Seminar on Contemporary Banking in India

MGM School of Banking, Varkala, Kerala

24-25 April 2015

Tactics that Accelerated Performance:

An Analysis on How Marketing Communications Helped the State Bank of
India to Hold Its Head Up High in the Recession Afflicted World Economy
Abhilash Sugunan Nair *

Banking industry plays a vital role in Indian Financial

In addition to adopting the recommendations of

Market. Nationalised banks are the largest providers

the Committee on Banking Sector Reforms regarding

of credit in the country and also they manage to pull

corporatization,

in billions of money as savings deposits. Holding up

also proposed that state owned banks be allowed to

the concept of socialism as mentioned in the

raise capital from the market in order to expand

preamble to the Constitution of India, it has been

their operations. This liberalisation approach led to

acting as a catalyst for the national development and

a situation where even public sector financial

the growth of the economy. They also act as the

firms have to face up intense market competition.

intermediary to the central government to provide

Public banks are forced to develop specific

financial support for the primary sector of the Indian

marketing strategies for shielding themselves against

economy. The diversity of the banking system

the

makes the industry more complex and competitive.

nationalised, private and foreign banks. Those public

the

increasing

central

government

competition

from

has

other

or private sector banks who are unable to control

In his book, Banking Reform in India and China, Saez

the economic downturn or instability would be

states that "In order to accelerate the efficiency of

coerced to stop functioning or merge with other

state-owned banks, the central government has

banks. A total of 23 banks in India have been merged

proposed the increased corporatization of state

with other banks for this reason between 1990

owned banks. Among the budget proposals included

and 2010.

by the central government in the fiscal budget for

the year 2000, the government will reduce its

State Bank of India: Competition and Recession

minimum shareholding in state owned banks to 33%.

The position of SBI as a public sector commercial

*Abhilash Sugunan Nair

Assistant Professor
Department of Mass Communications
AJ College of Science & Technology
University of Kerala
s.abhilash@hotmail.com

bank was secure till early 90s. When the industry

competition

from

institutions

got

other

banks

intense,

SBI

and

financial

underwent

an organizational restructuring. A Business Process

Re-engineering team, with McKinsey & Company as

consultants was formed in 2003. The project

exchange

objectives

(Pratiyogita Darpan, 2009).

were

defined

as

increasing

reserves

came

down

to

$254.21

customer satisfaction and convenience, freeing up

SBIs Strategic Triangle : Company Competitors and

time for branch manager and branch staff to focus

Customers

on sales and marketing, simplifying process for

employees, enhancing SBIs competitiveness in the

State Bank of India, one among the major banks in

market, increasing the profitability through higher

Asia is the biggest commercial bank in the country.

market share and improved process efficiency. This

move indicated

SBIs

transition

Its abundant financial resources (319,085.9 million in

towards

2009-10) and organizational capabilities makes SBI

innovativeness to achieve customer satisfaction and

different from its competitors. It provides a wide

to broaden its reach, especially to bring in more Y-

range of banking services such as Commercial

generation and high profile customers.

banking, Investment banking, Retail and Private

bankings, Consumer banking, Asset banking, Pension

The global economic recession that affected all parts

banking, Mortgages Management, Credit and debit

of the globe directly or indirectly, smashed the

cards etc. It has got a highly sophisticated branch

economic stability of many countries such as the US.

network with over 16,000 branches altogether and

It created a fall in employment rate, per capita

has 200,299 employees (in 2010). It accounts for 20%

income and consumption behaviour and caused

of the banking market share in India and one-fifth of

several serious social problems. Meanwhile the

economic downturn

did not produce

the loans.

severe

Developments

like Employee

Share

Purchase Scheme, Government Pension Fund,

consequences in some countries like Australia, China,

General Insurance and Venture Capital Fund made

India, Singapore, Canada etc. There are some

the firm more authentic and reliable to its

companies in the world that has not been affected

customers. The status of being the market leader in

by recession. State Bank of India is an example for

Indias banking industry is a competitive advantage

those companies that made remarkable financial

for SBI. In terms of resources and profits, State Bank

growth during this period. The net profit made by SBI

India is far ahead of its main rival ICICI Bank, which

in 2008 was INR 6729,55,77000. It raised to INR

has achieved INR 68346300000 as their total profit in

9121,56,58000 during the first phase of global

the last financial year. It is only about 75% of

financial crisis in 2009. It again raised by INR

the profit earned by SBI. Net profit earned by other

448265000 in the financial year 2010. The economic

main competitors such as Canara Bank, Bank

prosperity achieved by SBI during this period was not

of Baroda and PNB are only about one third of it.

