Operations Strategy

1. Abirami (29001) G Chandramouli (29011)
J Rachel Priyanka (29038) Sathesh Kumar S (29046)
Manikandan (29026)
ICICI Bank - Operations Strategy
Banking & Financial Services Industry

2. Banking Industry Analysis
3/13/2014 2ICICI Bank - Operations Strategy

3. Banking Industry Analysis - Overview
3/13/2014 3
• State-owned
Imperial Bank
of India was
the only bank
existing
•Closed
market
•RBI was
established as the
central bank of
country
•Quasi central
banking role of
Imperial Bank
came to an end
•Imperial Bank
expanded its
network to 480
branches
•In order to increase
penetration in rural
areas, Imperial Bank
was converted into
State Bank of India
•Nationalisation of
14 large commercial
banks in 1969 and 6
more banks in 1980
•Entry of private
players such as
ICICI intensifying
the competition
•Number of banks
increased to 27
public sector banks,
22 private sector
banks and 41
foreign banks
•Advent of mobile
and internet
banking
•Growing FDI in
the Indian banking
sector
1921
1935
1936-55
1956-2000
2000 onwards
ICICI Bank - Operations Strategy

4. Banking Industry Analysis
3/13/2014 4ICICI Bank - Operations Strategy

5. Banking Industry Analysis - Financial Products of Banks
3/13/2014 5
1.Retail Banking
2.Wholesale Banking
3.Treasury Banking
Loan Products
• Auto Loan
• Gold Loan
• House Loan
• Credit cards
• Education Loan
• Loan against
Securities
• Retail Banking
Business
Deposit Products
• Deposits
• Saving Accounts
• Current Accounts
• Fixed / Recurring
• Corporate Salary
A/C
Other Products /
Services
• NRI services
• POS Terminals
• Private Banking
• Demat Services
Commercial Banking
• Term Loan
• Guarantees
• Bill Collection
• Letter of Credit
• Working Capital
• Forex & Derivatives
• Wholesale Deposits
Transaction Banking
• Cash Management
• Custodian Services
• Clearing Bank Services
• Tax Collections
• Banker to Public Issues
Commodities(Inc
Hedging)
Key Segment: Large Corporates, Emerging
Corporates, Financial Institutions,
Government/PSUs, Agriculture
Commodities Product Segement
• Equities
• Derivatives
• Capital Market
• Debt Securities
• Foreign Exchange
Other Financing
• Cash Management
• Statutory Reserve
• Financial Decisions
• Asset Liability
Management
ICICI Bank - Operations Strategy

6. Banking Industry Analysis – Porter Five Force Model
3/13/2014 6
Indian Banking Industry : Not Attractive, unless differentiated
Threatofnewentrants
Licensing
Requirements
are very
tough
Product
differentiation
very difficult
Threatofnewsubstitutes
NBFCs, Mutual
funds,
Government
Securities and
t-bills increasing
rapidly
CompetitiveRivalry
Large no. of
banks
Low switching
costs
High fixed
costs
High exit
barriers
BargainingPowerofSuppliers
Banks have to
meet many
regulatory
criteria, made
by the RBI
(fairly
complex in
India)
BargainingPowerofCustomers
Provides
homogenous
kinds of
services, so
there is high
chance that
customers
switch their
banks
ICICI Bank - Operations Strategy

7. Banking Industry Analysis – PEST Analysis
3/13/2014 7
Political Factors
- Monetary Policy
- Regulatory Framework
- Budget & Budget Measures
- Changes in interest rates
Social Factors
- Increase in population
- Changes in lifestyle
- Easy way of lending money
- Exploring banking facilities
in rural areas
Technological Factors
- Internet Banking
- IT Services & Mobile
Banking
- Credit Cards
- Improvement in efficiency
Economic Factors
- More savings
- More Capital Formation
- Increase in production of
goods and Services
- Banking Channels
ICICI Bank - Operations Strategy

