Yet another state run
leviathan that was just on the verge of being labeled a corporate dinosaur.
These are the words which perhaps best summarize the status that ICICI Bank had
in 1996. A development banking corporation that lent to large enterprises and was
a term lender with little or no people, process and pace to serve the Indian
economy which had opened up in the early 1990s. In walked a technocrat armed
with a BS in mechanical engineering from REC Surathkal, Karnataka, an MBA from
IIM Ahmedabad and the method to madness of a scientist.who turned things around
for ICICI Bank with a magic wand.
What did the turnaround
taste so good? Today ICICI Bank is India’s largest private sector bank with
assets worth more than $60billion, more than 700 branches and 4000 ATMs.
Following was the recipe of the turnaround-
1) “No Mainframes” – While Mckinsey
stresses so much on the structure Kamath actually did the reverse by deleting
it from his dictionary. He said no to rigidity in thought processes. The ship
was about to sink and so the captain tried steering it to safety shores. With
his back against the wall he encouraged every employee to take risk, ideate,
incubate in team meetings and finally execute the plans. So the message was
clear innovate or perish!
2) Leverage information technology- The
world was speeding and staying slow was staying foolish. Volume of transactions
and the velocity of money would only go up by automating the system. Thus
appeared core banking services, an astounding 1000 ATMs and an online stock
trading terminal that was set rolling in just 90 days!
3) Need for speed- On hearing about the 90
day rule for the first time at a seminar in New York, Kamath benchmarked the
same for his corporation. At a time when there were less than 100 ATMs across
the country , Kamath went mad and asked his engineers to build a system of 1000
ATMs in the very first year . More over net banking was introduced for the
first time. And thus the early bird caught the worm!
4) Power to the customer- The public sector
undertaking banks had so many branch offices. To this Kamath thought on
Einstein’s words- “I do not need to know every thing. I only need to know where
to find it when I need it.”
The
brick and mortar model of banking required the customer to walk in. The new
system aimed at changing this and hence the banking automation took the bank to
the customer that too on his fingertips. Today branch transactions account for
15%, ATMs for 48% and call centers for 5%.
5)Consumer
Credit- When no one saw it coming, Kamath saw it. Retail lending for cars,
automobiles, and durables. This was a turf left defenseless and the forwards
struck bang on it.
6)
Alms for shanties- Some 600 million people live in 600 districts of India who
are unbanked. The next big thing is to first deliver savings products to them
to build a market from the scratch, then channelize their savings to rural to
investments so that the wheel turns a full round and then rolls on. One thing
leads to the other- a chain reaction. And with service costs being high and lock
in periods being high, IT along with MFIs will again be his bet against the
brick and mortar model .
