SBI DOC

Challenges faced by SBI

 Competition from new Entrants: Liberalization forced the Indian
Government to implement economic reforms. Relaxed entry restrictions
such as increased lending volumes, setting up of deposit and lending
rates, and abolition of 1:4 policy for branches led to entry of a lot of new
players in the Banking Industry. These new entrants launched innovative
features which the Indian customers had never heard of before. This
emphasis on innovation, technology and customer service made newer
banks an attractive option for customers.

 Dwindling market share: SBI had been losing market share steadily for
more than two decades. From 35% market share in the early 1970s, it had
fallen to 15% market share in the 1990s. In the early 2000s, the decline
was getting worse, thus a major transformational effort was needed to
turn around the situation.
 Organizational Inefficiencies-

 One way communication channel: Top-down communication channel

limited contact of employees with seniors because of which they were
unaware of the problems the bank was facing.
 Attitude of the employees: A major problem that SBI faced was that
its employees were not aligned to a common goal. As a result, they
were not motivated, seemed lethargic, and lacked any sense of
belongingness to the bank.
 No recognition of hard work: This led to low motivation among bank
employees which in turn transformed into poor customer service.

 Outdated technology: moving to a centralized computerized setup from a

decentralized one, was proving to be a difficult task. Resistance to
change was the hurdle for the bank in adopting the new
technology, while the entrants, being tech-savvy institutions,
provided an excellent customer services which lured everyone.

 Perception among the customers: SBI‟s image amongst customers was

that of an old, stagnated bank that did not focus on product innovation or
 marketing. Due to these factors, customers - especially the younger
generation - did not want to be associated with SBI.
 Differences in branch experience and services: SBI‟s new competitors
focused extensively on enhancing customers‟ experience when they
visited the bank. To realize this goal, they hired young professionals who
ensured that customers were fully satisfied on every visit to the bank. SBI
failed to match these efforts and predictably suffered.

 Receding Prominence of SBI: SBI played a significant part in developing

the rural India by providing assistance to villagers and providing them
credit. SBI became synonymous to a temple and was considered as the
choice for many Indians. While expanding its network in leaps and
bounds, it didn’t evolve with time. The banking industry saw several
private and foreign banks entering the field with their “Anywhere,
Anytime Banking” having large investments in technology and customer
service, which in-turn proved to be a significant threat to the incumbents.

 Poor customer services: Their customer services were lagging behind.

Account opening time was around 50 minutes which is excessive.

How the changes happened?

 Establishing leadership- Strategic restructuring of SBI: During initial

days, he had not established full authority over all employees. So, he
brought all the changes very quickly. He shuffled the top deck of
employees through new GMs. Apart from that, he created 4 new
strategic business groups -Rural and Agricultural banking group with
high potential in rural India, Corporate strategy group and Corporate
communication and change group, a new diverse group. Also, he tried
to address issues of inefficient rollout of CBS. He introduced audits
and training of soft wares for employees. Outcomes: This helped in
capturing large and mid-sized corporate companies with creation of
businesses like private equity. Employee training helped in enhancing
expertise with regard to software use. Along with, all the glitches and
bugs were rectified

 The Cascading Conclaves- To have a successful transformation, Bhatt

realized the need to convey the organization’s vision to all its 200,000
 employees through changing their mindset. He organized several
conclaves

 Aamby Valley Conclave: For top management consisting 2 MD and

22 DMD

 The Next Wave of Conclaves: Successive meetings with CGMs and

GMs

 The Union Conclave: For engaging leaders of trade unions within the
transformation process

Outcomes: Brainstorming session during Aamby Valley conclave

resulted in 14 transformation agendas through collaborative consensus
which provided link between business and people through improved
technology and processes. The Next Wave of conclaves improved two
way communication between top management and employees. Also,
union leaders got motivated as they were also become a major part of
SBI‟s transformation story

 Enabling Initiatives-

 All of the SBI branches were migrated to revamped CBS platform

with all glitches resolved: This improved the overall process flow
through transformation from branch based banking to new anytime,
anywhere banking which made SBI at par with the private competitor

 All operating processes were reengineered to align with the new CBS
platform: To align its all process to new CBS platform, Bhatt re-
engineered all operating processes through shifting of all non-
customer facing branch activities to centralized and back-office
processing cells. Also, he dismantled the modular structures where
each circle had modules or zonal offices who were responsible for 300
branches each. He removed the post of DGM and made GMs directly
responsible to regional general managers. Outcomes: Individual
branches become more focused towards sales and services. The new
structural changes brought quick decision making capability and
increased direct interaction between GMs and regional GMs. Also,
bank staffs are become more closer to the customers
  Campaign of “triggering posters” was started:
With a vision to improve ranking of SBI in customer services, a new
campaign of “triggering posters” was started. At the end of the campaign,
SBI surveyed all its employees and received 141,000 responses regarding
their perception of SBI‟s vision. SBI also introduced “SMS unhappy”
through which any customer can report any grievance and get it resolved
within 24 hours.
Outcomes: Customer satisfaction improved customer retention.
Technology enabling helped customers to explore all the bank products
conveniently, they no longer had to approach any branch staff. Also, new
customer grievance redressal system improved confidence among
employees
 Other Initiatives- To improve risk management: To improve risk
management system, SBI introduced a new managing director position
having responsibility as chief credit and risk officer. They also created
a new business performance system to improve synergy with non-
banking subsidiaries.
Outcomes: These actions helped eliminate duplicate front-end
branches which caused improved operational and administrative
process.

