YES BANK CASE ANALYSIS

Group O2
Aniruddh Ingle Kaushik Mahadevan Pallav Kumar Madhurya Rai Akshat Agarwal

Company overview
YES BANK was founded by in November 2003 by Dr. Rana Kapoor and Ashok Kapoor . Currently YES BANK is Indias fourth largest private sector bank (by balance sheet dated March 31, 2012.Since its inception in 2004, YES BANK has fructified into a Full Service Commercial Bank that has steadily built Corporate and Institutional Banking, Financial Markets, Investment Banking, Corporate Finance, Branch Banking, Business and Transaction Banking, and Wealth Management business lines across the country, and is well equipped to offer a range of products and services to corporate and retail customers. YES BANK has adopted international best practices, the highest standards of service quality and operational excellence, and offers comprehensive banking and financial solutions to all its valued customers. Today, YES BANK has a widespread branch network of over 380 branches across 275 cities, with 650+ ATMs and 2 National Operating Centres in Mumbai and Gurgaon. The sustained growth of YES BANK is based on the key pillars of Growth, Trust, Technology, Human Capital, Transparency & Responsible Banking. YES BANK has a knowledge driven approach to banking, and a superior customer experience for its retail, corporate and emerging corporate banking clients. As the Professionals Bank of India, YES BANK has exemplified creating and sharing value for all its stakeholders, and has created a differentiated Banking Paradigm with the vision of Building the Best Quality Bank of the World in Indiaby 2015

External Analysis
PEST ANALYSIS

Political

Economic

Technological -Internet banking Social -Mobile Banking

POLITICAL ANALYSIS
Banking Regulations Act was passed in 1949. This regulation brought RBI under government control. Under the act, RBI got wide ranging powers for supervision & control of banks. In July 1969, government nationalised 14 largest commercial banks. A branch licensing policy in 1977 was launched. According to this policy, for every new

branch in an already banked location, a bank has to open four new branches in an unbanked location
Financial sector was deregulated and foreign and private banks were allowed. Relaxation of FDI policies increased foreign investment inflows

ECONOMIC ANALYSIS The Indian economy has recorded remarkable growth over the past decade. India's economic growth is expected to robust in 2013.Banks provide capital formation to various sectors which directly help in the growth of Indian economy. General Economic conditions GDP of India in 2008 - $1.16 trillion Target growth rate (2007-2012) 8.1% The GDP of India had a growth rate of 7.09% in 2009. However, the real challenge was to focus on the neglected agricultural sector which employed 70% of the workforce. Percentage of population below poverty line 28.6%

SOCIAL ANALYSIS Indian banking system has been progressing rapidly. There are ample opportunities for the banks to cover untapped rural market. Yet, banking facilities are not available in many rural areas. Many farmers are taking loan from moneylender at a very high rate of interest. Smallscale industries would remain important for banks. Changes could be expected in near future for unorganized sectors. TECHNOLOGICAL ANALYSIS Indian banking industry has been consistently working towards the development of technological changes and its usage in the banking operations for the improvement of their efficiency. With the application of new and improved technologies banks expected to reduce costs, time and give customer satisfaction. Core banking has changed the face of banking by offering value added services. Core banking applications helps to provide complete front and backend automation of banks. Technological developments would enable flow of information

and data faster leading to faster appraisal and decision-making. This would enable banks to make credit management more effective, abesides leading to an appreciable reduction in transaction cost. Internet banking or banking via the Internet can be considered a remarkable development in

the banking sector. The ability to carry out banking transactions through the Internet has
empowered customers to execute their financial transactions within the comfort of their homes and offices. In todays busy world, when people do not have much time even for personal work, Internet banking appears as a boon. Internet Banking helped give the customer's anytime access to their banks. But for Internet banking there is a requirement of a PC / Laptop with an Internet connection. Mobile usage has seen an explosive growth in economies like India. India has reached 893.84 million mobile subscriber marks for a population of 1.21 billion. Mobile Banking, customer can check their account balance, transfer funds 24 x 7, bills payments, booking of bus / flight tickets, recharge prepaid mobile and do a lot more effortlessly and securely. Banking through cell phone benefits the banks too. It cuts down on the cost of tele-banking and is more economical.

