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What is Bank Today?
The current banking scenario is greatly different from the past.

Capital is going to play a crucial role in the banking sector.

Only 15 to 20 years ago, most Western banks generated 90% of


revenue from interest income. Now this percentage has fallen to
60%, sometimes as low as 40%.

The concept of banking is being modified and the traditional


barriers among financial service sub industries (retail banking,
private banking, investment banking, asset management,
insurance, etc.) are vanished.
jlobal Banking
The common trends resulted in pace of dramatic change for banking
are:
The focus of banking is shifting from transactions management toward sales of
financial products.

Barriers to entry for the retail banking segment are being lowered.

The growing variety of delivery channels for banking enables new entrants to
thrive.
Indian Banking Industry Segmentation
Reserve Bank of
India

Non Scheduled
Scheduled Commercial Bank
Commercial Bank

Commercial Bank Co-operative Bank Local Area Bank

Private Sector Public Sector Foreign Regional Urban


State Bank
(22) (26) (24) rural (6) Bank

SBI Group Nationalised


Old (15) New (7)
(6+1) (19)

Ô  
 

È PSU banks majority stakes are held by the jovernment of India(joI) & make up the largest category in
the Indian banking system.
È Regional Rural Banks (RRBs)- established during 1976-1987 & are owned jointly by the Central
jovernment, concerned State jovernment and a sponsoring public sector commercial bank.
È Private Sector banks have the majority of share capital with private individuals & corporates. Non-
nationalized are ͚old͛ and nationalised in 1993 are stated as ͚new private banks͛.
È Foreign banks have their registered and head offices in a foreign country but operate their branches in
India.
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ICICI stands for Industrial Credit and
Investment Corporation of India.

It was founded in mid 1950͛s.

Its purpose was to provide medium and


long-term development finance for Indian
business.

Established Retail Banking facilities in 1994.

Offers range of products instead of


concentrating purely on project finance.
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Second largest bank in India and largest private sector bank by
market capitalization.

It has presence in 18 countries.

As of 31 March 2010, the bank has


2,016 branches
5,219 ATM͛s
24 million customers
Company History

2002 - ICICI Ltd merged into


ICICI Bank Ltd in the year

1994 - ICICI
established Banking
Corporation as a
banking subsidiary
2001 - ICICI acquired Bank
of Madura(est. 1943) was
a Chettiar bank, Chettinad
Mercantile Bank (est.
1933) and Illanji Bank
(established 1904) in the
1960s.
1955 - ICICI incorporated at
the initiative of World Bank,
the jovernment of India and
representatives of Indian
industry.

Ô   
 
 
Company Milestones
2006: 1st Indian bank Opened branches in UK, Belgium & representative offices in Bangkok,
Jakarta & Kuala Lumpur.

2007: Amalgamated Sangli Bank-headquartered in Sangli, in Maharashtra which had 158


branches in Maharashtra and another 31 in Karnataka.

2008: Launched I Mobile - banking transactions through mobile. US Federal Reserve


permitted ICICI to establish branch at New York and Frankfurt.

2009: ICICI NRI Services wins Asian Banker Award for Excellence in Business Model
Innovation

2010: ICICI Bank announces Base Rate (͞I-Base͟) at 7.50% p.a. Announced merger with Bank
of Rajasthan with it through share-swap in a non-cash deal that values the Bank of Rajasthan
at about Rs 3,000 crore. The Monetary Authority of Singapore (MAS) has today granted
Qualified Full Banking (QFB) privileges to ICICI Bank Singapore branch.
Product Portfolio

ICICI Bank

Personal NRI
Banking Banking

Corporate
Banking
ICICI group today - A virtual Universal bank
Retail Financial Services Corporate Financial Services
Internet
ͻB2B
ͻConsumer
Finance Portals
ICICI ͻWeb Trade ICICI
ͻVenture Capital
ICICI Bank ICICI Bank

ICICI Capital ICICI Securities

ICICI Prudential ICICI Brokerage

ICICI Web Trade Technology Platforms ICICI Venture


ͻPayment jateway
ͻCustomer Relationship ICICI Infotech
ICICI PFS Management
ͻFinancial Vertical ICICI Lombard
ICICI Home ͻWeb Technologies

10
Personal Banking
·eposits.

Loans.

Investments.

Cards.

Insurance.

Online Services.

Wealth Management, Forex Services and ·emat Services.


NRI Banking
Money Transfer.

Bank Accounts.

Investments.

Property Solutions.

Insurance.

Loans.
Corporate Banking
Corporate Net Banking.

Cash Management.

Trade Services.

FX Online.

SME Services.

Online Taxes.

Custodial Services.

Agri/Rural Business Banking.


