Tuesday, June 18, 2024
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HSBC Reduces Branches & Goes Digital: Where Will Digitization Lead Us?


Who could have guessed in 18th century that horses would be of no use 300 years later? Invention of plough and sword made horse indispensable in agriculture and in the battlefields in the past few centuries. But the discovery of tractor and tank rendered it obsolete. Will our fate be the same as that of the horse? It seems so.

Last week, HSBC announced that it will reduce the number of branches in India to 26 in 14 cities from 50 in 29 cities as it looks to push more retail and wealth management business to online channel.

Customers are increasingly using digital channels for banking and it needed to adapt to the changing behaviour of the customers. The move will affect 1 percent of the total employees which is about 30,000.

Recent trends have shown that digitization is inevitable. The real question is whether it will improve out living standards.



Unemployment: Digitization will increase unemployment. Most of the jobs hardly demand our intelligence. They can be easily done by computers. Besides repetitive tasks like accounting, maintain databases; even driving, interacting with humans can be performed by computers. Capabilities of machines grow exponentially, whereas that of humans remains same. As a result, people, who rely on occupations like salesperson, cashier, clerk, will soon become jobless.

Security: Safety was always an issue, but the stakes are lot higher now. By relying more on technology, we are becoming more vulnerable to cyber-attacks. In absence of proper caution, hackers can rob our entire savings.

But it is one side of the story. Online transactions have not only resulted in better customer experiences, they have other advantages too.


Banks Reach Villages: Historically, rural people have not enjoyed banking services. It’s hard for banks to open branches in far-flung corners of the country. With digitization, only a mobile is sufficient for transactions. As a result, people from villages can access same functionalities as urban people do. Also, online transactions have played pivotal role in e-commerce.

Access From Home: The most important benefit of digitization is that it saves our time. We no longer need to wait in queues for long hours. Almost all banking facilities can be availed through digital media from home.

Cost-Efficient Solutions: At the same time, machines can perform tasks more cheaply than humans. Whereas salary of an employee needs to be hiked annually, cost of computation gradually decreases with time. As a result, banks will have larger profits.

Others: Curbing the use of counterfeit notes has been a challenge for years. When transactions will go completely online, this will be no longer threaten the economy.

Now, banks can easily collect feedback from customers. This will help them to provide better services. Another major advantage is that, big data analysis will help the banks to analyze data accurately leading to better decision making, more cost-effective solutions, and improved customer experience.

Researchers suggest that automation will result in lesser working hours. So, employees can be happier and more productive.

It is true that if people don’t have money, banks will be of no use. But that’s not reason enough to abandon digitization. Advantages of digitization easily outweigh its disadvantages. Instead of demonizing it, we should focus on how to improve cyber-security and create new jobs.

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