Sbi Bank Transformation

| What were the significant issues that Bhatt faced as he sought to transform the bank?

1. The bank had been losing market share steadily for more than two decades. In the early 1970s, it had 35 percent market share,now it is about 15 percent and the decline was getting worse.

2. By 2006, the bank had become just another bank from being an opinion leader earlier. It was the largest bank in India in terms of assets, branch network, customers, but had lost its voice and its influence significantly.

3. Two significant segments were slipping away. One was large and midsize corporations. These corporations needed extra things like fee-based services e.g. treasury, trade finance that required technology SBI didn’t have then. The other segment was the young and affluent, which were rapidly becoming a large customer base and SBI offered no relevant services for them.

4. The bank had become an "inward looking" bank with no sales focus. No focus on market share and customer segmentation.

5. The bank was losing its customers to its competitors -the flashy private sector and foreign banks. Customers were neither respected, nor treated well.

6. The bank's employees were not aware of the problems facing the bank since they had limited contact with senior management andcommunication was one way -top to bottom. No recognition of hard work. Outdated HR policies were prevailing.

7. The employees had lost their pride and sense of belonging. They were not aligned along a common set of objectives —no vision, goals or commitment.

8. Although being the market leader, it was facing tough competition from private banks such as ICICI bank, HDFC bank. Their global ranking was also slipping.

9. Senior management itself thought "private is better" and thought SBI would soon surrender its leadership position. The best people were leaving SBI in drove to join private banks, because of the facility of VRS in the bank.

10. As the famous economist Joseph Schumpeter predicted, the decay of capitalism as large organizations become more and more bureaucratisedand mechanical, killing the spirit of innovation necessary to keep capitalism thriving. An individual loses his identity and becomes just a cog in the wheel. This is what was precisely happening to SBI then.

Changes that Bhatt Brought about?

• Aligning the entire work force towards common set of objectives, goals, vision and commitment: To strengthen the relationships and motivate workforce towards common goal he arranged conclaves also conducted conclave for Unions to ensure their co-operation for the various initiatives in pipeline. Parivartan and SBI citizen were targeted for operation level workforce.
• Strengthening SBIs Technology Backbone: CBS was launched through out SBI before schedule dates.
• Created four new strategic business groups : National Banking Group, Rural and Agricultural Banking, Treasury and Markets, Mid Corporate Group, Corporate Strategy and New Businesses.
• Created New dept. “ Corporate Communication and Change” who reported to Mr. Bhat.
• Steps were taken to develop consistent Customer Service. The vision statement was changes and technology was leveraged to provide customer services.
• Strengthened and integrated risk management systems.
• Changing training and capability building systems. Scrapped VRS as they were loosing talent pool, new recruitment were done. Contract basis hiring were done for specialist jobs.
• Changed individual performance management system.
• Advertising initiative was launched to win back Indian Middle class consumer.
• Rebuilding of profitable wholesale bank and targeting fee income segment.
• Smart Global Expansion was undertaken to extent SBI presence to international markets.
• SBI consolidated treasury operations.

Issues being address with above mentioned initiatives:

• 1)Earlier SBI was seen as Old, hierarchical, transaction oriented, government bank now its is looked as modern, customer focused, and technologically advanced universal bank.
• 2) SBI was losing market share over two decades and its fallen to 15%. Because of the various initiatives taken market share increased to 25%. Ranking improved to 68 from 107.
• 3) Complete CBS role out in SBI.
• 4) System of having long queues of customer were done away and modular offices formed.
• 5) By creating new position of Managing director and integrating its risk management systems, SBI was able to raised $3.67 billion of equity from the market improving its Capital adequacy ratio.
• 6) The various workshop conducted sensitize the staff about the transformation efforts, energize them to become change agents, helped them to become more customer-friendly.
• 7) Even though in a public sector organization government dictated salaries and these were not at par with the private sector, the various other initiative taken by Mr. Bhatt to recognize employee performance motivated them.
• 8) Help build branches at strategic location. As due to core banking everything got centralized, it was easier to open new branches.
• 9) Because of considering Rural India as strategic business it led to empowerment of this sector, by 2011 SBi had reached 125000 villages.
• 10) Due to building of wholesale banking the fees collection improved 4 times. Also bank was in a position to sanction corporate finances within minutes.
• 11)Through  Smart Global Expansion initiative SBI made its presence felt internationally, they are In an unparalleled position of taking 1 billion single group exposure risk.