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State Bank of India: Transforming a state Owned Giant

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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

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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 regionsFinance for modernizing the countries agriculture industry

Infrastructure development credit and assistance in villageMerchant bankingHousing financeInstitutional investor services

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from an old,hierarchical,transactionoriented,governmentbank

TransformationPhases



to modern,customerfocused,technologicallyadvanced

Universal Bank.

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2006 : SBI losing market share oftwo decades to Private & foreign

banks.

2010: SBI had more than doubleits profits, deposits and advances

and won Asian BankerAchievement award for strongest

bank in the Asia Pacific Region.

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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

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Transformation begin

In 1990s transitioned from manual ledger system to computerized back office operation2003 implemented centralized online real time banking solution

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Organization structure

Officers

Clerical

Subordinated staff

Organisation Structure

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The Changing Banking Environment

Indian Govt. nationalized 14 commercial banks ---196991% of banking in govt. ctrlIssue for pvt bank of license and entry restrictionRBI decided whom they could lend, how much, what rate

Result

1) Nationalized bank network overburdened with NPA(social obligation)2) Directed lending practice3) Outdated risk management technique4) Customer issues5) A/C deficit

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

Strategy used by new entrant

1) Large investment in Technology2) Customer services3) Concept of remote banking4) ATM5) Centralized process6) Anywhere any time banking7) Noval branch experience8) Best talent hired9) Salary package10) new age population11) Income level

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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 significantly3) In race to retain numbers, quality has compromised4) Losing customer5) Bank for senior citizen6) No sale focus7) No integration from top to bottom level8) Communication was one way9) No recognisation for hard work10) Lost pride11) HR policy were outdated12) No goal, no vision,no commitment13) Attitude issue14) technical platform missing15) Complex structure

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Vision

1) innovative,hardworking,team person2) Encourage reverse feed back3) Want bank as customer oriented

4) Most tech savvy5) Global bank6) Focus on market share in every quarter .25%

Establishing Leadership

1) Prepare SBI status and charting out strategy2) Input from consultant,professors,within bank and retired persons3) Created 4 new strategic business group headed by DMD4) CREATED CORPORATE COMMUNICATION & CHANGE DEPT.5) CUSTOMER,BUSINESS,STAFF IS PRIME FOCUS

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The Cascading conclaves

Aamby VallyTop Management(2 MD,22DMD)1) First day reference point2) Banks Status3) Analyzed the previous day progress and design next step4) 14 point transformation agenda foe bank along 3 parametersi) Business Initiativeii) Enabling initiatives for facilitating businessiii) People initiative

The next Wave of conclave

For GM and CGM1) Group exercise

2) Issue discussion3) Feedback4) Series of 5 conclave

For AGM1) Feedback

Union Conclave2006 in jodhpur

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Winning IT Platform

2008 all of SBIs branch were on CBS rollout.

Completed the reengineering processCentralized branchFocus on sale and servicesRedesign branchFocus on core business

Develop Customer Services

Redefine Banks VisionService desk for customerSMS unhappy service

Others

Integrated risk mgmtNew sys for measure business performanceImprove capital adequacy ratio

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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 country5) Changing individual performance mgmt system6) More responsibility to work7) Reward and recognition8) ESOPs scheme9) Employee suggestion scheme

Business Initiativewin back the Indian middle class customerFocus on strategic location

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

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SBI Advertisement Campaign

2007: Pure Banking Nothing Else2008: Banker To Every Indian2009: Banker to This Indian2010: Banker to These Indians2011: Proud to be Indian

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Smart global expansion

Capture international mktCapture great share of India linked business

Issued foreign currency bonds

March and Beyond

2008 most valuable bank2010Rank 68 from 107 in 2006Indian market share increase 25%Awards for bankmost preferred bank, bank of the year

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

Documents

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