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Marketing Strategies of SBI(Battling for Market Share)

Vanessa Dsouza - 657

Rishabh Joshi - 642

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State Bank of India (SBI) is a Public Sector Banking Organization (PSU), in which the Government of

India is the biggest shareholder. It is oldest and largest bank in India, with more than $250 billion

(USD) in assets. It is the second-largest bank in the world in number of branches; it opened its

10,000th branch in 2008. The bank has 84 international branches located in 32 countries and

approximately 8,500 ATMs. Additionally, SBI has controlling or complete interest in a number of

affiliate banks, resulting in the availability of banking services at more than 14,600 branches and

nearly 10,000 ATMs

SBI traces its ancestry back to the Bank of Calcutta, which was established in 1806; this makes SBI

the oldest commercial bank in the Indian subcontinent. SBI was rechristened as State Bank of

Indian in 1955 from Imperial bank of India. SBI provides various domestic, international and NRI

products and services, through its vast network in India and overseas.

The SBI group companies include SBI Capital Markets Ltd, SBI Mutual Fund (A Trust), SBI Factors and

Commercial Services Ltd, SBI DFHI Ltd, SBI Cards and Payment Services Pvt Ltd, SBI Life Insurance

Co. Ltd Bancassurance (Life Insurance), SBI Funds Management Pvt Ltd, SBI Canada.

Unlike private-sector banks, SBI has a dual role of earning a profit and expanding banking

services to the population throughout India. Therefore, the bank built an extensive branch

network in India that included many branches in low-income rural areas that were unprofitable

to the bank. Nonetheless, the branches in these rural areas bought banking services to tens

of millions of Indians who otherwise would have lacked access to financial services. This

tradition of "banking inclusion" recently led India's Finance Minister P. Chidambaram to

comment, "The State Bank of India is owned by the people of India."

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The decade of 2000s was a turning point in the Indian banking industry. It brought out a major

transformation in the working style of Indian banks. With several competitors gaining ground in

Indian Territory, SBI was facing constant threat of takeover. The exhibit below maps the

banking industry using porters five forces model. The model shows that there is huge

competition in the banking industry and that the customer is the king. Banks that provide good

customer service and are responsive to the market in the long run would win.

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In 2001 SBI appointed KPMG as a consultant for preparing an IT plan for SBI. In 2002, SBI

launched a project to network more than 14,000 domestic and 70 foreign branches. All

branches were computerized, but on decentralized systems. This was the time when

competitors like ICICI Bank and Citi Bank with technological competence entered Indian marketand posed immediate challenge for SBI. They carried superior customer relationship

management systems and responded very quickly to customers. Yielding to them would require

SBI to restructure its business. Either fight for competency or go out of business. In 2004, SBI

implemented business process reengineering and rolled out sixsigma. It launched an initiative

of core banking systems for integrating all its branches and by 2008, SBI became the second

back in the world to have 10,000 branches.

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SBI has the largest market share in banking sector and it is ahead of its immediate competitors,

namely, ICICI Bank and Axis Bank. Although SBI is the largest bank, they were losing share of

their High Net Worth individuals. High Net Worth individuals are those who have invested

more than ten lakhs with the bank and carry high potential for investment. However, since the

entry of private players in the market it has been losing market share, particularly of the highnetworth individuals who are important customers of State Bank of India. With their latest

technology and customer-oriented services, these players were able to steal a considerable pie

of the market share of the State Bank of India. The exhibit below shows the brief history of

transformation at SBI.

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Oral MarketingSBI has appointed various customer relationship officers and assistants at the 10 branches of

SBI, Bilaspur. These officers take care to provide the relevant information to the customers who

visit their offices. They help the customers with various products and services of SBI.

Professional Offerings

SBI has also several offerings directed towards professionals who wish to set up their ownbusinesses. For example, Doctor Plus/ Dental Doctor Plus is a finance scheme directed towards

the Doctors/ Dentists who wish to set up their own clinics/ dispensaries and for purchasing

medical equipments. Similarly, they have SBI Shoppe scheme which is directed towards other

professionals like beauticians and other serviceoriented people encouraging them to set up

their own establishments for rendering services. SBI has a welltrained multiproduct sales team

(MPST) which educates its customers about these products and services.

Ads at various display boardsSBI also advertises at various billboards about its products and services

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TARGETTING RURAL MARKET

In 2008 SBI planned to capture the rural market of India. Establishing a bank in a rural area is a

costly affair. However, the technological advancements made the possibility of banking over

mobile from anywhere in India. SBI launched mobile banking in March 2009 with a vision to

capture rural market without needing to establish any physical premises there. Along with SBI,

ICICI and few other banks also launched Mobile banking. Mobile banking refers to conductingbanking activities using a mobile device, whereby customers can access their accounts to check

account balances, transfer funds, pay bills, and perform various other transactions. Mobile

banking reduces delays in banking transactions and affords time to employees for other

banking services.

The introduction of mobile banking follows the relatively successful introduction of Internet

banking in India, whereby customers can access their bank accounts, through the banks web

site. Since, the number of Internet users is small in comparison to mobile phone users in India,

the mobile phone network is the most likely platform for valueadded services such as online

banking and mobile commerce (Manson, 2002). Several issues, both technological and cultural

mar the adoption of mobile banking. Vital Analytics (2009) reveals fast growth of MobileBanking in Urban India. Around 40 million users in India are using mobile banking in Urban

India. The most widely used services in mobile banking are

Checking account balance (91%), Viewing last three transactions (65%), Cheque status (48%),

Payment reminders (48%) and Requesting a cheque book (44%).

However, although promising, the adoption of Mobile Banking has so far been dismal. Security

concern is the biggest barrier to adoption of mobile banking. SBI undertook several security

measures to allay users security concerns. Indian Government has also passed legislation

covering mobile banking practices in India. Still the adoption of mobile banking is far from

expected. Particularly in the target market (rural areas), there is hardly any adoption. Lack ofawareness of these security enhancing approaches could be one of the other major reasons for

poor adoption. The tradition and culture of India plays a vital role in how Indian users view and

adopt mobile banking for their transactions. It would be interesting to know if there are factors

that mar adoption beyond the lack of awareness or faith in security practices of Indian banks.

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BIBLIOGRAPHY

State Bank of Indiahttp://en.wikipedia.org/wiki/State_Bank_Of_India

Case Study: State Bank of India, World's Largest Centralized Core ProcessingImplementation - Robert Hunt, Senior Research Director, Retail Banking, Tower Group

Customer Satisfaction Vs Service QualityA. Krishna Kumar, Deputy Managing Director (IT), State Bank of India - 6th Banking Technology 2010

Conference & Banking Technology Awards 2009, January 28, 2010

http://en.wikipedia.org/wiki/State_Bank_Of_Indiahttp://en.wikipedia.org/wiki/State_Bank_Of_Indiahttp://en.wikipedia.org/wiki/State_Bank_Of_India