CEO talk

Transforming India’s largest bank

The SBI Group has undergone a dramatic transformation—from the single window concept to automatic cheque truncation, State Bank of India is making massive investments in technology. A K Purwar, Chairman, State Bank of India, tells Deepali Gupta about the IT road that SBI will tread in 2005. by Deepali Gupta

What are your business objectives for 2005?

We see the State Bank Group becoming the largest financial group, offering a full range of financial services comparable to that offered by the best banks in the world. This will be in terms of profitability of operations, assets and the level of technology used over the next few years. We already compare favourably with some of the best International Banks on several financial indicators. We want to achieve similar parameters in the remaining areas within the next two to three years.

In 2005, we will concentrate on increasing non-interest income. There will be a renewed thrust upon increasing our already high share of Government business which we now perceive as a profit centre. We will continue to emphasise upon lending to the retail, agricultural, SME and infrastructure sectors. The network expansion of overseas offices will also be a future priority.

The introduction of a Core Banking Solution and the implementation of initiatives under the umbrella of Business Process Re-engineering (BPR) will drastically change the functioning of our branches. These initiatives will give us a competitive edge.

Our IT plans for the near term include extending our Core Banking Solution to cover 3,500 to 4,000 branches that account for more than 80 percent of our business. We will also encourage migration of services to alternate delivery channels such as ATM and Internet banking. We plan to bring all our foreign offices, including joint ventures and subsidiaries, onto a common IT platform by June 2005. Keeping in view the increasing role of technology in our operations, we will intensify our information security system. Coupled with the initiatives under the BPR program, these technology initiatives are expected to lead change management at SBI.

What strategic role will IT play in helping SBI achieve its goals?

We have made phenomenal advances in the use of information technology in banking in recent years and have recognised the strategic competitive leverage that IT provides. We have made a paradigm shift from the classic decentralised IT model, to a centralised online, real time architecture. Our business strategies are now supported by our bold IT initiatives. SBI's IT mission is to provide state-of-the-art, world-class banking services to customers, bring about IT synergy among group constituents, facilitate cross selling in tune with business goals, and reduce transactional costs.

What are your focus areas, and how do your see IT enabling them?

Apart from our continuous efforts to grow in retail lending we recognise the need to concentrate on mid-sized corporates and SMEs to mitigate the threat of disintermediation posed by large corporates. We will also be lending to the agricultural sector by means of SHG-Linked financing. SBI will explore more avenues for increasing non-interest income. IT solutions in the government sector for direct tax collections, pension payments and e-governance projects with state governments will help us improve our already high share of overall government business.

Our IT plans support the above focus areas by means of fully computerised basic process efficiencies. With the introduction of a core banking solution (CBS) in a big way in the next fiscal we expect our processing capabilities to improve as a result of the centralised database, improved MIS and better asset liability management that the CBS brings. Process improvements and reduction in transaction costs will improve our operating efficiency and let us provide customised products.

What are the existing IT driven projects?

Our current IT projects include:

• Integration of foreign offices onto a common platform.
• Extension of Core Banking & Trade Finance Solutions
• Aggressive marketing for Corporate Internet Banking.
• Tie-ups with other ATM networks, and extension of the network to more than 7,000 locations.
• Focus on Cheque Truncation (MICR)
• Call centre services and a help desk to support our expanding IT driven services.
• e-learning for internal skill development.

The increasing use of IT has helped us leverage the strength of the State Bank Group and has led to group synergy. We now provide anytime, anywhere banking through multiple delivery channels. The IT initiatives have given us the scope for greater cross-selling within the State Bank group.

What value do you attribute to your IT network?

IT driven solutions are the backbone of any modern business. The power of information technology lets us meet growing customer expectations and intense competition for market share. Customer expectations are no longer confined to how well you serve them, but also when and where. Multiple delivery channels are the norm. Our IT solutions group is focusing upon alternate channels. IT also lets us comply with the changing regulatory and corporate governance environment.

In short, our IT initiatives have played a huge role in transforming the State Bank Group into a more responsive organisation ready to meet the challenges of a globalised economy. The threat from foreign banks and new generation private banks is here to stay. Our IT plans allow us to meet the competition successfully and at the same time offer our 90 million customers a state-of-the art world class banking experience.

Deepali Gupta can be reached at: deepali@networkmagazineindia.com