Banks in India can reduce costs by up to 50 per cent on a per-transaction basis in the next few years by redesigning their processes and systems for the digital age, structurally changing their cost base and instituting more aggressive ongoing cost management processes, an ASSOCHAM-PwC study said today.

"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 titled 'Logging into digital banking: Creating access, transforming lives,' jointly conducted by The Associated Chambers of Commerce and Industry of India (ASSOCHAM) and PwC.

"Branch banking needs to undergo significant transformation," the study added. "As technology enables every aspect of banking to go online, and as cash usage falls away, traditional branches are no longer necessary."

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), further noted the ASSOCHAM-PwC study.

"Banks that will lag behind this trend will start to struggle, due to structurally uncompetitive economics."

Going ahead, smart devices will grow in importance and take its place alongside cards as primary medium for consumer payment which will continue to remain popular, as they are quick and effective, allowing easy compartmentalisation of spend.

Besides, industry utilities will arise in nearly every area of infrastructure as cost pressures and technological advances force banks to focus on customer service and risk management, rather than development of undifferentiated and expensive processing and payments infrastructures, noted the ASSOCHAM-PwC study.

Likely examples of processes provided by utilities could include customer authentication, fraud checking, payments' processing, basic account infrastructure and KYC processing, it added.

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