DR Bank: Driving Growth through Digital Transformation
DR Bank like any other Public Sector Banks (PSBs) in India had initiated technology adoption from 1991. It faced increasing resistance from its employees in the initial years. But due to its able leadership, it was able to cope up with the initial hurdles and continued a multi-faceted tech-based expansion. Competitive landscape of Indian banking had gone through drastic changes in the last few years predominantly due to the challenges from new disruptive technologies and evolving market practices. DR Bank has set a target of becoming the ‘Best Retail Bank in Customers’ Perception by 2021’. The strategists at DR bank are pondering on the future course of action. It cannot ignore the competition from private banks and the new entrants but still has to step ahead of them if it has to realize its 2021 vision.
Background: First Phase (1991-2004)
Initiating Technology Adoption
DR Bank was constrained to undertake in-house computerization owing to employee resistance. However, in keeping with business requirements, it entered into credit card business through a tie-up with AV bank, another PSB, to introduce AVCARD which became popular in those times. In 1994-95, Indian Bankers’ Body, IBA (Indian Banks Association) concluded an industry-level agreement with major bank employee unions removing major hurdle in bank computerization. Government followed it up with soft loan offers to banks for computerization. By March 1994, it deployed 900 PCs at 200 branches. DR Bank had also approached the Government for two soft loans amounting to INR170 million for computerization and INR60 million for training infrastructure, respectively. The ATM vendor, India Switch Company (ISC), in 1996-97 under the initiative of IBA established an ATM network called SWADHAN in Mumbai. DR Bank joined this network in the same year by connecting 5 of its ATMs, each to a single branch of the bank. Its own ATM card under the SWADHAN scheme was issued in 1998. In the same year, it launched another credit card by name BharatCard, now in tie-up with Bharat Bank, which was a franchisee of MasterCard. In 1998-99 Telebanking was introduced in DR Bank in17 branches. TBA (Total Branch Automation) solution was spreading in branches by that time. A bigger view and plan was still emerging..................
Laying the Ground
Ms. B Leelavati, soon after taking over as the Chairman & Managing Director (CMD) of the DR Bank, in July 2001, spelt out the Business Objectives of the Bank highlighting that technology would be the driving force, at front office and also at the back office. In 2001, DR Bank implemented Finacle as its Core Banking Solution (CBS). New data centre was set up in bank’s head office at Andheri Mumbai, more ATMs were installed to improve customer service and Telebanking was launched on CBS platform; in 2002-03 it soft launched Internet Banking...........
Second Phase (2005 onwards): The Transformation
Mr. Mavila Mathews assumed charge as CMD of the Bank on March 1st 2005. He set the goal of DR Bank attaining the leadership position in every sphere through customer focus. In a meeting with his top management team, the priority areas were graded in the order of importance, and consequently, the gaps to be covered were also identified.
The total transformation plan and a project was launched which was subsequently named as ‘Project X Phase I’. The aim of the project was to re-write the primary architecture of the Bank so as to bring the customer to the centre stage. To achieve this goal, following initiatives were taken: .................
Third Phase (2009 Onwards)
Mr. S.Mohanty took over as CMD of DR Bank on April 1st 2009. In his initial message to the DR Bank family, he outlined the challenges viz; to retain and enhance the Bank’s premier position in the fast-paced and competitive environment; to hone skills; to gather market intelligence; to be the first to adopt technological developments; to improve asset quality and to upgrade physical and human resources.
He held a ‘Thought and Solution’ Summit in Mumbai during January 2009 that led to ‘Project X Phase II’. The Summit assessed the gains of the transformation process and facilitated introspection to take the journey to the next level.............
The Banking Industry in India and Disruptive Fintech
The nature and players of competition for banks had gone through drastic changes in the last few years, mostly due to the challenges from new disruptive technologies and evolving market practices. The competition among banks have expanded from the traditional measures of strengths of financials and branch network spread to newer measures such as availability and efficacy of technology based e-payment or self-service products. The product lines included Net Banking, Mobile Banking, IMPS, Credit Cards, Debit Cards, Prepaid Cards, etc...............
The Journey Ahead
With technology-based growth, translating capabilities into preferred business offerings is a challenge. Technological changes, organizational expansion and consequent realignments take place constantly during this long, competitive and uncertain journey. Early recognition of the need to put in place appropriate delivery mechanisms for infrastructure requirements, suitable organizational restructuring and psychological and skills reorientation of personnel for IT adoption in a service industry like banking for effective and ultimate customer satisfaction is extremely important for ensuring success............
DR Bank’s Future – Strategists’ Dilemma
DR Bank wants to be the “Best Retail Bank in Customers’ Perception” and they want to achieve it by 2021. Goal was to be reached with constant innovation and technology adoption and also through regular benchmarking against the Best Bank in the industry.
Towards this goal, many aspects need to be taken into account such as strengthen technology base, differentiated and original customer-centered services; improving uptime (intensive monitoring at regional levels) and sensitizing employees. Competition and environment always remain dynamic, therefore “Be Prepared” should be the motto. For Indian PSU banks, the push for adoption of IT had been mostly from the regulator. However, inter-bank differences in goals, in efforts and in achievements remain varied..............
Assignment Questions
I Considering objectives of DR bank set earlier and given the current Fintech scenario, how should be the new objective setting?
II Considering the information given in exhibits and case, what are the strategies to be adopted by DR Bank to achieve its goal of becoming ‘Best Retail Bank in Customers’ Perception by 2021’?
III ..................
Exhibits
Exhibit I: Customers are Embracing Non-Bank Offerings and Micro Transactions Getting Digitized
Exhibit II: Many Startups in Indian FinTech Space
Exhibit III: Customers are Embracing Services from Non-Bank Attackers
Exhibit IV: 50% of Digital Bank Customers with Internet Access are at Risk of Moving to New Players
Exhibit V: Transactions per ATM to Gradually Slow Down – Is It Time to Shift Infrastructure Towards Cashless Online Transactions?
Exhibit VI: BC Economics Set to Improve – Does BC has Potential to Emerge as a Powerful Delivery Channel?
Exhibit VII: Digital Banking Users Set to Grow at 20-25% in Next 5 Years – Penetration Could be Fastened by 2 Years by Taking Clues from Online Shopping
Exhibit VIII: Branch, ATM & POS Profile of Peer Public & Pvt Banks (March’15)
Exhibit IX: Mobile Bkg Txns of Peer Public & Pvt Banks (December’15)
Exhibit X: Number of Debit and Credit Card Txns of Peer Public and Private Banks (December 2015)
Exhibit XI: Value of Debit & Credit Card Txns of Peer Public & Private Banks (December 2015) (Rs million)
Exhibit XII: Comparison of Performance Parameters of Nationalized Banks in India (2014-15)
