The rise of the internet and the increasing penetration of broadband internet has ensured that large parts of urban India need not physically go to a bank to transact business. Every major scheduled commercial bank in India now offers its customers the choice of using the online platform to conduct routine transactions that would otherwise require you to go to your branch. With banks adopting systems like National Electronic Fund Transfer (NEFT) and Real Time Gross Settlement (RTGS), fund transfers take only a few minutes.
Most banks now go to great lengths to convince their customers to use the online mode of transactions. While the banks are legally mandated to use certain technologies to protect their customer from online fraud, most banks set limits on the amount of transactions that can be conducted online.
Retail banking has been the backbone of the financial services industry in India, since banking was established, in pre-independence times. Post-independence, all banks were required to seek permission to set up new branches and spread their network. Since the last two decades, the situation has changed and the entry of private banks has changed the dynamics of the industry. Embracing technology in a bid to outdo their entrenched PSU counterparts, private banks introduced online banking. This has taken root now and reports estimate that branch banking has slowly seen a decline. While most people still prefer to go to a branch to transact business, the younger generation is more comfortable using net banking.
The benefits of net banking are now apparent, as it totally removes your dependence on visiting the branch. Everything from your account statement to fund transfers, to requesting a cheque book can be done online. The benefits for banks are obvious. IT infrastructure required to service online customers is a one-time cost as compared to the ever increasing costs of hiring staff and maintaining branches in various locations.
Net banking also frees customers from dealing with a bank only during business hours. The fact that you can operate your account on a public holiday and the fact that you are not bound by geography when operating an account online also have helped customers take to online banking.
Statistics reveal that now ATMs have exceeded the number of bank branches in India. Almost 45 % of the ATMs are non-branch locations. With the increasing penetration of mobile phones, branch banking is set to become a rarer commodity. Net banking has already taken the load of the bank staff. Footfalls in branches have dropped in the last 3 years. All banks have begun advertising their online platforms to encourage their customers to use net banking.
While Net banking will never fully replace branch banking, a large variety of routine tasks can be done online. This will ensure that the number of times people visit a branch will now reduce.