Description
the bank, its operations and its future. It gives the analysis with the help of key financials. It also gives the SWOT analysis of ICICI Bank.
ANALYSIS OF ICICI BANK FROM STRATEGIC PERSPECTIVE
Table of Contents
About ICICI ...................................................................................................................................... 2 Products & Services ........................................................................................................................ 3 BUSINESS OBJECTIVE ...................................................................................................................... 4 SWOT ANALYSIS .............................................................................................................................. 5 STRENGTHS.................................................................................................................................. 6 OPPORTUNITIES .......................................................................................................................... 8 THREATS ...................................................................................................................................... 9 RECOMMENDATIONS ................................................................................................................... 10
Page 1
About ICICI
ICICI Bank was incorporated in 1994 as a part of the ICICI group. ICICI Bank’s initial equity capital was contributed 75.0% by ICICI and 25.0% by SCICI Limited, a diversified finance and shipping finance lender of which ICICI owned 19.9% at December 1996. Effective March 10, 2001, ICICI Bank acquired Bank of Madura, an old private sector bank, in an all-stock merger. Conversion into a bank offered ICICI the ability to accept low-cost demand deposits and offer a wider range of products and services, and greater opportunities for earning non-fund based income in the form of banking fees and commissions. ICICI Bank also considered various strategic alternatives in the context of the emerging competitive scenario in the Indian banking industry. ICICI Bank identified a large capital base and size and scale of operations as key success factors in the Indian banking industry. In view of the benefits of transformation into a bank and RBI’s pronouncements on universal banking, ICICI and ICICI Bank decided to merge. The amalgamation was sanctioned by the High Court of Gujarat at Ahmadabad on March 7, 2002 and by the High Court of Judicature at Bombay on April 11, 2002. The amalgamation was approved by RBI on April 26, 2002. The amalgamation became effective on May 3, 2002. The date of the amalgamation for accounting purposes under Indian GAAP was March 30, 2002.
Page 2
Segmental Information: The business operations of the Bank have the following segments: ? Retail Banking includes exposures which satisfy the four criteria of orientation, product, granularity and low value of individual exposures for retail exposures laid down in the Basel Committee on Banking ? ? ? Wholesale Banking includes all advances to trusts, partnership firms, companies and statutory bodies which are not included under retail banking. Treasury includes the entire investment portfolio of the Bank. Other Banking includes hire purchase and leasing operations and other items not attributable to any particular business segment. All liabilities are transfer priced to a central treasury unit, which pools all funds and lends to the business units at appropriate rates based on the relevant maturity of assets being funded after adjusting for regulatory reserve requirements.
Products & Services
Personal Banking
? ? ? ? ? ? ?
Deposits Loans Cards Investments Insurance Demat Services Wealth Management
NRI Banking
? ?
Money Transfer Bank Accounts Page 3
? ? ? ?
Investments Property Solutions Insurance Loans
Business Banking
? ? ? ? ? ? ?
Corporate Net Banking Cash Management Trade Services FXOnline SME Services Online Taxes Custodial Services
BUSINESS OBJECTIVE ? Vision
To be the leading provider of financial services in India and a major global bank.
? Mission
? ? ? ? ? We will leverage our people, technology, speed and financial capital to: be the banker of first choice for our customers by delivering high quality, world-class service. Expand the frontiers of our business globally. Play a proactive role in the full realisation of India’s potential. Maintain a healthy financial profile and diversify our earnings across businesses and geographies. Maintain high standards of governance and ethics. Page 4
? ?
Contribute positively to the various countries and markets in which we operate. Create value for our stakeholders.
SWOT ANALYSIS
SWOT analysis is done for a company, to find out its overall Strengths, Weaknesses, Threats and opportunities leading to gauging the competitive potential of the company. The SWOT Analysis enables a company to recognize its market standing and adopt strategies accordingly. Here SWOT analysis of ICICI bank is made to understand the positioning of the bank better: Strengths ? ? ? ? ? ? ? ? ? Brand Name Market share Huge network Diversified Portfolio Salary Accounts Working Hours Treasury Department Aggressive Marketing Technology Threat ? ? Advent of MNC banks Dissatisfied customers Improving nationalized banks Weakness ? ? ? ? ? Transaction cost Focus on high-end customers Defensive approach in lending Marginal presence outside India Poor customer service/care
Opportunity ? ? ? ? New IT &ITES Companies Dissatisfied customers of other banks Remittances Business Advising for smaller players
?
