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

Transformation Phases Transformation Phases Transformation Phases

to modern, customer focused, technologically advanced Universal Bank.

from an old, hierarchical, transaction oriented, government 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

Organisation Structure
Officers

Clerical

Subordinated staff
Organization 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what rate Result 1) Nationalized bank network overburdened with NPA(social obligation) 2) Directed lending practice 3) Outdated risk management technique 4) Customer issues 5) A/C deficit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) 2) 3) 4) 5) 6)

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

Establishing Leadership

1) 2) 3) 4) 5)

Prepare SBI status and charting out strategy Input from consultant,professors,within bank and retired persons Created 4 new strategic business group headed by DMD CREATED CORPORATE COMMUNICATION & CHANGE DEPT. 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) 2) 3) 4) 5) 6) 7) 8) 9) The Power of One (presentation) Parivartan (Internal communication prog) Training for entire branch at a same time Serving to country Changing individual performance mgmt system More responsibility to work Reward and recognition ESOPs scheme 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.