The Hong Kong and Shanghai Bank Corporation announced Friday the closure of over half of its retail branches in India to keep pace with global businesses shifting to digital channels. The London-based bank intends to focus on digital banking channels to expand its urban customer base. The move will likely shed almost 1% of total staff employed in India. This comes after the bank announced a  three-year restructuring plan last year that cuts down nearly 12% of the bank’s branches globally.

According to an e-mailed statement on Thursday, HSBC Holdings Plc (HSBC-PA) plans to close 24 of its 50 retail branches in India shifting its focus to digital channels to expand its customer base. It is seeking “the right mix of digital versus physical branch distribution.”

The bank said in a release, “The network will consolidate from 50 branches across 29 cities to 26 branches across 14 cities. This change reflects changes in customer behavior who are increasingly using digital channels for their transactions. The move follows a strategic review of its Retail Banking and Wealth Management (RBWM) business in India.”  

The outlets to be closed account for less than 10% of HSBC’s retail customer base in the country. Out of around 33,000 employees in India, 300 employees will likely lose their jobs as cost cutting and increased earnings are a part of the move. (For more, see also: Which Are the Top 10 Private Banks?)

Similar Strategies by Other Foreign Banks

With HSBC taking the lead, its major competitors, including Singapore’s DBS Group Holdings Ltd., is also following the digital strategy in India with a mobile banking initiative. The Royal Bank of Scotland (RBS) also announced plans of closing 10 branches in India, earlier this week. Apart from foreign banks, most of the public and private lenders have been shifting to the digital spectrum to tap urban customers. (For related reading, see also: U.K. Bank Stocks Jump After BoE Announces ‘Ringfencing’ Rules.)

Stuart P. Milne, Group General Manager and Chief Executive Officer of HSBC India said, “This move aims to position our RBWM business for the future, with the right mix of digital versus physical branch distribution. Customer expectations are changing rapidly, and we need to adapt accordingly. India is a priority market for HSBC and we will continue to invest to achieve sustainable growth by supporting the needs of our customers.”

The Bottom Line

Despite cutting its branches, HSBC said it remains committed to India which was the fourth-biggest contributor to group earnings before tax in 2015.