Technology can help banks reduce 50% costs

 Banks in India can reduce costs by up to 50% on a per-transaction basis in the next few years by going digital, according to a study.

Redesigning the processes and systems of the banks for the digital age, structurally changing their cost base, and instituting more aggressive ongoing cost management processes can help in reducing the costs, an Assocham-PwC study titled ‘Logging into digital banking: Creating access, transforming lives’ said.

“Banks will have to make changes to the way they operate, including making the operating model agile so as to easily adapt to changing business dynamics as the people driving technological innovations at banks have grown up on technology that is different from what is prevalent in today's times,” noted the study.

Branches may remain, but need to take many forms, from flagship information, advisory and engagement hubs (offering education, financial advice, full service capabilities and community offerings) to smart kiosks (offering service, sales, cash and video contact with a range of specialists), it notes.

Competitive reach of banks will no longer be determined by branch networks, rather by technology and advertising budgets. Besides, new entrants will no longer be constrained by the availability of acquisition targets and prime retail locations, the study adds.