Banks prioritise enhancing digital service over opening new branches 

Foreign banks operating in Bangladesh almost stopped opening new branches long ago. Following suit, the local banks are now prioritising digital services over traditional branches to provide the clients with financial services, signaling a significant shift in the banking sector.

In 2023, many reputed banks refrained from opening new branches and focused on introducing app-based services and launching new digital platforms. They increasingly installed cash recycling machines (CRM) for cash transactions, instead of conventional ATMs.  

The banking sector insiders are considering it as a time-befitting banking strategy. 

According to Bangladesh Bank data, the number of bank branches increased by 143 in 2023, a decline from the 200 and 268 new branches opened in 2022 and 2021, respectively. Earlier, there were only 103 new branches in the coronavirus stricken year of 2020. 

In the aftermath, the banking sector registered a significant slow-down in recruitments of frew manpower. The new branches opened in the previous year mostly belong to the fourth-generation banks or those seeking to address their liquidity crisis by attracting deposits through expanded branch networks.

Bankers believe the branches lost their appeal in the process of reaching out to the clients, given the new reality of app-based services at fingertips. People can withdraw cash using their cards at booths of all banks. These digital services also require lower operational costs than traditional branches. 

They anticipate that the trend of opening new branches will continue to decrease in the coming days, with banks shifting focus to sub-branches and CRM machines to enhance their outreach.

Alongside full-fledged branches, the sub-branches and agents are now providing basic banking services, including account opening, cash transactions, and loans. A large section of clients are now carrying out transactions through online banking and apps. 

According to the central bank data, the count of bank branches was 10,568 in 2019, while it rose to 10,671 in 2020, to 10,939 in 2021, to 11,139 in 2022, and to 11284 in 2023. 

Some banks, including Prime Bank, The City Bank, Eastern Bank Limited (EBL), BRAC Bank, and Mutual Trust Bank (MTB), launched no new branches in 2023, but opened sub-branches and installed new CRM machines to a significant extent.

Prime Bank had 146 branches in 2022 and it still remains the same. Since 2022, the City Bank has kept its branch count limited to 133, MTB to 199 and BRAC Bank to 187.  

Islami Bank did not open any new branches in 2023 and remained static at a branch count of 394. It, however, increased the number of sub-branches from 228 to 249 and that of agents from 2,694 to 2,771. 

Dutch-Bangla Bank opened 5 branches last year due to its different business model and its total branch count stands at 243. It is now in the leading position in terms of agent banking and ATM/CRM services. 

Pubali Bank opened 6 branches in the previous year, raising their branch count to 504. Apart from this, state-run Sonali Bank launched 3 branches, while Agrani Bank and Janata Bank opened 6 branches each. The newly launched banks, however, are opening branches as per their requirements.

Managing directors (MD) of two new generation private banks told Prothom Alo that they cannot function properly without branches in prominent districts and divisional cities. They see no alternative to opening branches as people do not come to know about the banks in absence of their strong branch network. However, this conviction is not applicable for the old giants. 

Mutual Trust Bank MD Syed Mahbubur Rahman said the old banks are not so interested in opening branches, though all want to attract new clients and business. Therefore, they are engaging sub-branches and agent banking outlets.

“Banks like us are trying to grow the business in collaboration with fintech companies. Therefore, it has been possible to provide service with 3 skilled manpower, instead of 10 people. The quality of service also remains uncompromised,” he added. 

An opposite scenario prevailed in investments for digital infrastructure in the last few years. All the banks introduced various digital products last year, including account opening, deposit, and loan application on mobile apps. Some banks even initiated the service of opening letter of credit (LC) through apps. 

In addition to ATMs, the banks are increasingly being interested in the CRM machine given its unique facility of deposit and withdrawal. Some banks, including Pubali, Dhaka, City, and Islami Banks, have begun the process to transform the ATM booths into CRM booths. Besides, all banks are gradually phasing out the cash deposit machines (CDM). 

There were 13,367 ATMs in the country in 2022 and it rose marginally to 13,436 by the end of 2023. In contrast, the count of CRM machines saw significant growth across the country from 2,489 in 2022 to 4035 in 2023. There were 1,094 CDM machines across the country in 2022 and it plunged to 263 by the end of last year. Now, the clients can use a card in all booths to deposit and withdraw money.  

MTB MD Syed Mahbubur Rahman said all the banks are now seeing good potential in CRM machines due to its simultaneous facilities of cash deposit and withdrawal. It will alleviate pressure on conventional branches and reduce service dependency on bankers. The machines will flourish with more services. 

***This report first appeared in the print version of Prothom Alo and has been rewritten in English by Misbahul Haque.