Bank of Baroda has now opened swank new branches in Hyderabad and Bangalore to attract IT professionals

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Bank of Baroda has now opened swank new branches in Hyderabad and Bangalore to attract IT professionals; SBI is gung-ho on ATM, Internet and phone banking; while Punjab National Bank has initiated its 8 to 8 banking campaign and started ‘Doorstep Banking’ as a pilot project in New Delhi. Most PSBs are also gleefully hiring savvy and smart-talking MBAs for their marketing and sales operations, which till a few years ago was purely the prerogative of the ICICIs and HDFCs of the Indian banking world.

To get a reality check for ourselves, we visited a branch of a state-run bank in the NCR last week to open a new savings account. The branch did look cleaner than it did a year ago (this author has a savings account there – courtesy their locker facility – for the past six years) but the sense of bureaucratic apathy is still writ large on the bank’s overall packaging ambience. Notwithstanding the gruelling training sessions with staffers; decades’ old mindsets do not change in a day. Sure the guy at the counter was more helpful (and even smiled!) but the sense of urgency was absent. Like Barack Obama, guess PSB’s will sooner or later have to figure that campaigning for change and implementing change are opposite sides – not of the same but – of different coins!

If state-run banks are flexing their muscles, you will be wondering why private and foreign banks are keeping mum. It’s the global financial watershed, silly! When Wall Street’s worries made way into India, one of the first casualties was ICICI Bank - the nation’s largest and most aggressive private bank. People were seen lining up to withdraw their savings at ICICI branches, no thanks to malicious rumours about the bank’s financial exposure to Lehman. In an unprecedented move, the RBI had to intervene and issue a statement about adequate liquidity at ICICI. Unlike their public sector counterparts, private banks have also gone on the defensive even in their positioning. So in this downturn, ICICI Bank’s ads are doling out the message of ‘trust us’, giving PSB’s a free run to communicate their ‘change’ agenda.

Sure state-run banks have all had a haircut, shaved and worn designer suits... but will it be smooth sailing from hereon to win back the young and savvy customers in metros and big cities? Halve does not think so! The first step he feels is for them to get their respective ‘change agents’ up and running across the spectrum and the second is innovation in ‘reaching out’ strategies. “Right now, state-run banks have simply reached that threshold level at par with private banks. The next step now should be to widen the service bundle.” He’s hinting at the shape of things to come. After all, like with most services-based industries, differentiation is what will eventually decide victory. The one-size-fits-all -strategy will not work forever and a segmented approach is bound to replace it. Who knows the next initiative from Canara Bank will tantamount to service guarantees? So if your account is not opened in 30 minutes, the bank will actually pay you a fine for the inconvenience (a la Domino’s 30 minutes or money back scheme)!!

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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