Question

Over the last couple decades, as fewer banking transactions require actual paper, the need for bank branches -- buildings where customers interact with the bank -- has diminished. What are some positive and negative features about this from the viewpoint of running a commercial bank?

Answer 1

Following are the some positive and negative features of increased technology/online commercial banking and reduced paper work and actual customer physical interaction at branches:

Positive:

1.With reduction in paper work, fewer employees are required at branches, which has resulted in reduction of employee cost for Commercial Banks.

2. With lower paper consumption, cost of stationary has reduced.

3. As good number of transactions are done online and not with physical papers. audit and examination of these transactions has become easy and time efficient audits can be conducted.

4. As many transactions and services, bank is handling online, there is lower need of physical presence to provide a service, which has resulted is lower capital/building expenses for Banks.

5. With lower paper work and physical visit of a customers, transaction with a commercial bank has become quick and efficient.

6. With less paper work and low no of branches, there is low maintenance work require for physical paper, building and furniture and branch can focus on core banking activities.

7. Lower branch building helps is save taxes on property.

8. With lower branch buildings, there is lower need of parking spaces and resources available can be used for other productive purpose.

9. As paper work is reduced and transactions are done online, data storage and analysis is possible and that can be used for business analysis and growth by the Banks.

Negative:

1. In Cases, where a customer complain is complex, it becomes really difficult to understand what customer issue is, as the customer is not physically present and is not communicating directly, resolving that issue becomes difficult, takes time and the bank may end up loosing customer.

2. As there is lack of paper work, transactions are done online, there are chances that the data available online is subject to any threat from external environment or can be accessed and used for some other purposes. Data available online is subject to many kind of damage and misuse. Company needs to invest in additional funding for data storage and safety.

3. When a customer actually visits a Bank branch, it not only help resolve the issue quick but also help to maintain good customer relation, which in turn helps the bank acquire more business from that customer or from reference of that customer. With no customer direct interaction, maintaining relation with the customer becomes difficult.

4.With a customer physically visiting the branch it becomes easy for the Branch manager to understand the credibility of the customer. Which in case of transactions done online becomes difficult as there is no physical connect between the bank and the customer.

Above are the few, positive and negatives.