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31/12/2014
Project Report
Contents
1 INDIAN BANKING OVERVIEW ........................................................................................................................ 3
1.1 STRUCTURE OF INDIAN BANKING INDUSTRY ................................................................................................ 3
1.2 MAJOR PLAYERS IN INDIAN BANKING INDUSTRY .......................................................................................... 3
1.3 HOW DOES THE INDUSTRY WORK ................................................................................................................ 3
2 ICICI BANK OVERVIEW .................................................................................................................................. 4
2.1 INTRODUCTION ............................................................................................................................................ 4
2.2 VISION........................................................................................................................................................... 4
2.3 MISSION ........................................................................................................................................................ 5
2.4 AWARDS & RECOGNITION ............................................................................................................................ 5
2.4 PRODUCTS OFFERED ..................................................................................................................................... 5
3 EXTERNAL ANALYSIS- OPPURTUNITIES AND THREATS .................................................................................. 5
3.1 OPPURTUNITIES ............................................................................................................................................ 5
3.2 THREATS ....................................................................................................................................................... 6
3.3 PORTERS FIVE FORCES MODEL .................................................................................................................... 6
3.3.1 BARGAINING POWER OF SUPPLIERS ..................................................................................................... 6
3.3.2 BARGAINING POWER OF CUSTOMERS: LARGE NUMBER OF CUSTOMERS ........................................... 6
3.3.3 INTENSITY OF EXISTING RIVALRY .......................................................................................................... 6
3.3.4 THREAT OF SUBSTITUTES ...................................................................................................................... 7
3.3.5 THREAT OF NEW COMPETITORS ........................................................................................................... 7
4 INTERNAL ANALYSIS ...................................................................................................................................... 7
4.1 VALUE CHAIN ANALYSIS AT ICICI BANK ......................................................................................................... 7
4.2 STRENGTHS ................................................................................................................................................... 7
4.3 WEAKNESS .................................................................................................................................................... 8
5 BUILDING BLOCKS OF COMPETITIVE ADVANTAGE ........................................................................................ 8
5.1 SUPERIOR EFFICIENCY................................................................................................................................... 8
5.2 QUALITY ........................................................................................................................................................ 8
5.3 INNOVATION ................................................................................................................................................ 9
5.4 RESPONSIVENESS TO CUSTOMERS ............................................................................................................... 9
5.5 ECONOMY OF SCALE ..................................................................................................................................... 9
5.6 LEARNING EFFECT ......................................................................................................................................... 9
5.7 MARKETING STRATEGY AND PRACTICES ..................................................................................................... 10
5.8 HUMAN RESOURCES DEVELOPMENT ICICI ................................................................................................. 11
5.9 RECOMMENDATIONS FOR ICICI .................................................................................................................. 11
5.10 CRM AT ICICI BANK ................................................................................................................................... 12
6 BUSINESS LEVEL STRATEGY AND THE INDUSTRY ENVIRONMENT ................................................................ 12
6.1. HORIZONTAL MERGERS: ............................................................................................................................ 12
6.2 CHAINING ................................................................................................................................................... 13
6.3 USING INFORMATION TECHNOLOGY AND INTERNET ................................................................................. 13
6.4 ICICI POSITION IN OVERALL INDIAN BANKING SECTOR ............................................................................... 13
7 ICICI INTO INTERNATIONAL MARKETS ......................................................................................................... 14
7.1 TECHNOLOGY ISSUES .................................................................................................................................. 15
7.2 OPERATIONAL ISSUES: ................................................................................................................................ 15
8. DIVERSIFICATION STRATEGIES FOLLOWED BY ICICI .................................................................................... 16
8.1. RELATED PRODUCT DIVERSIFICATION- HORIZONTAL INTEGRATION ......................................................... 16
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2.2 VISION
To be the leading provider of financial services in India and a major global bank.
