State Bank of India: Transforming a state Owned Giant

History of SBI

Lineage to bank of Calcutta Estd 1806
rechristened as Bank of Bengal
Presidency bank
Imperial bank of India by merging the three presidency banks
RBI Estd 1935 cease IBI

Post Independence

Govt wanted to focus rural India
Govt takeover IBI and integrated with state own banks
1955 SBI Born
500 branch in 1960
18000 branch in 2011


A bank with 60% Govt stake
Was India `s largest banks
43
rd
largest bank world wide
Market capitalization of over $36.5 billion in 2011
More than 267000 employees
Pan India network over 18000 branch
25000 ATMs
Profit $2.6 billion
5 associate banks and 22 subsidiaries constituted State Bank group

Role played by SBI

Developed India rural regions
Finance for modernizing the countries agriculture industry
Infrastructure development credit and assistance in village
Merchant banking
Housing finance
Institutional investor services


from an old,
hierarchical,
transaction
oriented,
government
bank
Transformation
Phases
Transformation
Phases
Transformation
Phases
to modern,
customer
focused,
technologically
advanced
Universal Bank.
2006 : SBI losing market share of
two decades to Private & foreign
banks.
2010: SBI had more than double
its profits, deposits and advances
and won Asian Banker
Achievement award for strongest
bank in the Asia Pacific Region.
Bank Issues

Lost sight in early 1990s

Aftermath of bank nationalization

Profit of bank

Focus on Physical expansion

75% area at branch reserved for employee

Less focus on customer

Multiple people involved in transaction process

Manual work time






Transformation begin

In 1990s transitioned from manual ledger system to computerized back office operation
2003 implemented centralized online real time banking solution




Organization structure
Officers
Clerical
Subordinated staff
Organisation Structure
The Changing Banking Environment

Indian Govt. nationalized 14 commercial banks ---1969
91% of banking in govt. ctrl
Issue for pvt bank of license and entry restriction
RBI decided whom they could lend, how much, what rate

Result
1) Nationalized bank network overburdened with NPA(social obligation)
2) Directed lending practice
3) Outdated risk management technique
4) Customer issues
5) A/C deficit





New Entry
Private bank(ICICI Bank, HDFC Bank)
Foreign Bank ( Standard chartered Bank,Citibank,HSBC)

Strategy used by new entrant

1) Large investment in Technology
2) Customer services
3) Concept of remote banking
4) ATM
5) Centralized process
6) Anywhere any time banking
7) Noval branch experience
8) Best talent hired
9) Salary package
10) new age population
11) Income level


2006 :- O.P. Bhatt becomes the SBI Chairman

In a departure from traditional practice govt. select chairman of eligibility criteria.

Challenges face by him
1) Market share of bank fall from 35% to 15%
2) Largest bank in terms of assets but lost its voice significantly
3) In race to retain numbers, quality has compromised
4) Losing customer
5) Bank for senior citizen
6) No sale focus
7) No integration from top to bottom level
8) Communication was one way
9) No recognisation for hard work
10) Lost pride
11) HR policy were outdated
12) No goal, no vision,no commitment
13) Attitude issue
14) technical platform missing
15) Complex structure




Vision

1) innovative,hardworking,team person
2) Encourage reverse feed back
3) Want bank as customer oriented
4) Most tech savvy
5) Global bank
6) Focus on market share in every quarter .25%


Establishing Leadership

1) Prepare SBI status and charting out strategy
2) Input from consultant,professors,within bank and retired persons
3) Created 4 new strategic business group headed by DMD
4) CREATED CORPORATE COMMUNICATION & CHANGE DEPT.
5) CUSTOMER,BUSINESS,STAFF IS PRIME FOCUS


The Cascading conclaves

Aamby Vally
Top Management(2 MD,22DMD)
1) First day reference point
2) Banks Status
3) Analyzed the previous day progress and design next step
4) 14 point transformation agenda foe bank along 3 parameters
i) Business Initiative
ii) Enabling initiatives for facilitating business
iii) People initiative

The next Wave of conclave

For GM and CGM
1) Group exercise
2) Issue discussion
3) Feedback
4) Series of 5 conclave

For AGM
1) Feedback
Union Conclave
2006 in jodhpur

Union Conclave
2006 in jodhpur
Movie to motivate(Bagger Vance)

Winning IT Platform

2008 all of SBIs branch were on CBS rollout.
Completed the reengineering process
Centralized branch
Focus on sale and services
Redesign branch
Focus on core business

Develop Customer Services

Redefine Banks Vision
Service desk for customer
SMS unhappy service

Others

Integrated risk mgmt
New sys for measure business performance
Improve capital adequacy ratio
Motivation for Employee

1) The Power of One (presentation)
2) Parivartan (Internal communication prog)
3) Training for entire branch at a same time
4) Serving to country
5) Changing individual performance mgmt system
6) More responsibility to work
7) Reward and recognition
8) ESOPs scheme
9) Employee suggestion scheme




Business Initiative
win back the Indian middle class customer
Focus on strategic location


Rebuild profitable wholesale bank
In 4 yrs fee income increased from .15$ billion to .90$ billion.
Sanction 12000 cr to Tata Corus deal.

SBI Advertisement Campaign


2007: Pure Banking Nothing Else
2008: Banker To Every Indian
2009: Banker to This Indian
2010: Banker to These Indians
2011: Proud to be Indian


Smart global expansion

Capture international mkt
Capture great share of India linked business
Issued foreign currency bonds




March and Beyond


2008 most valuable bank
2010Rank 68 from 107 in 2006
Indian market share increase 25%
Awards for bank
most preferred bank, bank of the year


A CEO of a well established bank waiting for Mr. Bhatt to retire.