only due to the reasons such as nationalisation of

banks and the measures taken by Reserve Bank of

According to Datamonitor, SBIs average CASA

India and the Government of India to control the

[Current Accounts and Savings Accounts] growth

impacts of recession in the country, but also owing

during 2008-10 was around 25%, compared to 16%

to the behaviour of its loyal customers. That was why

growth registered by its peers. Growth in low cost

SBI kept on making profit even when Indias foreign

CASA deposit base has helped the bank to reduce

reliance on bulk deposits, unlike its private sector

competitors or foreign banks with significant

emblem and the unique design of branches are other

presence in India. The experience of SBI as one of the

tools of marketing. In addition to this, various

first banking establishments in India, plentiful

offerings with the help of world wide web bring in

financial resources, extensive service lines and

large number of loyal customers.

application of technology in everyday banking makes

With the catchy taglines such as Pure Banking

them fittest in the industry. SBI has a large and

Nothing else, The nation banks on us, With you

growing customer base. Corporate Banking Group,

all the way and so on SBI has achieved the hearts of

National Banking Group, and Rural Business Group,

the Indian majority. Because it has been with them

the three strategic groups of SBI are meant to target

as a reliable banking partner for more than five

its different customer segments like corporations

and

institutions,

small

scale

industries

decades. To its loyal customers State Bank is the best

and

banking solution. On the other hand SBI provides

agriculture, personal banking customers etc. In order

to

focus

on

agricultural

sector

developed particularised branches.

they
Tapping

excellent banking services with the help of its

have

business

the

intelligence

and

customer

service

departments who withhold the vision statement :

financial resources from the growing semi-urban

My SBI, My Customer first. My SBI: First in customer

population is another objective of SBI. Mainly to

satisfaction . This mutual trust gives a competitive

achieve the business from Indian corporations and

advantage for SBI in the market.

NRIs State Bank of India has extended its business

overseas.

When a customer recognizes his/her need to engage

in a banking activity, the reputation of SBI alleviates

Buying Decision -Making process ; SBI

the effort to make an intense information research.

State Bank of India has an effective marketing

Its long term relationship with the Indian customers

communication

involves

is an added advantage of SBI for being the

promotion,

customers best choice. Above mentioned inputs

instructional material, advertisement, publicity and

from the companys part have contributed a lot for

public relations and corporate design. The personal

the formation of such a positive attitude from

communication methodology followed by SBI with

customers. Wide branch network of SBI makes it

the help of customer service, training and word of

easy for its customers to take part in convenient and

mouth

effortless

mix

which

personal communication,

has

been

sales

found

very

effective

banking

services.

Among

all

other

for disseminating its marketing efforts. For the better

alternatives, SBI is an Evoked set for its customers. If

reach

the

a customer has direct or indirect banking experience

potential customers, they rely on various advertising

with SBI before, he would again go for it as a safe

techniques such as TV, print, outdoor, direct mail

option (retrieval set). Innovative banking schemes of

and the internet. SBI has got an advanced PR

SBI makes them prominent in the environment. SBI is

department that

and

successful in helping its customers for carrying out

other

their banking transactions without physically visiting

special events to promote the brand name. Websites

the branches. It is achieved through a network of

of

those

efforts

organizes

receptions, sponsorship

towards

press

programmes

meets
and

and manuals, stationary materials labelled with SBI

21,485 ATMs, 55.40 million debit cards across India

with the Indian marketplace. State Bank of India

and mobile and internet banking facilities.

which can claim a tradition of two centuries (as Bank

of Bengal) is well acquainted with the cultural

The increase in number of SBI customers shows that

customer

expectation

complements

heterogeneity and buying culture of the Indian

to the

customers. It has been banking with India for five

customers satisfaction. The micro financial initiatives

decades (in the form of State Bank of India) with a

provided by SBI is a part of their business strategy to

diversified portfolio to make sure that its services are

creative loyal customers in the future. It reveals the

dispersed evenly all across the country. Its Indian

long term orientation of the company. With all these

customers in general fall into Devouts of the

efforts they have achieved better financial prosperity

global consumer segments which contributes 22% of

and loyal customer base as can be seen on their

the global share. But there are

balance sheets. Both its existing and new customers

developing

and developed consumer segments that belong to

kept on banking with SBI even during the time of

Fun

global financial crisis for the reason that they found

Seekers

and

Creatives

categories.