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2.3 MISSION
We will leverage our people, technology, speed and financial capital to:
Be the banker of first choice for our customers by delivering high quality, world-class
products and services.
Expand the frontiers of our business globally.
Play a proactive role in the full realization of Indias potential.
Maintain a healthy financial profile and diversify our earnings across businesses and
geographies.
Maintain high standards of governance and ethics.
Contribute positively to the various countries and markets in which we operate.
Create value for our stakeholders.
ICICI Bank ranked 5th in the list of "57 Indian Companies", and 288th in World
Rankings in Forbes Global 2000 list.
ICICI Bank has won the "Banking Technology Awards 2010" at The Indian Banks
Association in the following categories:
"Best Financial Inclusion Initiative" (first prize).
"Best Online Bank" (runner up).
"Best use of Business Intelligence" (runner up).
"Technology Bank of the year" (runner up).
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3.2 THREATS
1. The concept of saving in banks and investing in financial products is increasing in rural
areas as more than 62% percentage of Indias population is still in rural areas.
2. ICICI bank is planning to open 1500 new branches
3. Small and non performing banks can be acquired by ICICI because of its financial
strength
4. ICICI bank is expected to have 20% credit growth in the coming years.
5. New products and new markets can help ICICI Bank to expand their business and
diversify their portfolio of products and services
6. International markets offer ICICI Bank new opportunities to expand the business and
increase sales
Inputs have little impacts on costs: When inputs are not a big component of costs,
suppliers of those inputs have less bargaining power. Low cost inputs positively affect
ICICI Bank. Inputs have little impact on costs (ICICI Bank), so an analyst should put
more weight into it.
Bargaining power of supplier of ICICI bank: Bargaining power of supplier of ICICI bank
has a significant impact, so an analyst should put more weight into it. "Bargaining
power of supplier of ICICI bank" will have a long-term negative impact on this entity,
which subtracts from the entity's value. This qualitative factor will lead to an increase
in costs. This statement will lead to a decrease in profits.
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Government limits competition: Government policies and regulations can dictate the
level of competition within the industry which is positive for the bank.
Large industry size: Large industries allow multiple firms and produces to prosper
without having to steal market share from each other so an analyst should put more
weight into it. So competing institutions will have a difficult time overcoming it.
4 INTERNAL ANALYSIS
4.1 VALUE CHAIN ANALYSIS AT ICICI BANK
4.2 STRENGTHS
Online Services: All the banking facilities of ICICI have been encircled by online
services.
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Advanced Infrastructure: ICICI bank one of the well-equipped bank in India with a
good deal of advanced infrastructure in each and every branch of it in order to help
its customer with a tester banking services.
Friendly Staffs
12 Hrs. banking services
Late night ATM services
Brand name: Within a very short span of time this bank has acquired a strong brand
name by providing a quality of services to its customers, thus they have a getting a
huge edge over their customers.
Huge network: The bank consists of near about 450 branches and over 1800 ATMs all
over India.
Diversified portfolio: This bank has a well-diversified portfolio of products which not
only helped them to minimize their risk but also huge customer base.
Expanding International and rural business: ICICI has been aggressively progressing
towards international growth. Today more than 25% of its business comes from the
foreign shores
Strong balance sheet and loan growth
4.3 WEAKNESS
5.2 QUALITY
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5.3 INNOVATION
Some of the innovative and breakthrough products and services by ICICI bank is shown
below:
Pockets by ICICI Bank: In September 2013, ICICI Bank launched a one of its kind app
on Facebook 'Pockets by ICICI Bank' to enable customers to carry out a wide range of
financial transactions on Facebook.
MySavings Rewards: ICICI Bank has rolled-out the programme 'MySavings Rewards'
from 1 September 2012, where reward points are offered to individual domestic
customers for a variety of transactions done through the savings bank account.
iWish: the flexible recurring deposit: iWish is a flexible recurring deposit product
launched by ICICI Bank for its savings account customers.
