and dedicated staff. Third, offering customers insights into their spending patterns and recommendations for saving, investing and goals based on their transaction history and financial profile. Fourth, cross-selling and up-selling additional banking products like loans, credit cards, investment accounts, etc, targeted to each customer’s particular needs and financial situation.”

As part of EASE (Enhanced Access Service Excellence) matrix, data analytics is one of the criteria every PSB is expected to establish and create more use cases for business augmentation and service conveniences, says Dinkar. In one of the use cases, the analytics team analyzed the pattern of ’counter cash transactions’ in the branches and the segment of such customers were pursued for debit card and online banking channels. The consistent analysis and drive in this regard helped Bank of Maharashtra reduce counter cash transactions by 52% within 2 years.


Why silos? Customer is not comfortable if approached by different people for different products. That is where the relationship managers came into the structure of branch/personal/ even corporate banking.

A customer walking into the branch is free customer acquisition opportunity, avers Harshal of Kores India.

Customers are very comfortable talking to the teller or a relationship manager. This is exactly the point of sale or initiating the sale that needs to be captured. Adds Harshal: “Our and every other solution should aim at making the most of this incredible opportunity for pitching multiple products.”

Dinkar says that PSU banks have already established data warehouses for multiple MIS needs. They are now moving towards micro-segmentation to devise personized content and mobile app experiences.

Rajnish Khare classifies the initiatives into 4 categories: “First, combining customer data from different systems like CRM, transaction history and loan data to build a centralized customer profile. Second, implementing a consistent customer ID across channels so data from mobile app, internet banking and branches can be connected to the same customer profiles. Third, mapping customer journeys across channels to identify touch-points for improvement and integration, such as, integrating online and branch account opening processes. Fourth, investing in tools and technologies that break down data silos, enable data sharing across departments and provide a single customer view. This supports branch staff in personalizing service and product recommendations for each customer’s unique circumstances.”


There are multiple advancements in automation, on the digital side as well as self-service side. In this context, Harshal raises questions from the business perspective: What will be the impact on customer foot fall in the branch? When will our country become non-branch banking country? If not soon, then how are we transforming the branches to become a revenue opportunity at a reduced cost?

He also gives a key branch customer perspective: “Consumers in general and bank account holders in particular are comfortable and happy talking to someone about their requirements. One to one dialogue is still very strong when it comes to seeking information and services.”

Dinkar says that Bank of Maharashtra has taken up process automation as one of the prominent project implementations. It has so far automated its customer onboarding, nomination, card stop services, IB creation, etc. Loan process automation, compliance audit, credit and various other inspection and audit functionalities are in the pipeline.

Rajnish lists 5 new areas for automation:

  1. Inventory Management: Automated systems using technologies like RFID and sensors will enable real-time tracking of inventory levels, reorder points and product locations for more efficient stock management and lower wastage.
  2. Order Processing: With advanced automation tools, more routine order management tasks like order entry, processing, fulfilment and invoicing will be taken over by automated systems and thereby reduce manual errors and costs.
  3. Account Management: Tasks like onboarding new clients, processing transactions, verifying identities and managing accounts will continue to shift from manual to automated workflows using AI and robotics. This allows banks to scale more efficiently.
  4. Customer Support: More straightforward customer queries that can be handled by analyzing large amounts of data will be automated through AI chatbots and virtual agents. This frees up agents for more complex issues.
  5. Records Management: Automated systems that leverage technologies like AI, ML and RPA will be able to classify, index and retrieve business documents with increasing accuracy to improve records management efficiency.

Transactions including loan applications, service requests, trade transactions and general cash transactions are being covered in our philosophy of automation, says Harshal of Kores India. Automation in branches is moving fast, from VR, social media platforms, AI becoming key components. Automation aimed at reducing front-end and back-end processing timelines, over and above freeing up time of front-end employees to engage the customer are the latest areas, he adds.


With a population of 1.4 billion people, anywhere in India can become crowded. Crowding at the branches is still common, creating customer dissatisfaction, and creating a loss of brand equity for the concerned bank, and for the banking system in general.

Dinkar points to 2 major initiatives to mitigate branch overcrowding and chaos: (i) enhancement of technology infrastructure and customer adoption on digital channels, and (ii) automation of service journeys and access through digital platforms.

As per the transaction data, branch banking transactions have fallen down to 4% of total transactions of the banks. Some of the banks have targeted more than 50% of customer onboarding through digital channels and V-KYC without requiring customers to visit the branch.

Harshal sees the gold in the ore. He asks: “Why should there be a solution to a good problem? These are prospective customers for other products that the bank wants to sell. A machine cannot create and maintain relationships. The best fit is to reduce the time they spent on doing transactions they came for. Make it as fast as self-service and guide them towards compatible products they should be spoken about.”

His solution is simple – make branch banking so easy and automated that staff is relaxed, customer is happier doing transactions through the branch. The softwares and hardwares should be aligned to achieve this.


Dinkar lists 4 aspects of the branch of the future.

  1. A robust technology infrastructure along with AI and analytics enabled features in designing and delivery of customer services.
  2. Automation of operational processes so that frontline staff will be more focused on value added services as well as customer adoption on digital channels.
  3. Reduction in multiple strenuous processes at branches, digital documentation and paperless working to make the branches of the future more sustainable.
  4. PSBs must re-imagine the branch layout for future and have provision of DigiCorner in all the branches.

Rajnish avers that the branch of the future should focus on selling and managing specialized products requiring nuanced human interactions. Examples include providing customized advice and solutions based on a deep understanding of client needs, building long-term relationships and trust through personalized service, and handling complex exceptions and edge cases that automated systems cannot yet match.

As for PSU banks, he thinks they have an opportunity to differentiate themselves through customized human resources that leverage a deep relationship with clients to design and sell specialized products. This hybrid model utilizes the best of both automation and specialized human capital.

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