Three years back, I went to a State Bank of India (SBI) branch in Calcutta to open a Public Provident Fund (PPF) account, which is an important savings instrument in India. SBI is the largest bank in India, it is majority-government owned with the largest number of branches: however, it faces stiff competition from other private banks such as ICICI, HDFC as well foreign ones such as Standard Chartered. You don't need to have a savings account to start a PPF; the PPF account is different but you must start the PPF in SBI and no other bank. The branch manager was an elderly guy, over 50 probably, and he joked with me, "I'm planning to stop all PPFs in my branch. What's the use? You young people open savings accounts in private banks, we operate just the PPF accounts and get nothing." I laughed and he opened the PPF.
This is an example to show how government-owned banks in India , such as SBI, are thirsty to tap deposits from the younger, upwardly-mobile and high-earning generation. They realize that most of these prospective customers are being captured by nimbler private banks fast. Banks like SBI are still looked at favourably by the older generation but that does not do them a lot of good.
To be fair, various divisions of SBI, especially the bank, are trying to market themselves aggressively as technology-friendly to acquire new customers. The bank has gone on a massive modernization drive (upgrading IT systems, computerization, online banking etc) and changed the layout of its offices. For instance, the branch I went to looks quite modern and is spacious. The TV advertisements focus on customer convenience and satisfaction and alliances with global players such as GE Money have been forged. But, one thing that struck me in that particular branch was the age profile of the employees. I could not find many young employees, the teller and other staff were mostly older people, probably over 40 and this made it difficult for me to connect with the bank. This may be true for other younger customers as well. That's not the case when you walk into a private bank which has mostly young employees, 25-35 years old, but the branch manager's age would be on the higher side.
So, what should SBI do to connect more intimately with younger customers? Firstly, hire young, smart employees, this is crucial to change the perception of SBI as a large, staid government-owned bank with old, lazy employees. Secondly, aggressively market its products. I have received calls from ICICI, HDFC to open joint accounts, senior citizen accounts (for my mother), take credit cards and have discussed savings schemes with bank representatives. I remember receiving just one offer from the credit card division of SBI, which I refused because I already had one HDFC credit card. Aggressive marketing is costly and might not provide immediate benefits in an intensely competitive market, but SBI has the financial wherewithal and the need to market itself better in order to make its presence felt.
Thirdly, it should improve customer service. I have invested in SBI Mutual Fund, a separate division of SBI, and they never send me monthly or even quarterly paper fund statements. I would ideally want them to do so, as is done by some other funds I have invested in such as Reliance Mutual Fund and HDFC Insurance. For instance, both HDFC and Reliance send me quarterly fund statements and I can also track my HDFC investment online. It could be that SBI may be trying to implement paperless transactions (though I'm not sure) but if so, they should convey the message clearly. What SBI Mutual Fund does impacts the overall brand image of SBI and also other business divisions, such as the bank.
As of now, I am a 'Barnacle' to SBI as my loyalty is quite low but my value potential is high: I am already generating value for the mutual fund division. This is true for numerous other younger customers, who SBI wish to engage with. But, SBI would need to do market its products aggressively and change the brand image further.
Only then, they can make 'True Friends' with customers whose value potential and loyalty are both high.
This is an example to show how government-owned banks in India , such as SBI, are thirsty to tap deposits from the younger, upwardly-mobile and high-earning generation. They realize that most of these prospective customers are being captured by nimbler private banks fast. Banks like SBI are still looked at favourably by the older generation but that does not do them a lot of good.
To be fair, various divisions of SBI, especially the bank, are trying to market themselves aggressively as technology-friendly to acquire new customers. The bank has gone on a massive modernization drive (upgrading IT systems, computerization, online banking etc) and changed the layout of its offices. For instance, the branch I went to looks quite modern and is spacious. The TV advertisements focus on customer convenience and satisfaction and alliances with global players such as GE Money have been forged. But, one thing that struck me in that particular branch was the age profile of the employees. I could not find many young employees, the teller and other staff were mostly older people, probably over 40 and this made it difficult for me to connect with the bank. This may be true for other younger customers as well. That's not the case when you walk into a private bank which has mostly young employees, 25-35 years old, but the branch manager's age would be on the higher side.
So, what should SBI do to connect more intimately with younger customers? Firstly, hire young, smart employees, this is crucial to change the perception of SBI as a large, staid government-owned bank with old, lazy employees. Secondly, aggressively market its products. I have received calls from ICICI, HDFC to open joint accounts, senior citizen accounts (for my mother), take credit cards and have discussed savings schemes with bank representatives. I remember receiving just one offer from the credit card division of SBI, which I refused because I already had one HDFC credit card. Aggressive marketing is costly and might not provide immediate benefits in an intensely competitive market, but SBI has the financial wherewithal and the need to market itself better in order to make its presence felt.
Thirdly, it should improve customer service. I have invested in SBI Mutual Fund, a separate division of SBI, and they never send me monthly or even quarterly paper fund statements. I would ideally want them to do so, as is done by some other funds I have invested in such as Reliance Mutual Fund and HDFC Insurance. For instance, both HDFC and Reliance send me quarterly fund statements and I can also track my HDFC investment online. It could be that SBI may be trying to implement paperless transactions (though I'm not sure) but if so, they should convey the message clearly. What SBI Mutual Fund does impacts the overall brand image of SBI and also other business divisions, such as the bank.
As of now, I am a 'Barnacle' to SBI as my loyalty is quite low but my value potential is high: I am already generating value for the mutual fund division. This is true for numerous other younger customers, who SBI wish to engage with. But, SBI would need to do market its products aggressively and change the brand image further.
Only then, they can make 'True Friends' with customers whose value potential and loyalty are both high.