Porter's Five Forces Model

Buyer Power High bargaining power of customers on account of banks renders uniform services to the clients. Now a days almost all banks would like to provide requisite information very easily by way to Internet, Mobile banking to the clients. Banks offers different services according to clients need and requirement of the customer. Supplier Power- Low bargaining power of suppliers on account of RBI regulatory benchmarks. Banks have to meet numerous regulatory standards created by RBI. Competitive Rivalry- High competition of account of number of prominent public, private, foreign along with cooperative banks Availability of Substitutes - High menace from substitutes like NBFCs, Mutual funds, Government Securities and T-bills Threat of new entrants - Low threat of new entrants on account of banking regulations. Before setting up of a new bank, it is essential to take the consent of RBI.

Core Competence and Strategic Differentiators

Yes Bank realized at a very early stage that the Indian Banking sector was Over Branched but the Indian consumer was mostly Under Served. Yes Bank knew that it was unrealistic for them to compete directly against big banks. So they concentrated on emerging Indian companies and small enterprise owners. Another major differentiator was their concept of Responsible Banking. Knowledge Banking was the heart of Yes Banks core business. Their team had members who had deep domain expertise in their respective sectors.

Key Success Factors for Yes Bank

Technology related Skill & Capability related KSF's Development Banking Other types of KSF
Non core techonlogical requirements of the bank was managed by Wiproproviding optimal capital effiency. Money Mobile services in partnership with nokia and obopay to target consumer segment who does not have a bank account but has strong access to mobile services.

YES BANK entrepreneurship program (YPEP) , a lateral talent acquisition program to hire to -notch talent.

Diffrentiated itself from other players through developemnet banking . Developement banking was divided into four distinct practices ARSB, Micro finance , Sustainable investment banking, Social Banking. Financial inclusion program which includes two intitives : Money mobile services,Rural banking through the business correspondent (BC) model .

Tatva capital was introduced to make equity investments in early stage commercial enterprises . target investments returns per transaction between 25 to 30 percent

SWOT ANALYSIS Strengths Knowledge driven approach to banking and consistent customer service experience for its retail banking and wealth management clients.
Best IT systems and practices in order to make its technology platform a strategic tool to build competitive advantage. business

Created differentiation through specific focus on high growth sectors like Food & agriculture, Infrastructure development, life sciences & Biotechnology etc. International best practices, the highest standards of service quality and operational excellence Efficient and customized banking solutions to attract new investment opportunities.

Weaknesses Current and saving account deposits accounted for only 9% of total deposits in 2012. Number of branches is less (153) as compared to major competitor like SBI (9034) and ICICI bank (2035). Yes bank is still not a major player in retail banking.

Opportunity
Large market India has a population

of more than a billion. This helps the player to cover a bigger and rural market. Still there is lots of untapped market.
Rising disposable income

Increase in disposable income has resulted in demand of different financial products and hence a new way to bet on the top line of the company.

Threats
Non Banking Financial Corporation (NBFC)

NBFC are offering other financial services and eating up the share of the banks.
Reserve Bank of India persuade banks to lower the spread

RBI can persuade banks to lower the spread which have a direct and hard impact on the margins for the service provider.

The Way Ahead In just seven years since its inception, Yes Bank has been very successful. Yes Bank has ambitious plans to grow their balance sheet from $8.1 Billion in 2010 to $30 Billion by 2015. To achieve this growth they needed to increase their number of branches and expand their corporate, retail finance and commercial banking practices. All this required a huge amount of capital investment. Yes Bank wanted to be a new age bank that was innovative as well as socially and economically responsible. However, It was a crucial decision whether to invest the already scarce capital into development banking. The financial inclusion program required an incremental commitment of $8.6 million in capital while Tatva Capital required a pledge of $11million over three years. These commitments towards Development banking went above and beyond what was needed to meet regulatory requirements. The implementation of the development banking initiatives was not only an uphill task but also had no guarantees of providing higher returns even when successful. The key question is whether Yes Bank could capture the huge market opportunity for development banking in a consistent and profitable manner.