State Bank launches six digital branches, plans 50 more in one year

State Bank of India (SBI), the country's largest lender, has launched six digital branches across the country. These new digital stores - sbiINTOUCH - will enable consumers to do their basic banking activities and can be used to open accounts, apply for loans, etc.

These branches will enable customers to carry on banking transactions via the digital medium - such as interactive walls and table displays - without much of human interaction. However, at the moment the branches will not be un-manned and will have employees to help customers in case the need arises.

In order to stay relevant to young consumers, SBI has decided to go digital in a big way in the coming days. "Today, more than half of India's population is under the age of 25. By 2020, India's average age will be just 29 years - this is a digital demographic that expects businesses to provide solutions immediately. At the same time, the mass-affluent - no matter what their age - have similar expectations," said Arundhati Bhattacharya, Chairperson, SBI.

Going ahead, the bank wants to scale up the number of digital branches and aims to take it to several locations across the country. A Krishna Kumar, managing director & group executive (International Banking) said, "We have six branches across the country today but we want to expand it to 50 in the coming one year across tier-I and select tier-II cities."

At present, the lender is focusing on malls or high streets as these are high footfall areas. For this digital initiative, the bank has engaged Accenture as its technology partner.

Apart from being convenient for the consumers, these branches also turn out to be advantageous for the bank itself. "These digital branches will help the bank in improving the overall productivity as the manpower requirement comes down with technology and the staff can be deployed elsewhere thus enhancing productivity," explained Kumar.

He added that the referrals from the digital branches can also help in boosting the overall loan growth for the bank.

Apart from the digital branches, the bank also plans to open another 1,000 branches and 3,000-5,000 automated teller machines (ATMs) across the country. Kumar also added there is a need to revise the ATM transaction fee charged for withdrawal from another bank's ATM.

The Indian Banks' Association (IBA) has suggested there should not be any free transactions for consumers in cities and they should be charged for cash withdrawals from ATMs of other banks. With the maintenance cost of ATMs going up banks have been asking for a revision in fee. Kumar said despite having more than 27,000 ATMs in the country, the bank is just about able to break-even in its ATM business.

The lender has also been focusing on cash withdrawal via Point of Sales (PoS) machines and has been trying to push the business in the past couple of months.