Bank branches with staff are indispensable, says Wu
ELECTRONIC and telephone banking can never replace the need for branches, according to Ka Wah Bank director and president Wu Xuexin, who opened the bank's 33rd branch yesterday.
Disputing claims that the rapid development of technology has diminished the importance of a large branch network, Mr Wu argued that branches were necessary for interaction with customers.
'There are bank services which require face-to-face explanation and clarification by bank staff,' he said.
'I am convinced that branches will still be needed for a few more years in Hong Kong.' Having visited bank branches in Japan, which operate solely through automated machines, Mr Wu said the issue of manned branches had been raised among bankers.
But he said he felt the concept of machine-manned branches would not be popular in Hong Kong.
'There is also a school of thought on financial disintermediation, commenting that a bank's position as a intermediary will gradually be replaced,' Mr Wu said.
The impact of disintermediation depended on the nature of the banks, he said.
Small banks that catered for the mass market would not be affected. But the larger banks would see their big corporate customers switching to the capital market directly for funds.
Commenting on the recent interest rate rise, Mr Wu said banks would not suffer as long as the margin between lending and deposit rates was maintained.
The negative interest rate problem had been slightly alleviated - as deposit rates came closer to the inflation rate, depositors would have a stronger desire to place money with the banks.
He said the deregulation of time deposits of more than one-month maturity did not push up banks' funding costs as the banks were paying swap rates on such deposits beforehand.