Most banks have recognised the challenge of convergence, and have even started to deal with it. With the branch as a pivot around which all key applications will converge, rather than sliding into oblivion, it has got its due resurrection. The branch of the 21st century is here to stay.

The late '90s sounded the death knell of that quintessential customer touch point of the retail banking landscape-the bank's branch. It was the time when newer banks were looking to expand their presence in the country and to effectively compete with the far-reaching branch network of state owned banks, deployed innovative delivery channels such as ATMs, phone and Internet banking.

In the era of the dotcom boom, clicks were valued higher than concrete bricks and the world thought it was the take-over of a hi-tech new age of doing business.

Years after the dotcom bust, banks were as keen to remain hi-tech, especially since the new way meant lesser overhead costs. And while phone and Internet banking did take off to a laggard start, this was blamed on a combination of psychological, technological and socio-economic factors that banks felt customers were eventually bound to overcome.

Cut to less than a year ago in a country that can easily be described as one of the most evolved marketplaces today: according to leading research firm, Forrester, in a survey conducted in June 2004, 49 per cent of US households stated that the bank's branches and whether they were situated in convenient locations made them decide in favour of one bank over another. Surprisingly, only between three and four of the sample chose a bank for its online offerings or the fact that the bank offered a free online bill payment facility.

Simply put, though most retail banks have invested and promoted their internet banking channel proactively, customers still continue to express a need and desire for the traditional bank branch. However this is not to say that the hi-tech customer touch points are unsuccessful. Migration numbers are continually increasing but the efficacy of the remote banking channels is limited to routine cash withdrawals and checking of bank balances only. Remote banking has not been anywhere near successful as a bank's branch in increasing a share of the customer's wallet, namely in cross-selling.

Today bank managements are aware of the limitations of these channels and is beginning to capitalise on the branch as the most trusted, convenient and dependable customer touch point. The branch is emerging as the medium to appropriately channelise customer interactions.

Branches will increasingly co-locate with ATMs, kiosks for Internet Banking and more importantly will be completely integrated with their call center. The branch teller who today is otherwise preoccupied in administering to basic queries will play the role of facilitator, directing customers to those channels that most conveniently resolve the query, thus allowing for value add, identifying cross sell opportunities and simply enhancing the customer interaction.

Take for example with ATMs - while they are very popular with customers, they have remained physically isolated from the bank's branch. Today ATMs are widely used for cash withdrawal and have little or no involvement in any other application. However, going forward, the ATM will need to play a more important role in the entire solution integration.

If a customer walks in to a branch to make a cash deposit, check out his balance, or the state of his fixed deposit, the teller would direct him to the ATM located at the bank's premise to conduct his transaction. In this manner, every remote delivery channel will play out the true value of its customer interface capability. The branch in turn will leverage on cross sell opportunities and look at increasing business with each customer.

Especially in the age of deregulation when banks are allowed to participate in new lines of business that were previously off limits, the teller will increasingly have to play the role of the seller.

From a technology and service stand point, this requires the banks to upgrade and network branches to ensure consistent service levels and an uniform customer experience throughout the banking system. This will be a next step infrastructure requirement for branches, requiring hardware and software upgrades and further necessitating IP as the pervasive infrastructure throughout the bank and branches.

Most banks have not only recognised the challenge of convergence, but some have even started to deal with it. And with the branch as a pivot around which all key applications will naturally converge, rather than sliding away into oblivion, it has got its due resurrection. The branch of the 21st century is here to stay.

* The author is senior vice president-enterprise, Cisco Systems, (India & SAARC) Pvt. Ltd.