8. Banking Industry Analysis - Growth Drivers
3/13/2014 8
• Growth in infrastructure, industry, services and agriculture is expected to grow corporate
credit in the economy
• Nearly 35% of the Indian population has a median age of 25.5 years which signifies that
India will gain from its demographic dividend
High Growth of the Indian
Economy & Favorable
Demographics
•Given that 40% of Indians lack access even to the simplest kind of formal financial
services, the RBI on July 2011, mandated banks to allocate at least 25% of the total number
of branches proposed to be opened during a year in unbanked rural centers
•Banks considering FI as a banking opportunity rather than a Regulatory obligation are
likely to see long term profitable growth and a cushion against market volatility
Financial
Inclusion (FI)
• India not only enjoys a favourable demographic dividend but also has a strong
population of High Net worth Individuals (HNWI)
•Given the improved performance of the equity markets in 2012 & increasing affluence
beyond urban and metro areas the number of HNWIs is expected to rise further,
HNWIS will continue to demand better or more sophisticated service
Private Banking & Wealth
Management
•New channels in banking services such as internet banking, mobile banking
have increased productivity and help in acquiring new customers
•As per a survey conducted by PwC, today banks spend 15% of the total
expenditure on technology today
Technology Innovation
ICICI Bank - Operations Strategy

9. Banking Industry Analysis - Opportunities
3/13/2014 9
Mortgages to cross Rs
40 lakh crores by 2020
Wealth Management to
be a big business
Rapid growth of
branches & ATMs
Mobile banking to see
huge growth
Infrastructure financing
to reach over Rs. 20
trillion on Commercial
banks book by 2020
New Models to serve
the Small & Medium
Enterprises (SME)
ICICI Bank - Operations Strategy

10. Banking Industry Analysis - Challenges
3/13/2014 10
• Indian Banks will have to bring in an additional capital of Rs. 5 Lakhs Crore to meet the Basel III
norms.
•Basel III norms will be implemented in a phased manner starting from January 2013 (now pushed to
April) 2013, to be implemented to the fullest by March 2018
Introduction
of BaselIII
Norms
•High competition due to a large number of players in the banking industry and other players such as
NBFCs (less regulation)
•Such competition in the industry has decreased the market share of the existing banks
Intensifying
Competition
• Economic slow down and aggressive lending by the banks has turned loans into non- performing
assets
•This has impacted the profitability of the banks as they are required to have higher provisioning
amounts
Increasing
NPA
•For commencing a banking business in India, a banking license from the RBI has to be acquired
which has served as a associated protocol and formalities
•The last licenses issued were to Kotak Mahindra Bank and Yes Bank in 2003 and 2004 respectively (as
Kotak Mahindra Bank was earlier a NBFC)
Licensing
Requirement
•Banks have to incur substantial employee costs as the attrition of the employees in this sector is very
high
Managing
Human
Resources
ICICI Bank - Operations Strategy

11. ICICI Bank – An Overview
3/13/2014 11
• Corporate History
o Industrial Credit and Investment Corporation of India
• Vision
o To be the leading provider of financial services in India and enhance our positioning among
global banks through sustainable value creation.
• Mission
o To create value for our stakeholders by
• Being the financial services provider of first choice for our customers by delivering high
quality, world – class products and services
• Playing a proactive role in the full realisation of India’s potential and contributing positively
in all markets where we operate
• Maintaining high standards of governance and ethics; and balancing growth, profitability and
risk to deliver and sustain healthy returns on capital
ICICI Bank - Operations Strategy

12. ICICI Bank - Subsidiaries
3/13/2014 12
ICICI Bank
Insurance
Finance
Asset
Management
Securities
Fund
Management
ICICI Bank - Operations Strategy

13. ICICI Bank – Corporate Strategy
3/13/2014 13
 Higher increase in full year margins & fee growth
 Continue to strengthen funding profile
 Improvement in cost - income ratio
 Strong profitability in insurance businesses
 Improving returns in banking subsidiaries
 Diversified portfolio
 Selective underwriting & close monitoring
 Strong operating performance to absorb
 any higher credit losses
 Domestic loan growth targeted at 2% - 3% higher
than system, driven by retail
 Continued focus on secured retail loan products;
leveraging increased presence to improve market
share
 Cautious approach in corporate & SME
 Focus on growth in insurance businesses
ICICI Bank - Operations Strategy