ICICI Bank has developed this product in collaboration with Social Money.
NRI Advantage: ICICI Bank offers a new product benefit for its NRI customers. It
entitles customers to handpicked, exclusive discounts/special offers. These exclusive
offers on various products/services are centred on the important needs of NRIs,
hence ensuring their relevance.
Reduced TurnAround-Time: The TAT has been reduced from 4 days to less than 24
hours.
Customer Delight: Improved customer interactions resulted in higher customer
satisfaction
Made2Order Account: ICICI Bank's Made to Order Account (M2O) is an account tailormade keeping in mind transactions unique to your business.
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ICICI bank faced issues during 2008 subprime crisis, as it gave loans to less credit worthy
customer and invested fund in other countries. ICICI bank learnt from this mistake and
started giving loans before checking credit worthiness of customer. ICICI bank follow KYC
(Know Your Customer) rigorously.
ICICI Bank
Funds &
Investments
Insurance &
Risk Protection
Investment
Advice
Credit Cards
Managing
Investment
Banking
Products
Banking
Services
Business
Banking
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Three different job profiles viz., customer service and cross selling of products, back
office operations and marketing and sales emerged after the new organizational
structure was put in place.
New recruits have been provided training in skill up gradation and team building and
development of an appropriate mind-set for better conduct of banking business.
Training programs of shorter duration were designed for the existing staff, with
specific focus on product information, customer service, crosses selling of products
and operational excellence.
The promotion process has been designed on the principles of openness and
transparency.
Career progression is based on performance of employees being above an acceptable
level with emphasize on those with high business drive and potential.
These exercises are carried out by the Career Development Centre, which offers a
comprehensive competency-building program.
A high level of performance is rewarded by a system of performance bonus.
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CRM at ICICI Bank involves increased communication between the bank and its
present and prospective customers.
It facilitated coordination of multiple business functions & multiple channel of
communication with the customers to carry out customer management more
efficiently.
It also automated the process flow tracking in the product sales process and helped to
generate customized reports and promote cross-selling.
IT Services
Finacle by Infosys
and Phone banking
(iWish, iMobile)
Consolidating
Banking
Industry
Horizontal
Mergers
(Bank of
Rajasthan, Bank
of Madurai etc)
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Chaining
Opening branches
nationally and
internationally
Opening Regional
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6.2 CHAINING
ICICI Bank has opened branches (chain of nationwide banks) at most of the cities in India. To
attract NRI customers, it has branches at prominent international locations. It also has
regional offices that maximized responsiveness to the need of regional branches and
customers.
(i)
(ii)
Figure (i) shows trend of overall Indian banking industrys and private sectors NPA
level over various years. Figure (ii) shows the same for ICICI bank.
2. Capital Adequacy Ratio: Overall Indian banking sectors capital adequacy ratio is close
to 13% in FY2013, but ICICI has the same as 16.5% in FY2013. As per Basel III, it should
be 17.94%. ICICI bank might reach this target by FY2014-15.
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3. Infrastructure: ICICI bank has largest rural branch network among private sector
banks. There has been 75% branch addition in rural and semi urban area since 2012.
ICICI bank has 3588 branches in Dec 2013, largest in private sector banks. This is
supplemented by 11000+ ATMs.
Although ATM growth rate (CAGR) of overall Indian banking sector is 30.6%, but ICICI
bank holds 11000+ ATMs in Mar, 2013.
It looked into the existing model, where the bank followed its customers, whether
corporate or retail.
It looked into the alternative modes of servicing the customers based in different
parts of the world.
It evaluated on how to leverage its banking and business network to expand in the
international markets.
ICICI as an organization is divided into six major product divisions like;
Retail Banking
International Banking
Rural
Micro-Banking and Agri-Business
Government Banking
Corporate Centre
The company identified international banking as a key opportunity, aiming to cater to the
cross-border needs of clients and leveraging the domestic banking strengths to offer
products internationally.