 People Initiatives-

 Parivartan and Citizen SBI: The firststep towards including the

Bank‟s 138,000 officers and clerks into Bhatt‟s vision was through
“Parivartan”. It took 6-7 months to formulate it and was led by
Deepak Chawla. “Parivartan” was an in-house mass internal
communication 2-day program that allowed people to interact
through individual conversations and group discussions. The aim
was to help the staff become change agents, customer-friendly and
inclusive to the organization. 3,800 workshops were conducted
under “Parivartan” in over 100 venues starting 16th July, 2007.It
was followed by a campaign named “Citizen SBI”. Its aim was to
help people explore who they are and what their role is in the
Bank. The campaign was run in 3 phases. In the 1st phase,
employees had to envision the ideal SBI citizen (employee). In the
2nd phase, employees were provided with tools to practice
citizenship in the workplace. In the 3rd phase, focus was on
practicing citizenship in the community.
 Result: As a direct result of “Parivartan” and “Citizen SBI”, a shift
in attitude was noticed among the employees. It led to overall
increase in customer satisfaction by 10 percentage points from 46%
to 56%

 Recruitment Drive: Under the new policy of adding 1,000 new

branches every year, SBI faced a massive shortage in manpower.
Bhatt overcame this challenge by terminating VRS (Voluntary
Retirement Scheme) and shifting the process of recruitment online.
SBI received 2.4 million applications for 20,000 technical staff and
3,500 officers. Of the 2.4 million applicants, 60,000 were
interviewed. In order to train the new employees, AGMs and
people at other higher posts, SBI tied up with top institutions
including business schools.
Result: The employee strength of SBI increased by 15% in 2008.

 Introducing New HR Policy: SBI suffered due the old model of

promotion followed which was slow and was depended on reports
from Managers. In order to solve this issue, Bhatt changed report
writing into multiple choice format. Various interview committees
were drafted to ensure faster promotion process. Several employee
recognition measures were also introduced which included
appreciation letters, family trips to foreign countries and awards
like „Employee of the Month‟. The employee suggestion scheme
was also transferred online and ₹500 was given to any employee
who made suggestions regardless of its feasibility. Employee Share
Purchase Scheme was also introduced, under which anyone could
subscribe to SBI shares whether they were simple messenger in the
Bank or the Chairman.
Result: These new policies helped in boosting employee morale.
They were learning new things and were enjoying the process.
They felt valued and for the first time they were being recognized
for their performance

 Business Initiatives

 Rebranding SBI‟s image: SBI launched a series of campaigns to

rebrand its image in the public eye. The main agenda of these
campaigns was to make SBI relevant to youth and the Indian
middle class. References like “Pure Banking Nothing Else”,
 “Banker to every Indian” and “Proud to be an Indian” helped
drive home this message. step that SBI took was to provide
customized solutions to different customers. An example of this
was Corporate Salary Account for IT professionals. In addition to
these steps, the bank started hiring more and more young people
directly through campuses. This was a conscious effort to attract
young customers.
Result: People started to express more interest in joining SBI as it
contributed to their brand’s appreciation. In another positive step,
vendors moved their entire corporate salary account to SBI

 Rural Expansion: SBI created the Rural Banking and Agricultural

Group with the aim out to 100,000 unbanked villages.

 New Wholesale Bank: Bhatt had set a target to double fee-based

income. So, the Wholesale Banking group was created which
provided fee-based services like treasury, trade finance and cash
management. The account planning exercise was renewed. It
focused on building customer relationships and provided all
products and services in a single window.

Result: SBI‟s fee income from wholesale banking increased by

more than six times from $0.15 billion to $0.99 billion in just 4
years.

 Global expansion: SBI, in order to extend its presence in

international market and capture a greater share of Indian linked
businesses, started building foreign currency assets and taking
greater exposures on Indian companies. SBI also issued foreign
currency bonds and boasted of taking a single group exposure up to
$1 billion.

 Other Initiatives: SBI expanded globally by providing refinancing

services to Indian firms setting up offices abroad. It also
consolidated its treasury operations by ramping up its salesforce
and introducing new financial instruments for SMEs. It also
expanded its services to include PE, pension funds, general
insurance and financial planning. All these transformational
changes fructified and SBI became the most valuable bank in the
country by 2008 in terms of market capitalization. Other laurels
that followed were:-“The Bank of the year, India” in 2008 & 2009,
and CNBC Awaaz consumer awards for “Most Preferred Bank”,
“Most Preferred Home Loan Brand” and “Most Preferred Credit
Card Brand” in 2010.