State Bank of India: Transforming a state Owned Giant

History of SBIHistory 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•43rd 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 industryInfrastructure development credit and assistance in villageMerchant bankingHousing financeInstitutional investor services

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

Organisation Structure

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Result 1)Nationalized bank network overburdened with NPA(social obligation)2)Directed lending practice3)Outdated risk management technique4)Customer issues5)A/C deficit

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

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

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

Challenges face by him1)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

Vision

1)innovative,hardworking,team person2)Encourage reverse feed back3)Want bank as customer oriented4)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

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 exercise2)Issue discussion3)Feedback4)Series of 5 conclave

For AGM 1)FeedbackUnion Conclave2006 in jodhpur

Union Conclave2006 in jodhpurMovie to motivate(Bagger Vance)

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

Motivation for Employee

1)The Power of One (presentation)2)Parivartan (Internal communication prog)3)Training for entire branch at a same time4)Serving to country5)Changing individual performance mgmt system6)More responsibility to work7)Reward and recognition8)ESOPs scheme9)Employee suggestion scheme

Business Initiative win 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.

SBI Advertisement Campaign

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

Smart global expansion

Capture international mkt Capture great share of India linked businessIssued foreign currency bonds

March and Beyond

2008 most valuable bank2010Rank 68 from 107 in 2006Indian 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.