Banking beyond branches: How branchless banking works in the digital economy

by Haadi Bakar
0 comment

Admit it. No one likes going to the bank anymore these days, what with our busy schedules, the waiting lines, and let’s not get started with finding parking and the intense outdoor heat.

But thanks to emerging technologies, the days of stepping foot in a bank, whether it’s to open up a bank account or making deposits, will soon be a thing of the past. Eventually, all their services will no longer be delivered at their premises, but rather at malls, parks, post offices and convenient stores.

In fact, this practice is increasingly common right now. For instance, we use our phones to pay at checkout counters, verify our account balance, transfer funds to our family and friends, or even open up investment products. No matter how close your nearest bank branch can be, your phone is always closer.

This is a dynamic shift that banks are undertaking as we usher in the age of the digital and cashless economy. It’s a concept financial institutions are calling ‘Branchless Banking’.

A BIBD branch in Kiulap.

What is Branchless Banking?

Branchless banking is defined as the delivery of financial services outside conventional bank branches – customers are able to complete all their banking without ever having to visit the bank, but rather through technological services such as online, over the phone, through point-of-sale systems, ATMs and biometric applications, among others.

These new business models rely on a widespread network of agents, often retail locations, where customers can go to transact. The new systems in place are also robust and secure, and there’s very little learning curve for consumers and merchants to use them.

A user tests the BIBD Wave mobile wallet on an NFC-equipped POS system.

How does it benefit consumers?

Branchless banking operations will dramatically increase customer convenience. There is no need to take time out of the day to visit the bank, as customers now have access to financial services either on their phone or with a wide range of agents outside branches.

In addition, customers can check and verify their account balances, make automatic bill payments or make remittances, at any time of the day, on a computer screen or smartphone.

All this helps cut down travel and queuing time as well as reduce travel costs for consumers.

Branchless banking makes comprehensive banking services more available to all, including the unbanked – people in the low income segment or simply have no access to banks.

A branchless banking service in Pakistan that aims to serve the country’s unbanked.

There is a considerable growth in branchless banking services in India, for instance, where the poor people living away from cities could withdraw money, pay bills and make remittances at their nearest sundry shops.

Although Bruneians are privileged to have easy banking access, there are still pockets of the population that are unbanked, such as students, the under-aged, foreign workers and residents living off the grid.

Whether its to encourage saving or boost productivity, branchless banking will help serve these demographics and accelerate financial inclusion in Brunei.

What about the banks? How will this benefit them?

The beauty of the branchless banking model is that it helps the banks lower their operation costs. They no longer have to upkeep several physical branches, and this translates the savings to lower fees and better interest rates for customers.

And by going branchless, banks can reach out to more customers and ensure that everyone in a country get to use their services, even those living outside of cities and towns.

So every transactions made by the entire population will be documented efficiently, which is really good for the economy in the long run.

The move towards branchless banking is in line with Brunei’s Wawasan 2035.

Is Brunei prepped for branchless banking?

Banks in Brunei have also embarked on the branchless banking model. BIBD, the country’s largest Islamic bank, has an easy-to-use mobile banking app, introduced mobile payment systems at retail stores, enable businesses to manage their accounts with their phones, and they even a drive-through ATM at a residential housing area.

Last year, BIBD launched its digital banking concept NEXGEN, which aims to make banking services more accessible to the public through its digital platform. This initiative includes creating a branchless banking proposition by forging alliances with industries like telecommunication and retail.

Progresif Pay is one example of a successful alliance between a local bank and a telco provider that fulfills BIBD’s branchless banking vision – Progresif’s subscribers can use this mobile wallet to top up their credit and send money to friends, even if they do not have a BIBD account.

Progresif Pay is powered by BIBD NEXGEN. Image: The Bruneian

Consequently, this allows BIBD to tap into Progresif’s subscribers to use its banking services.

BIBD also opened its first “digital” branch to encourage the habit of cashless transactions among Bruneians. Located at The Mall Gadong, this branch swaps human bankers and teller counters with cutting-edge tech like concierge robots, interactive screens and augmented reality.

The move towards branchless banking is in line with Brunei’s Wawasan 2035, during which the banks become fully digitised and the whole population gets to enjoy the benefits of banking.

A customer takes a selfie with a concierge robot at BIBD’s NEXGEN branch at The Mall Gadong. Image: The Scoop

Related Posts

Leave a Comment