Organisation Structure of ICICI Bank

CEO

EXECUTIVE ·IRECTOR

Regional Regional Regional


Managers Managers Managers

Branch Branch
Branch Branch
Managers Managers
Branch Branch Managers Managers
Managers Managers
Financial Service Organizations
Ë Special characteristics:

Monetary assets:

†current value is much more easily measured than value of plant


and machinery

†quality refers to quality of service rendered and to quality of


financial instruments other than money

Time period for transactions:

†ultimate financial success or failure of a bond issue, mortgage loan


or a life insurance policy may not be known for 30 years or more
Financial Service Organizations
†control requires that there be means of continued surveillance of
soundness of transaction during its life including periodic audits
†at the other extreme, some transactions are completed quickly
e.g. firm must have an accurate, prompt system for estimating risks
of securities held
Risk and rewards:
†most business decisions involve trade-offs between risk and return
†In financial service firms, this trade-off is more explicit than in
business investments like purchase of machine or introduction of
new product
Financial Service Organizations
Technology:

† firms have used IT as a way to offer innovative


services

for e.g. automated teller machines of banks

† Insurance and mutual funds have developed


electronic marketplaces
Weaknesses
Strengths 1) Low Fee ʹ based income
1) Leading private sector bank component thus more
2) High Capital Adequacy as per dependence on net interest
Basel II norms income
2) Credit risk concentration

SWOT Analysis
ICICI Bank

Opportunities
1) ·ecrease in Housing Loan
Threats
Interest Rates
1) Volatility of Indian financial
2) Opportunity to increase fee
market
based income
3) Private equity in India
Value Chain Analysis
Value Chain Analysis

Tool to understand Firms Core


The Primary Value Primary activities are
Competencies and activities in
chain activities are supported by
which it can pursue
competitive advantage:
Firm Infrastructure like
organizational structure, control
Inbound Logistics systems, Company Culture

HRM: Employee Hiring,


Training, ·evelopment and Cost advantage: by better
Operations understanding costs and
Compensation
squeezing them out of the
value-adding activities
Outbound Logistics Technology development:
technology to support value
creating activities
Marketing and Sales Differentiation: by focusing on
those activities associated
Procurements: purchasing with core competencies and
inputs such as materials, supply capabilities in order to
Services & equipments perform them better than do
competitors
Value Chain Analysis: ICICI Bank

Focus on Use of The interest Marketing Extensive ATM


Low cost information margins oriented and network
CASA technology to charged by ICICI the first to providing better
deposits reduce is slightly higher use brand service. ATMs in
operation ambassadors villages
costs
Strategies
Retail Strategy ʹ Focus on risk containment
† Tightening of lending norms
† Increasing CASA ·eposits (26.1 % to 28.7%)
† Expanding branch network (755 to 1419)
† Cross selling products (eg: life and general insurance of subsidiary companies)
to existing customers
† Creation of concept of ·SA (·irect Selling Agent) & ·ST (·irect Selling Team)
† Effort on the part of the bank to reach the customer rather than waiting for
the customer
Small Enterprises
† Cluster Banking approach followed
† Bouquet of small business banking products and investment banking and
advisory services
† Initiatives like SMERA (Credit rating), ͞SME ·ialogue͟(Sharing success
stories), ͞ SME CEO Knowledge Series͟
ICICI͛s focus on inward remittances has resulted in major
dividends for the bank
Corporate Banking
† Providing comprehensive and customized financial
solutions
† Maintaining relationships with all of the country͛s
corporate houses
† Product specific teams to focus on specific areas
of expertise in designing financial solutions for
clients
International Banking
† Building of retail deposit franchise, meeting
foreign currency needs of corporate clients
† Focus on meeting foreign currency needs of Indian
corporate for overseas and domestic expansion
† ICICI discovered that, in India, there is a large
untapped rural market which lacks awareness of
financial services as well as convenient access to
remittance delivery services
Rural and Agri-Business
† Strategy to not only increase finance in this sector but also the ability to
mitigate risks by offering micro savings, investment and insurance products
† Launch of Kisan Credit Card ʹ Adequate and timely support to farmers under
single window with flexible and simplified procedures
Life Insurance sector Strategy
† Life insurance market expected to see revival in growth in second half of
FY2010 (first half would be impacted by high base effect)
† ICICI Life: focus on consolidating position as largest private sector life insurer,
while maintaining new business profit margins and reducing expense ratio
† jeneral insurance sector continues to witness impact of detariffing
† ICICI jeneral: focus on maintaining market share and leadership, while
maintaining underwriting profitability and reducing expense ratio
Use of IT for rapid Business expansion and transformation
has always remained a key strategy for ICICI
Information Technology

† Used as a strategic tool to gain competitive


advantage

† Also leads to increased productivity and


efficiency

† Systems capable of handling high customer and


transaction volumes

† Focus on investments in technology to create


new business offerings, improve performance
and optimize costs

† Some initiatives- Service request automation,


enhanced use of SMS alert platforms, self
service enablers
Peer jroup Analysis
ICICI bank standing in its peer group
Market Capitalisation Revenue
Company
(in ' crores) (in ' crores)
HDFC 97,771.62 12,194.20
ICICI 100,937.86 15,592.00
AXIS 54,806.57 8,950.30
KOTAK MAHINDRA 26,885.34 3,255.62 Ô  
 