14. ICICI Bank – Business Strategy
3/13/2014 14
• Retail Banking
o Building long term relationship
• “My Savings Rewards”
• 24 X 7 fully electronic
• Product Customization
• SMEs
o Strategic Partnership
• Financing, Transactions and Investment needs
• Cluster based approach
• Wholesale Banking
o Collaboration for Inclusive Growth
• Customized, Structured and Comprehensive products
ICICI Bank - Operations Strategy

15. ICICI Bank
3/13/2014 15ICICI Bank - Operations Strategy

16. ICICI Bank – Deficiencies wrt Business Strategy
3/13/2014 16ICICI Bank - Operations Strategy
High Service
Charge
Less Credit
Period
Low focus on
SMEs

17. ICICI Bank – Operations Strategy
3/13/2014 17
The Bank continues to scale up its retail business and invest in strengthening
the franchise and distribution infrastructure
Sustained Growth in
granular deposits
Pick up in portfolio
growth
Growth in fee income Healthy Asset Quality
Trends
1.Retail Banking
ICICI Bank - Operations Strategy

18. ICICI Bank – Operations Strategy
3/13/2014 18
1.Retail Banking
Infrastructure
ICICI Bank - Operations Strategy
 Advanced mobile banking platform
 Enhanced ATM functionality
 “MySavings Rewards” program
 “Money2India Mobile App” for
NRIs
 24x7 electronic branch
 Leveraging social networking
platforms
Technology
 ~ 25% increase in Home and Auto Loans
Retail Lending
 Healthy growth in retail fees
Retail Fees
 Network of 3,507 at Sep 2013; largest in
private sector banks
• Supplemented by >11,000 ATMs
 Largest rural branch network among
private sector banks
• ~75% of branch additions since
March 2012 in rural and Semi -
urban areas

19. ICICI Bank – Operations Strategy
3/13/2014 19
2.Corporate & SME Lending
ICICI Bank - Operations Strategy
 Moderation in growth with focus on working capital
 Continued focus on credit selection
 Close monitoring
Domestic corporate (33% of total loans)
 Maintain low share of SME in the near term
SME (<5% of total loans)
 Growth calibrated to global funding markets; continued
focus on margins
 ALM profile matched; no refinancing requirement
Overseas Branches
 Consolidation of balance sheet
 Continued focus on capital rationalisation: USD 100 mn
from UK & CAD 75 mn from Canada received
International Business
3.Subsidiaries & Others
 Life insurance: sustained profitability resulting in healthy
returns on invested capital and dividend payouts
 General insurance: significant improvement in profitability
Insurance
 Focus on maintaining market position
 Business performance linked to market conditions;
however franchises remain profitable
Asset Management & Broking

20. ICICI Bank – Terry Hill framework
3/13/2014 20ICICI Bank - Operations Strategy
Design Infrastructure
Promoting and
balancing inclusive
growth
1. Expanding to unbanked areas
2. Expanding to rural areas
through Business
Correspondents by leveraging
technology
3. Delivering relevant products
& services to rural people
1. Branch on Wheels
2. Number of Branches:
3126
3. Number of ATMs:
10481
1. Network expansion
to 3507 branches
2. Upgrading facilities
by leveraging
technology: 24/7
Electronic branches
Risk management
1. Bringing down the % of NPAs
2. Secured lending to retail
sectors
1. Diversified portfolio
2. Strengthening
secured lending
1. Regulatory capital
requirements as per
RBI
2. Stress testing
3. Evaluation of
options to raise
capital from domestic
and overseas markets
Increasing profitability
1. Increasing fee income
2. Increasing the home and
auto loans
3. More lending to high profile
corporates
1. Standardized process
design
2. Increased operational
efficiency
1. Increase in credit
growth
2. Increased channel
network to acquire
new customers
3. Healthy trends in
CASA
4. Good asset quality
OPERATIONS STRATEGYCORPORATE
OBJECTIVES
MARKETING STRATEGY
ORDER
QUALIFIERS &
WINNERS
1. Accessibility
(Branch Location,
Number of ATMs
etc)
2. Leveraging
technology
(Mobile banking,
Social
networking, 24/7
Electronic
branches, Mobile
App for NRIs)
3. Providing
world class
banking products
4. High quality
service
(Relationship
management,
Customer
service)
5. Brand
Reputation
6. Customer
friendly
operations

