“Why don’t you invest in our mutual funds? They are giving good returns.”
Don’t be surprised if you hear this gentle voice even before you step inside the Kasba branch (south Kolkata) of the State Bank of India.
For customers at this branch, the frail Gobinda Naskar, who stands guard at the front door with a heavy double barrel gun, is also its first marketing face.
Om Prakash Bhatt, SBI’s feisty chairman since 2006, may not know Naskar, but he personifies all the attributes Bhatt wants to infuse in his 200,000 employees in his unfinished quest to retain SBI’s preeminent position in Indian banking, and a place among the top 20 banks in the world.
It’s a search that was thrust upon SBI in the post-reforms era.
In an interview to the McKinsey Quarterly (Q3, ’09), Bhatt admitted that SBI’s market share had dipped from 35 per cent in early ’70s to about 15 per cent now.
From the mid-1990s, upstart private sector rivals such as ICICI Bank and HDFC Bank, which were technology-savvy and carried no public sector legacy, began nipping at its heels and then overtook it on most parameters of customer satisfaction.
The Hindustan Times-MaRS survey shows that private sector rivals Axis Bank, HDFC Bank and ICICI Bank are ahead of SBI in customer satisfaction in India’s three most important commercial centres — Delhi, Mumbai and Bangalore — and in Chennai.
In Kolkata, SBI comes in at joint second (with HDFC Bank), behind Axis Bank, but turns the tables in Hyderabad, where it is the clear No. 1.
“They (private banks) brought more products to the market, introduced the latest technology and weaned away the urban segment that had a lot of money in their pockets but little time to spend in a bank,” says Ranjan Das, professor of strategic management, IIM-C.
Apart from the new generation customers, large and mid-sized companies also started moving away.
The 800-pound gorilla in India’s banking space was obviously punching below its class.
But getting its act together was a challenge. To overcome the technology handicap, SBI got IT major Tata Consultancy Services to create the world’s largest core banking solution with 11,888 offices on a single platform.
Transformation came at a faster pace in its backroom than at the front desk. But SBI did learn to dance — and develop a customer focus.
It began by taking several leaves out of the books of its private sector rivals. It set up dedicated retail branches, changed the disheveled public sector look at these branches, began one-stop banking (where customers did not have to go to five different counters to get work done) and expanded its network of ATMs at a furious pace.
SBI’s sheer size and its access to cheap resources also came to its defence.
“SBI handles most government accounts, pensions and public provident fund accounts. As a result, the constant flow of funds was almost guaranteed,” says Rajesh Agarwal, director, CD Equisearch, an equity research firm.
A bank, designed to function like a socialistic welfare organisation after Independence, was morphing into a market entity.
And that is what Bhatt, who has spent 38 years with SBI, has been doing for the past five years.
And it’s showing in the Hindustan Times-MaRS rankings.
SBI has been ranked joint second among public sector banks, joint fifth overall. Given its size and the difficulty of transforming large organisations, that is very creditable.
It is the favourite among ATM users and easily outscores its private sector rivals on this count, but ranks between five and seven on other parameters.
Clearly, there’s a lot that’s right with India’s largest bank. The areas where it needs to improve are also clear. And given Bhatt’s success at transformation management so far, only a very rash punter would wager against him setting these right in the foreseeable future.