The Indian banking community has just received a shock
I have just returned from a week in India where I visited many companies and spoke to a dozen or so CEO’s and business leaders. What I found was a mix as interesting as India itself. From the bold and brave, to the calm and spiritual to the downright confused.
In recent weeks, State Bank of India (SBI), under the wise stewardship of Arundhati Bhattacharya have shaken the business community to the core. I believe few would disagree with the notion that SBI were seen as the ‘dusty old lady’ of India banking. The bank has over 16,000 branches and is woven into the fabric of society in India - a state institution that has nearly 300,000 employees and serves nearly 200m customers. The numbers are mind boggling. The bank, because of it’s size had a reputation for moving slowly. That all changed six months ago, with the advent of a new initiative championed by Mrs. Bhattacharya herself. The challenge, making the old lady of Indian banking appeal to the 600m young consumers under the age of 25 in India today.
SBI In Touch
In July 2014, SBI launched ‘SBI In-Touch’, a project that resulted from a partnership between Accenture in India and Allen International. The brief, to create the coolest tech branch or branch of the future ever seen in India and to open six of these in various cities within three months.
The resulting branch designs have changed everything. Gone is the ‘old lady’ image of SBI, to be replaced by a new, cool, relevant and meaningful retail oriented branch that appeals directly to the young people of India... and other banks are in shock. ‘How did this happen’ one CEO mentioned to me. ‘This is not what SBI should be doing’ said another who was trying to justify his banks lack of action in building meaningful relationships with young people.
In realty, SBI In-touch has left the other banks in India with their ‘trousers around their ankles’ wondering how to respond.
As I mentioned, there are different approaches to counter SBI’s move. One bank I spoke to are cost conscious and will do very little, another are wanting to copy SBI and launch the same but different - this will fail.
Watching while Rome burns
It seems incredible to me that so many banks have been sitting on their hands and waiting for another bank to make the first move in becoming relevant to young people. It is rather like ‘sitting and watching while Rome burns’. All the statistics point towards a dramatic change in the banking dynamic in India yet, it seems only a hand full of banks are standing up and taking notice.
Young people are tech savvy, indeed I read this week that Micromax Mobile, an Indian low cost smart phone manufacturer is outselling Samsung and Apple in India (reuters) grabbing a 16.6% market share. If this is not another signal to companies in this market, then what is.
Only three banks I met really got it
For banks to attract the youth customer, they have to be relevant. The truth is that young people have very little loyalty when it comes to service orientated businesses. They are quick to judge, quick to rate and quick to dismiss any service that is not relevant to them, individually and specifically.
A knee jerk reaction is not the right approach to building a long-term sustainable business model. Here’s what the banks need to do:
Focus on your brand: Think what is our brand all about, what’s it’s DNA
Focus on your business strategy: Plan ahead, set short-term, medium-term and long-term goals for acquiring new customers
Focus on education: Help key employees understand the journey you are about to take and be sure they understand their role in this
Define your own character: Differentiate by understanding what it is about you and your offering that is unique and own it
Create a story that is relevant: Your customers will want to have an empathy with your offering stories are a way to create this
Use data to understand trends: Particularly in digital
Do not use data for everything: Remember if Henry Ford had only listened to customers, he would have designed a faster horse. Leave room for magic to happen. This will ensure you win
Do not fear transparency: Use social media to get to know you customers better and do not be afraid if you get something wrong. We all do, and an honest approach is best in dealing with this
Get out of the board-room: Never make decisions without first ‘getting down and dirty’ with every customer. Don’t rely on perception, rely on fact
Move fast: Put your best people on any future project team. Move quickly and deliver fast. Steve Jobs said ‘those who win, ship’. by this he meant do not waste time creating perfection, the competition will chase you down before you launch
Iterate: Be prepared to change everything
I see the banking market changing so dramatically in India over the next 15 years that it is difficult to believe that there will not be casualties. If you are a retail banker in India, I have one simple message for you: The time for innovation is now. Please get in touch.