Over 2,000 branches have been shuttered in the United Kingdom over the last decade with more to come. However, State Bank of India (SBI) UK has decided to expand its brick-and-mortar presence by 20%. While this is only two branches, it is a step in a different direction. Patrick Brusnahan reports
Between April 2015 and April 2016, over 600 bank branches were closed. In 2014, around 480 branches were shut down indefinitely. As more consumers turn towards the slick digital world, branches are apparently becoming less relevant.
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However, SBI UK has decided to buck the trend and open two new branches, one in Hounslow and one in Ilford, to take its total to 12. With branches seen as less popular and, even more importantly, less profitable, is this wise?
Sanjiv Chadha, regional head of SBI UK, believes branches have plenty of potential. He tells RBI: “We look at expanding the branch opportunity when our core client team picks areas where we have key brand recognition. That guarantees you viability.
“[Hounslow and Ilford] were two locations with large Indian communities that are currently underserved. The other part we looked at is that we needed critical mass when we move in and use it as a stepping stone. Therefore, when we open branches, we make sure they are on the high street. You need a street presence to give them reassurance that there is a brick-and-mortar presence.”
With regards to the presence, Chadha doesn’t expect to see ‘lines out to the street’ with the new branches, but ‘there is value’.
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The multitude of banks withdrawing their physical presence has given SBI quite the opportunity, as Chadha describes.
“There are a lot of services that high street banks are withdrawing and that leaves gaps to exploit in the market.
“For example, a lot of banks are moving out of providing safety deposit boxes. There are hardly any banks giving that service. We are offering that particularly because the Indian population puts a lot of emphasis on gold and family heirlooms. It’s a very real requirement and all of the new branches have a large bank of safety deposit boxes.”
SBI has big plans for the UK, but that does mean expanding its recognition in the country to acquire new customers.
On this point, Chadha says: “We recognise we need to go beyond the Indian community. We need to look to expand our reach through other platforms. We are hoping to update our internet banking platform within the next 6-8 months and that would allow us to launch more products.
“In India, the bank is very active in its social media presence and digital banking and this is an advantage we wish to transfer here. We have the scale in India, we ahve around 300 million customers and 16,000 offices. This means that any concept can be supported by a wide customer base. The concept can be proofed there and transported here.”
As a relatively new bank in the market, SBI has an advantage of speed in implementation as it is not burdened by legacy infrastructure or costs.
“In the UK, we have over 100,000 customers and of the incremental customer base heading to online channels, about 90% are not Indian customers, so that gives us encouragement. The fact is because we do not have legacy costs, we are comparatively low cost in the UK. That means we can pass on the benefits to our customers. We have certain advantages that we have tried to leverage,” Chadha explains.
Chadha concludes: “Our plans in the UK are similar to our plans in India. We are already finding that the digital divide is being bridged and we’re becoming cutting edge. Once we actually become competitive in terms of our digital offering, that’s really when we can access the mainstream UK market in a competitive manner.”