21. ICICI Bank – Line of fit
3/13/2014 21ICICI Bank - Operations Strategy

22. ICICI Bank – Platt’s Gregory Procedure
3/13/2014 22ICICI Bank - Operations Strategy

23. ICICI Bank – Operations Strategy Matrix
3/13/2014 23ICICI Bank - Operations Strategy
Accessibility Critical
Speed Critical
World classproducts Critical
Customer service Critical
Cost Critical
Location Technology Channel Product Innovation
Performance
objectives
Decision Areas

24. ICICI Bank – Hayes & Wheelwright’s Framework
3/13/2014 24ICICI Bank - Operations Strategy

25. ICICI Bank – Order Qualifiers & Winners
3/13/2014 25ICICI Bank - Operations Strategy

26. ICICI Bank – Impetus for Expansion into South Africa
3/13/2014 26ICICI Bank - Operations Strategy
Increasing Bilateral trade
•India-Africa bilateral trade will increase to $90 billion by 2015 & $15 billion bilateral trade with SA in 2014
•FinMin Dictum: PSB’s to scale up operations in Africa, Asia & Latin America to support diversification of India’s export
market
South Africa-Development Center of Africa
•25% of Africa’s GDP, BRICS nation
•Increasing trade and trade volumes
Foray of International banks, other Indian PSBs and Pvt. Banks
•Indian Banks such as Bank of Baroda, SBI, Canara Bank, HDFC have branches in SA
•Focus on facilitating India-related trade by Indian PSBs
•Presence of International Banks such as Bank of China, HSBC, Bank of Taiwan, etcIndian Corporations & Population
•Major investments by Indian giants like TATA, UB Group, pharma companies
•Investment in energy resources , infrastructure, mfg, IT
•Significant population of Indian workers and tradersAttractiveness of financial sector
•Well-regulated financial sector
•2nd in “Soundness of Banks” rating by World Economic Forum
•South African Reserve Bank-responsible for giving licenses
•Rising financial inclusion –from 50% in 2003 to 77% in 2010
•High Market Potential

27. PEST Analysis of Banking Sector in South Africa
3/13/2014 27
Political Factors
- Political Stability
- Monetary Policy
- Regulatory Framework
Social Factors
- Increase in customer base
-Financial Inclusion
-Growing Middle class
Threat:Labor unrest
Technological Factors
- Internet Banking
- IT Services & Mobile
Banking
- Credit Cards
- Improvement in efficiency
- Foray of foreign banks
Economic Factors
-Foreign investment &
Growth
- More Capital Formation
- Increase in production of
goods and Services
ICICI Bank - Operations Strategy

28. Managing a
new and
unfamiliar
set of risks
Securing
the talent to
meet your
objectives
Breaking
into new
markets
Following
your
customers
Adapting
operating
models and
governance
structures
Formulating the Operations Strategy - SA
3/13/2014 28ICICI Bank - Operations Strategy
Representative
Office
Branches
Subsidiary

29. • Focus on India linked opportunities
• Subsidiary Route: Is it a viable option??
• Understanding financial sector regulations
• Target Customers: NRIs, Indian corporates
• Leverage NRIs
• Expansion strategy-Scope for JVs, Alliances
• Types of Services-Full range or Selective
• Workforce issues
o Recruitment, Type of talent
o High wage rates
Present Scenario:
• MoU with Ecobank in 2012
• Representative Office in South
Africa
The Way Forward-Operations Strategy
3/13/2014 29ICICI Bank - Operations Strategy

30. 3/13/2014 30ICICI Bank - Operations Strategy