Banks losing significance: Branch v mobile technology

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mpesa mobile banking
M-PESA ? M stands for mobile phone, and PESA is a Swahili word for money. Many people in Kenya and other developing countries are finding it easy, safe and inexpensive to send or receive money. Photo -

Technology is playing a crucial role in our lives. Few years ago, paying bills, withdrawing money, investment of funds, and many other tasks demanded time and our physical presence at various locations. Now, everything is accessible on the go with the help of our mobiles and tablets.

Banks are coming out of their shells and transforming banking into a fun-filled and convenient experience. In yesteryears, banks were located in huge buildings with marble counters and a banker managing all the financial affairs. Things have drastically changed ever since with buildings replaced by canopies and outlets into malls and high streets, which are cheaper for banks to operate and manage.

Following international trends, banks in Gulf region are also analysing the cost effectiveness of their branch networks. Changing technology has brought a revolution by bringing customers closer without having many branches and bank employees. Large network of banks does not necessarily mean that it would be effective and business-friendly as well.

Good news is that the forecast of mobile payments for physical goods?will triple by 2015. As announced by telecommunications research organisations, figures would go up from US$60 billion to $170bn worldwide.

M-Pesa, one of the biggest providers of banking services in Kenya is operating without a single branch. A joint venture between Vodafone and Safaricom, it allows deposits, payments and remittances through text messaging and has forced big banks take a leaf from their book.

The bank does not operate from branches and sells licenses to retailers and partners with affiliate banks minimising operating costs. It reached 14 million customers in a span of 4 years making revenue of 11.78bn Kenyan shillings (AED464.2 million).

Abu-Dhabi-based Al Hilal Bank has totally negated M-Pesa’s concept banking and is constructing a 4,000 square metre flagship facility in its mall branch. The area constitutes of cr?che, serving women only and priority banking ? alongside a coffee shop, airline desk, Etisalat kiosk and a car dealership.

Mohammed Zaqout of Al Hilal justifies it to be not only cost-effective but also a way to create a unique and invaluable customer experience. For him, it not only justifies the cost but also received a reaction where the whole family comes back to open their accounts.

On the other hand, HSBC announced to cut 200 jobs in the region as a part of global efforts to reduce costs. To them mobile technology came as a rescue to retain customers and save the funds. The bank also accepted that providing banking services through mobiles or tablets is more important, considering the changing trends and customer preferences.

UAE?s Central Bank has a limitation for international banks where they are allowed to have only one branch per emirate, providing all the advantages through a single branch. The banks have therefore established customer service units occupying small spaces or kiosks in shopping centres, offering just financial advice to customers. These units are like branches acting as keys locations to meet their target customers and a lot of banking is done through them.

Nowadays, banks are focusing on establishing smaller, efficient and specialised units to guide customers on finances. Such units help the bank to accumulate customer data and analyse customer spending habits. Though, few bankers still believe that technology cannot replace branches and satisfaction granted through them is unmatched. After all, customers always want to know that they are looked after and their money is in safe hands.

Banks have a reason of their establishment. They are not only four walls and a ceiling but also a symbol of trust for all those who are planning and making an investment for future. A telephonic conversation or few clicks can never replace the trust that is build through a visit to a place they are risking their future with.

Sources:?The National

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