 "Union Bank to open 100 digital branches this year")
Public sector banks (PSBs) are typically viewed to be slow adopters of technology. But with lenders like Union Bank of India focusing heavily on digital, this myth is being dispelled.
Arun Tiwari, chairman and managing director, has ensured that digital will be amongst the top three differentiators for the bank. With this in view he says he has begun the transformation and it started with him. Tiwari said the bank had done away with the piles of files on his desk and replaced it with a tablet. Now, with a single click, he can keep tab of what is happening in a bank branch thousands of kilometres away in Vellore. The digital culture has percolated to other employees of the bank and is now being extended to the customers as well.
Tiwari said the lender is looking at launching 100 digital branches this year that will be unmanned. “We think we will have a minimum of 100 digital branches by the year-end. And we are capable of doing that because we have a strong technology back-end and we have managed to digitise the entire process,” he said.
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Apart from digital branches, the bank will also soon be launching NFC (near field communication)- enabled contactless debit cards. With this, customers need to only tap their cards at point of sales (PoS) terminals, instead of swiping them. Some other lenders such as ICICI Bank, Axis Bank and State Bank of India have already launched NFC-enabled cards.
Union Bank will also be looking at launching mobile wallets which will allow customers to view their statement online, transfer funds based on email ID and mobile number, open savings bank account online, etc. They have already launched m-passbook as part of their initiative to increase their focus on digital. With this, the bank expects more transactions to go through via the digital platform.
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On the wallet front, the bank is also looking at tying up with mobile wallet player, Paytm to allow its users to top up their wallet from any automated teller machine (ATM) of the bank. Currently, these top-up facilities are available only on net banking and debit/credit card gateways.
“Currently, about 59 per cent (in volume) of the transactions take place on the digital medium. In fact, till last year the number was higher, at about 63 per cent, but it has come down due to the increase in the total number of accounts opened under the Pradhan Mantri Jan Dhan Yojana,” explained Tiwari.
According to the Reserve Bank of India (RBI) data for Union Bank, at the end of April, transactions worth Rs 118 crore were carried out on the mobile platform. A year ago, the number stood at only Rs 26 crore.
Tiwari explained that apart from providing convenience to the customers, the digital medium also translated into cost effectiveness for the bank. “A transaction at the brick-and-mortar bank branch costs anywhere between Rs 55-60; if you shift the transaction to internet then it costs about Rs 15-17 and on the mobile the cost is reduced to only Rs 2-3,” he said.
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Along with increasing offerings for customers on the digital front, the bank is also looking at tying up with online retailer Flipkart to roll out its MPoS (mobile PoS) solution for customers ordering their product through cash on delivery.
Other lenders such as SBI have tied up with Snapdeal to roll out a capital assistance programme for sellers using the online retailer’s platform and also with PayPal to help in international trade. Apart from this, SBI had also signed a memorandum of understanding with Amazon to develop a payment solution for customers and sellers. It has also tied up with Makemytrip. Recently, ICICI Bank tied up with Alibaba.com; with this the Indian entrepreneurs who are a part of the online portal will get a whole host of banking facility from ICICI Bank.
According to a report, PwC has said the e-commerce market in India will touch $22 billion by the end of 2015. With this in view, banks are clearly seeing lending to small and medium enterprises in the online space as a growing opportunity.
The bank is looking at the digital medium not only to provide more convenience to the customers and reduce its cost but also to provide additional security while transacting. For instance, Union Bank will soon be allowing its customers to block or unblock their credit/debit cards on their own. Apart from this, customers can also set limits for cash withdrawal, PoS and e-commerce transactions on their own.
It is not only the digital medium but the bank has been overall growing its focus on alternative channels like ATMs as well. With this in view, the bank has already launched small denomination ATMs in rural areas that allow customers to withdraw small denomination currency notes like Rs 20 and Rs 50. Going ahead, the bank is also planning to launch recycler ATMs, wherein the deposited money of the customer in BNA (bunch note acceptor) shall be available for cash withdrawal as well.