Marketing strategy and customer management of

SBI as a safe place to keep their money. Capital

SBI with the help of its business groups and

adequacy ratio, Business per employee, Deposits and

strategic business units is capable of catering

advances of SBI are on a huge raise. It is an evidence

solutions for all these three segments. Personal

of their managerial and marketing excellence.

banking services

(different

deposit

schemes,

educational loan, festival loan, car loan, housing loan

Culture and Consumer Behaviour

etc), Corporate banking, Rural/agricultural banking,

India is one of the ancient cultures in the world that

NRI

stretches back more than fifty centuries. It is the

other services of SBI are meant to deal with various

worlds second largest community with cultural,

aspects of consumer behaviour such as age, self

linguistic and religious diversities, which makes them

concept, group influence, social class, gender role

a Pandoras box for the Western marketers.

etc.

services,

International

banking

and

Irrespective of the Supranational, National and

Unlike majority of the products and some services

Subcultures the ultimate concern of an average

Indian

customer

(except

the

upper

do, the prevailing marketing communication strategy

class)

of SBI is to stitch up traditional symbols like family,

before making a purchasing decision is to make sure

that

he

gets good

value

for

money.

relationship and well being with the core message,

This

rather that depending on celebrity endorsement. As

pertinence makes them one of the most discerning

per McCrackens Meaning- Transfer Model (1989),

consumers in the world. That is the reason why

cultural meaning can be communicated by goods or

even premium brands are forced to give away offers

service. It is what SBI has been doing with their

and discounts in order to snap up the market in

marketing communication efforts for gaining and

the sub-continent. Majority of the Indian population

retaining valuable customers, which is a part of their

are located in rural and semi-urban areas. But many

organizational culture.

foreign companies are reluctant to target the rural

population, which reveals their inexperience to deal

Indian population can be classified as adolescence

international presence is limited and it is amenable

and

couples

to certain political interferences, SBI has achieved a

with children, married couple without children,

mammoth maturation within the national boundary.

parents living with children, parents staying alone

Ultimately all these advantages empowered them to

and migrated families and individuals (from rural to

attain profitable business deals in the recession

urban)

afflicted world economy.

adults

(unmarried),

on

the

characteristics.
pensioners,

basis

SBIs

Medi-plus

married

of

their relationship

schemes

like

scheme,

Loan

for

Project export

finance, Easy home loans, Agricultural banking etc

covers all these segments of the social spectrum
including the grey market (the elderly) (Jiang, T 2010
pp.173-174). As considering certain aspects of the
Indian population such as age structure (0-14 years
30.5%, 15-64 year 64.3%, >65 years 5.2%) and
median age (25.9 years), the significance of having a
long term market orientation and generation- X
centring can be recognized. Effectuation of Core
banking system, Centralised payment services and IT
based

solutions for

corporates

are

clear-cut

examples of the market intelligence and peripheral

vision of SBI. For the reason that family life cycle is a
steering force in the Indian context, it is important to
talk

of

different

facets

of

Extended

Selves

like individual, family, community and group. Most of

the insurance and banking services provided by SBI
are designed in such a way to trickle down its
benefits to the extended selves. It is vivid from the
plans like SBI life- Smart shield, Saral shield, Swadhan
etc. SBIs market experience, risk management and
internal control system and customer intimacy
enable them to understand and serve the market
needs efficiently. The successfulness of State Bank of
India during the era of global financial crisis is an
ideal example of how a firm can converge its
managerial and marketing competence by the virtue
of customer relationship management, in order to
deliver better solutions for its clients and long
term financial benefits for themselves. Though its