Branchless banking can help expand formal banking: PwC

Branchless banking and shift from the traditional to low-cost solutions like solar ATMs will help bring more people under the formal banking ambit, a report said.
The traditional branch-heavy approach to financial inclusion would require addition of almost 4,00,000 branches and 1,75,000 ATMs by 2034 to the existing network of 1,00,000 branches and 1,15,000 ATMs, said the PwC report 'The Future of India: The Winning Leap'.
This would require investment of around USD 40 billion by 2034 through traditional means, it said.
The traditional approach to growth in the banking industry -- building more brick-and-mortar bank branches -- will however not always be a profitable proposition, especially in rural markets, it said.

Many accounts opened in rural parts, at present, remain comparably inactive and hence operationally inefficient and less profitable for the banks, it pointed out.
"To deploy such solutions, banks must forge cross-sector partnerships with established players, shift from traditional to emerging low-cost solutions such as solar ATMs, and ride the mobility wave to maximise their reach to customers. As a result, India could expand the percentage of citizens who have access to formal banking services from 35 per cent in 2012-2013 to 90 per cent in 2034 through much lower investments of USD 28 billion," the report said.
Adoption of branchless banking channels and partnerships with players in other sectors could help banks reduce their infrastructure investments by 30 per cent, the report said.

Also, growth of 5 per cent in cashless transactions could help save more than Rs 500 crore annually for the national economy through lower transaction and administrative costs, it added.