Consolidation In The Indian Banking Space


The growth story of Indian banks during digitization and the latest tax reforms has been an inspiration to other industries in the country. Technological trends, acquisitions & mergers and branch expansion to rural areas are some of the key steps to take banking to newer heights according to a panel at the 11th BW MAGNA Awards 2019.

With a growing economy at 7%, Indian banking revises their consolidation models. The BW MAGNA Awards 2019 brought together a panel discussion on the topic, “Consolidation in the Indian Banking Space – Prospects, challenges and impact in the Indian Economy”. The discussion was moderated by Joydeep Roy, Executive Director – Human Resource  PwC. 

Ashutosh Khajuria, Executive Director & CFO, Federal Bank during while giving the opening remarks said, “Communication and make believe for teams is a bigger challenge during India’s digitization and economic transformation. Federal Bank expanded its footprint out of Kerala and we opened 500 branches across Tamil Nadu, Maharashtra and Gujarat. At the same time we gave a definition to the credit dispensation team as well. Consolidation only comes in when we can cut our losses and recover loans to move forward and these are the two areas we focus on heavily. In the meantime we are inaugurating branches in rural areas of the states mentioned while we are recruiting local talent from these areas”. 

Banks across the country are evaluating the most profitable ways to consolidate and achieve newer heights. According to Kotak Mahindra Bank, value is always better than volume. By introducing a digitized product like 811 the bank has gained a boost and have been able to stay ahead of the curve. 

“Virat Dirwanji, President – Retail Liabilities & Branch Banking, Kotak Mahindra Bank said, “We always believed that customers come first ad we remained focused towards value than volume. Kotak Mahindra is the first to delve into the future of banking and 811 was that offering in the public space. We wanted to make sure that customers have a unique experience in dealing with mobile phone based products. Due to this step we managed to double our customer base within the first 18 months of its launch. With the help of artificial intelligence and machine learning we can not only drive a huge influence for our customers but also an opportunity for the bank to attain further growth”.

Technological trends can prove to be a key ingredient in an organization’s growth story. While serving products on the mobile for banks AI and ML can also help grow their customer base even in areas where banking facilities are available only through data. Other ways to discuss a consolidation strategy for banks like SBI come through acquisitions and mergers. Acquiring banks that find it difficult to sustain themselves can bring more value in terms of workforce and structured data. 

“The path of consolidation for us started in the year 2008. SBI at that time was a small bank and we invented the wheel of mergers and acquisitions. Shortly after we merged with State Bank of Indore who were dealing with challenges related to sustainability. Eventually integrating human resources is was not easy but with past experience we merged the data of 5 banks including Bharti Mahila Bank. This gave us the size and market share comprising up to 23%. Today we are serving more than 33 crore customers and have chalked out our risk management strategies meticulously. If it wasn’t for the mergers, we would see an economic turmoil and ineffective utilization of capital”, said Dinesh Kumar, MD, Global Banking & Subsidiaries, State Bank of India.