We believe that we have to serve our customers anywhere in the world
-K V Kamath, CEO
The company had substantially used the alliances and partner model in the domestic market
and it tried to replicate the same in the international markets. In the domestic market it had
alliances with the airlines and travel houses. The objective was to target NRI when they were
either visiting or leaving India. It also had a focused marketing approach in the domestic
market, where it tied up with universities and companies from where students and
employees were likely to migrate to foreign countries for different purposes.
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To tap the opportunities in the remittance market in India ICICI launched a remittance
product in association with US based Wells Fargo to enable non-resident Indians in the US to
send money to India directly from their Wells Fargo account to their beneficiarys ICICI Bank
account in India in just 24 hours. It also launched a partnership with Mees Pierson, Fortis
private banking arm to provide a full range of high net worth products and services to ICICIs
clients in India and abroad.
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17% year-on-year increase in standalone profit after tax to 2,655crore (US$ 441
million) for the quarter ended June 30, 2014 (Q1-2015) from 2,274crore (US$ 378
million) for the quarter ended June 30, 2013 (Q1-2014)
Operating profit increased by 18% to 4,517crore (US$ 751 million) for Q1-2015 from
3,814crore (US$ 634 million) for Q1-2014
Standalone profit after tax increased by 17% to 2,655crore (US$ 441 million) for the
quarter ended June 30, 2014 (Q1-2015) from 2,274crore (US$ 378 million) for the
quarter ended June 30, 2013 (Q1-2014).
Net interest income increased 18% to 4,492crore (US$ 746 million) in Q1-2015 from
3,820crore (US$ 635 million) in Q1-2014
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Western
Canada, USA
Central
Operations
CEO
Eastern
Russia, China, Hong
Kong, Bangladesh,
Thailand, Malaysia,
Indonesia
South
Sri Lanka,
Singapore, South
Africa
Work Environment: ICICI banks work environment fosters growth and learning of an
individual. This helps individual to fulfilling both the individual and organizational
aspirations. ICICI bank tries to conduct business which refleects its values and results
to maximize values to stockholder. This approach benefits both organization,
stackholders and comminity. Personal growth of an individual and balancing work life
balance is one of the main agenda.
Performance Driven Culture: ICICI bank commits to create inclusive organization
where everyone can succeed based on merit.
Learning & Development: L&D practice at ICICI promotes professional to enhance
their technical, function and softer aspects required to succeed. ICICI bank thrive by
imparting skills and knowledge through various training interventions to enhance
personal & team effectiveness.
The Bank set up the International Banking Group (IBG) in the year 2002 to implement
a focused strategy for its international banking business.
ICICI Bank believes that a home country linked approach is a very effective entry
strategy for new international markets.
The Bank has initially focused on serving the entire range of investment, remittance
and financing needs of non-resident Indians (NRIs)
ICICI Bank's international presence spans 12 countries
UK
Russia
Canada
Singapore
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Hong Kong
Bahrain
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13 BIBLIOGRAPHY
http://www.business-standard.com/article/finance/icici-bank-opens-101-rural-branchesacross-6-states-112121400175_1.html
https://www.google.co.in/webhp?sourceid=chrome-instant&ion=1&espv=2&ie=UTF8#q=icici%20annual%20report
https://www.google.co.in/search?q=icici&espv=2&source=lnms&tbm=isch&sa=X&ei=_p6jV
M7GFce2uASww4HQCg&ved=0CAgQ_AUoAw&biw=1163&bih=558
http://www.icicibank.com/managed-assets/docs/investor/annualreports/2014/Subsidiaries-of-ICICI-Bank-Annual-Report-FY2014.pdf
http://www.icicigroupcompanies.com/corporate_governance.html
http://www.icicibankrussia.com/iciciworldwide.htm
http://www.ximb.ac.in/~jcr/JCR1.pdf
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