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CASE STUDY OF AXIS BANK

Banking on Technology and Market Segments for Competitive Space

Introduction
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AXIS bank (formerly UTI Bank) is the first new generation private sector bank to be established in India under the overall reform programme initiated by the govt. of India in 1991.

The bank promoted by Unit Trust of India, the largest mutual fund in India, holding 87% equity.

Axis banks first capital raising post inception was in 1998through public offering.

The present shareholding pattern is :


Administrator of the specified 27.33% undertaking of the AXIS LIC 10.34%

GIIC & four PSU Insurance 5.28% companies Non promoters Holding Foreign Shareholding 16.96% 40.09%

AXIS Bank performance in 2008


The bank has developed a branch network which is built on customer convenience & service , helping it in acquisition of low cost retail deposits, retail assets, etc. As on march 31, 2008, bank had 651 branches as against earlier year, it was 508. Out of 651 branches, 158 branches are in semi urban & rural areas.

SHIFT IN STRATEGY
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Initial business model: the bank started to give more corporate loans, as they offered higher yields during FY96 to FY99. But the overexposure to corporate loans impacted the banks asset quality. In 1999, the banks net NPAs to advances ratio jumped to 6.3% in FY99 from 3.7% in FY97. Realizing the risk of overexposure to this segment, AXIS bank started shifting its concentration to retail finance, which presented immense growth opportunities.

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Strategy shift: AXIS Bank started focusing on both physical & technology infrastructure, which it thinks are key to acquire customers in retail finance segment. Braches increased to 450 from just 35 in FY99. It is the 1st Indian Bank to have a remote disaster recovery management system to protect its business from any eventualities.

AXISs Current Strategy


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The bank follows a broad differentiation strategy. They are:

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Managing changing customer needs:


   

Powerful back office hubs Banks centralized phone banking center Zonal level Nodal officers Know your customer norms

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2. Risk management:


Risk limits are set according to number of criteria including relevant market analysis, business strategy & management experience.

Risk limits are monitored & reviewed regularly.

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3. Dealing with regulations:


The bank calculates capital charge on operational risk under both the Basic Indicator Approach & the standardized approach.

The bank has simultaneously undertaken internal studies on several lines of business for an evaluation of the risk profile, capturing of losses incurred & identifying the key risk indicators.

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4. Keeping pace with the technology :


The banks IT system developed a process called SETU ( Seamless Electronic Transfer to AXIS Bank)

The sale & redemption of 58 AXIS Mutual Funds Schemes was an additional service through the ATM channel.

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5. Product & service innovation:

 

Bank set up low cost rural ATMs at Anand. A channel finance hub was created

The strategy making, strategy execution process for AXIS Bank

Revise as needed in the light of actual erformance, changing conditions, new opportunities , & new ideas

Growth Strategy
Objectives
Increasing the market share in various business resulting in an enhancement in its core income streams.  Improve the quality of its income streams.


Complementary Strategies for Business Growth And Development


Strategic alliances and Collaborative Partnerships
Tie-ups

with Maruti & Hyundai For selling car loans. Co-financing pact with India In infrastructure Finance Company Ltd.(IIFCL) for infrastructure projects. Tie-up with Bajaj Allianz General Insurance Tie-up with Metlife as Bancassurance Partner. ATM sharing based on alliances with other banks such and multi-bank shared payment networks. Economic Times Remit2India for money transfer.

Outsourcing Selected value-chain Activities


Outsourcing recruitments to MonsterIndia.com Outsourcing Print Operations to Xerox. Outsourcing of Electronic Bill Payment(EBP)

Offensive Strategic Moves


Superior customer service Range of Service on ATM machines. Aggressive Growth in cards business. Expansion Of Geographical reach. Financial Advisory services. Launched an e-Payment Facility for payment of central excise & service tax. I-trade

Evaluation Of Growth
Year
2004-05 2005-06

Net Profit
334.58 485.08

% increases
---44.98

Scope of Future Growth

Governance & Ethics Structure


To enhance long term interest of its share holders and to provide good management ,and the adoption of prudent risk management techniques and compliance with the required standards of capital adequacy. Thereby safeguarding the interest of its other stakeholders such as depositors, creditors, customers, supplies and employees. To identify and recognize the board of Directors And the management of the bank as the principal instruments through which good corporate governance principals are articulated and implimented.

Innovation and Entrepreneurship


Experimented new delivery models for Credit, including low cost ATMs at Anand. Such application of technology provides convenience as well as product innovation.

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