KOTAK
AXIS BANK HDFC BANK KARUR VYSYA
ICICI Bank MAHINDRA
BANKS -> LIMITED LTD. BANK LTD
BANK LTD.
2008 2009 2008 2009 2008 2009 2008 2009 2008 2009
RATIOS % % % % % % % % % %
Credit - Deposit Ratio 68.09 69.48 62.94 69.24 92.30 99.98 94.69 106.27 75.07 68.93

Investment - Deposit Ratio 38.46 39.47 49.02 41.19 45.60 47.20 55.66 58.23 28.10 31.23
Ratio Of Net Interest Margin
2.83 2.87 4.66 4.69 1.96 2.15 5.08 5.33 2.66 2.59
To Total Assets
Return on Assets(in %) 1.24 1.44 1.32 1.28 1.12 0.98 1.10 1.03 1.63 1.49

Return On Equity 17.60 19.12 17.74 17.17 11.63 7.77 11.19 7.36 18.49 18.57
ICICI bank standing in its peer group
KOTAK
AXIS BANK HDFC BANK KARUR VYSYA
ICICI Bank MAHINDRA
BANKS -> LIMITED LTD. BANK LTD
BANK LTD.
2008 2009 2008 2009 2008 2009 2008 2009 2008 2009
RATIOS % % % % % % % % % %
Capital Adequacy Ratio -
Tier I 10.17 9.26 10.30 10.58 11.76 11.84 14.46 16.13 12.11 14.40

Capital Adequacy Ratio -


Tier II 3.56 4.43 3.30 5.11 2.20 3.69 4.19 3.88 0.47 0.52

Net NPA as % to net


Advances 0.42 0.40 0.47 0.63 1.55 2.09 1.78 2.39 0.18 0.25

U ICICI has high percentage of non-performing assets in its peers.


U For ICICI, CAR is higher than its closest competitors- Axis and H·FC
bank.
CRM- THE ICICI EXPERIENCE
È CRM at ICICI involves increased communication between the
virtual universal bank and its customers and prospects as well as
within the group itself.

È The underlying idea is to enhance every instance of contact with


the customer.

È ICICI believes that a true customer-centric relationship can only


be accomplished by considering the unique perspectives of every
single customer of the organization.
CRM ROA· MAP OF ICICI
È CRM is viewed as a discipline as well as a set of discrete software
technologies, which will focus on automating and improving the
business processes associated with managing customer relationships in
the areas of sales, marketing, customer service and support.

È The organizations aims to achieve the end goal of one-to-one marketing.

È The CRM Software applications will facilitate the coordination of


multiple business functions.

È Coordinate multiple channels of communication with the customer to


carry out customer management more efficiently.
È It should allow ICICI to engage in one-to-one marketing by
tracking complete customer life-cycle history.

È To begin with, it will automate process-flow tracking in the


product sales process, and be able to generate customized
reports and promote cross selling.

È It will also enable efficient campaign management by providing a


software interface for definition, tracking, execution and analysis
of campaigns.
THE CRM BUSINESS CYCLE
COMPONENTS OF CRM CYCLE

È Understand and ·ifferentiate.

È ·evelop and Customize.

È Interact and ·eliver.

È Acquire and Retain.


Understand and ·ifferentiate
Organizations need to understand their customers in order to have a
relationship with them.

Profiling to understand demographics, purchase patterns and channel


preference.

Primary research to capture needs and attitude.

Customer valuation to understand profitability, as well as lifetime value


or long-term potential.

The ICICI jroup͛s customers need to see that the firm is differentiating
service and communications, based on their learning independently
and on the customer expectation and the expected values expected.
·evelop and Customize
In a customer-focused world, product and channel development
has to follow the customer͛s lead, identify customer͛s wants,
determine the value and desire of the customer, etc.

Organizations are increasingly developing products and services,


and even new channels based on customer needs and service
expectations.

ICICI believes that the extent of customization should be based on


the potential value delivered by the customer segment.
Interact and ·eliver
To foster relationships, organizations need to insure that:

All areas of the organization have easy access to relevant, actionable


customer information.

All areas are trained how to use customer information to tailor interactions
based on both customer needs potential customer value.

ICICI is strongly of the opinion that value is not just based on the price of the
product or the discounts offered but are based on a number of factors
including the quality of products and services, convenience, speed, ease of
use, responsiveness, and service excellence.
Acquire and Retain
The more ICICI learns about customers, the easier it is to pinpoint
those that are producing the greatest value for the organization.

They aim to continue to learn more about each customer segment


and use it for successful customer retention.

As ICICI moves step further in CRM they hopes to gain insight and
understanding that enhance the subsequent efforts. The
organization shall become increasingly sophisticated in the
implementation of CRM processes, and over a period of time shall
become increasingly profitable by doing so.
Successful customer retention is based on the organization's
ability to constantly deliver, based on three principles:

Maintain interaction- never stop listening.

Continue to deliver on the customer͛s definition of value.

Customers change as they move through differing stages of


their lives, which implies that the firm needs to be alert for
changes and to modify its services and value propositions as
they change.