State Bank of India has been advised by the global management consultancy McKinsey to shut down or relocate 30% of its branches. SBI plans to follow this advice and consolidate 24,000 of its branches so as to remain competitive.
The Managing Director of SBI confirmed that the bank had hired McKinsey for branch and ATM optimization. The consultancy will also advise the bank on customer enhanced experience programme. SBI had also roped in Accenture Financial Services to draft a plan for the former’s digital branches across the country.
To increase the scope of cost rationalization, SBI is currently gearing up for the merger of its five associate banks. It plans to merge five of its subsidiaries namely – State Bank of Hyderabad, State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Patiala and State Bank of Travancore – with itself.
More than 400 branches of SBI have already been shut down or relocated, and the process of adding new branches has slowed down considerably in an effort to cut cost. In the financial year 2014, 1053 new branches were added however only 464 new branches were added in FY 2015.
Rajnish Kumar, MD of SBI said that the plan is to consolidate branches according to the business they generate. He also said that, at many places, SBI had 5-6 branches within the radius of 50 meters to 1km. They will be mapping branches that overlap location by location in order to consolidate or merge them and benefit from their synergy.