Banking and the Marketing Paradox

SBI, the largest PSU bank has over 2,000 ATMs all over India. ICICI Bank has around 1,700 ATMs while HDFC bank has 830 ATMs.
ICICI introduces Mobile banking services including fund transfer.
Almost all banks currently support Internet/Phone Banking. Remember the branding efforts of Canara Bank.

The main reasons for the introduction of these extra channels of service for each of these banks would essentially include
1) Reducing Transaction Costs (Approx. Transaction in Branches : 5-10 $; Transaction in ATMS : 1-2 $; Transaction in Online : 0.5-1 $).
2) Enhancing Customer experience.
3) Competitive edge.
4) Scalability of operations.

So, what would be your reaction when an eminent banker says,
"The Banking sector is digging their own grave; if they continue expanding with only ATMs or Internet/Mobile banking "

Personally, I was a bit-shocked esp. being a hard-core addicted user of all the above additional services offered by my bank I was definitely trying to find the truth(or)fallacy in the above statement.

Back-tracking to understand the logic behind the statement let me bring across another lesser known fact in the banking sector ...
The Revenue potential for the Banking sector these days :-
a) Personal Loans : 30-40% (including Auto & Home loans)
b) Credit Card services : 10-15 %
c) Investment Banking : 15-20 %
d) Other services

As can be understood most of the revenue for the banks of today is not restricted to Loans and to realize the growth potential they need to advertise their newer services to their existing customers or to rope in newer customer base... But why aren't they able to do this ???

The ATMs/Mobile banking facilities has if-you-had-not-noticed successfully pushed the customer away from Branches; and in the case of banks such as ICICI banks have removed the necessity of having Brick & Mortar branches.
So banks not only lose the pulse of the customer but also invariably create a gap to market their services to their potential customers.. thus in the end restricting growth in the future.

Traditionally, my dad would go every week to the bank have a rapport with the manager see if there was any funds/services that the bank offered he could invest in.
Fast forward to my generation.. I hardly step outside the vicinities of my home, delete any sms-alerts of the bank, go across to ATMs only to perform dumb operations of withdrawing/checking balances... and an idle corpus lying in my savings account.

Have the Banks drunk the Nectar of technology pretty early without understanding the true benefits ?

The next imminent issue for the banking sector is to develop newer channels of marketing for their future. Any suggestions ??