Page 5
STRENGTHS
1. BRAND NAME: ICICI Bank has earned a huge Brand equity in banking in a very short span of time. It has earned a reputation in the market for extending quality services to the market with respect to its competitors.
2. MARKET SHARE: ICICI Bank has the largest market share of 34% in the IT & ITES industry in Hyderabad according to our survey (within the limitation of the sample size.)
3. HUGE NETWORK: ICICI Bank has the highest number of linked branches in the country. The bank operates through a network of 450 BRANCHES AND over 1800 ATMs across India, thus enabling them to serve customer in better way.
4. DIVERSIFIED PORTFOLIO: ICICI Bank has all the products under its belt, which help it to extend the relationship with existing customer. ICICI Bank has umbrella of products to offer their customers, if once customer has relationship with the bank. Some Products, which ICICI Bank is offering are:
Retail Banking, Business Banking, Merchant Establishment Services (EDC Machine) Personal loans & Car loans Demat Services with E-Broking Mutual Fund (ICICI Bank is the Distributor of all Mutual Fund) Insurance Housing Loans
5. SALARY ACCOUNT: One very interesting thing that we have observed in our survey is that ICICI is having an edge over other banks in case of Salary Account. Most of the companies are having their
Page 6
Salary Account with ICICI even if their Current Account is with any other Bank. This is mainly because of the huge network of ATMs and branches of ICICI. 6. WORKING HOURS: ICICI is the only bank which is having its working hours from 8 to 8 which is one of the major strength of ICICI Bank with respect to IT & ITES Industry. As most of the IT & ITES companies are global players and their Parent company is in US, so they have to work according to their office time. Thus some have their Office time in the morning and some have it in the evening so if the working hour of the bank is 8 to 8 it is very convenient for them.
7. TREASURY DEPARTMENT: ICICI is the only bank which is having its treasury department especially for Hyderabad Customers. So customers can get the best rates for foreign exchange.
8. AGGRESSIVE MARKETING: ICICI Bank is known for its aggressive marketing of its products. Recent Endorsement of its product by AMITABH BAHCHAN proves the same. This gives ICICI an edge over other banks.
9. TECHNOLOGY: From its inception, ICICI Bank has adopted a policy of selecting internationally proven and specialized Packaged Systems for its technology. ICICI bank’s technology platform has been acknowledged globally as one of the best in terms of robustness, flexibility and cost efficiency. ICICI Bank is in a position to leverage this platform to further build cost and service advantage.
WEAKNESS
1. TRANSACTION COST: ICICI Bank charges high cost for its transactions. Through our data analysis we have find out that most of the small companies prefer nationalized banks only because of this cost factor. Also the group has found out that there are companies which are going for multi bank system i.e. they are using only those facilities of ICICI Bank which are provided at cheaper rates (read Salary Account) and for other services they are going to nationalize banks and MNCs (read Forex). So there exists a huge potential for ICICI Bank if they are ready to make their transaction cost flexible.
2. FOCUS ONLY ON HIGH END CUSTOMERS: The bank targets only the top bracket of clients and does not cater to the needs of small customers. Due to this reason the bank may sometimes loose good clients.
Page 7
3. DEFENSIVE APPROACH IN LENDING: ICICI Bank has a defensive approach in lending. Mainly to IT & ITES companies Bank do not provide loan as these companies are not having collaterals so bank hesitate in giving loans to them. Because of this policy companies prefer nationalized banks and ICICI Bank in turn sometimes loose potential customers.
4. LITTLE PRESENCE OUTSIDE INDIA: ICICI Bank is having little presence Outside India, because of which companies are preferring MNC Bank, mainly Citibank. So if ICICI Bank tries to emerge outside India then it has a huge potential of customers.
5. POOR CUSTOMER CARE/SERVICE: With its aggressive marketing ICICI Bank is rapidly increasing its customer base. They are not however, increasing the number of employees accordingly. This is leading to deterioration of the standard of customer service.
OPPORTUNITIES
1. NEW IT & ITES COMPANIES: IT & ITES sector is on a boom in the Indian market context, with new companies mushrooming in the market; it opens the door for ICICI bank to capture the huge untapped market.
2. Dissatisfied Customers of Other Banks: The group from its survey and analysis of IT companies have found out that there are many companies which are not satisfied with its current bank, so ICICI with its superior service quality and long working hours can capture those customers.
3. Remittances: From the analysis group has also found out that ICICI bank has very little presence as far as the EEFC account is concerned. Companies prefer to bank with MNCs (which have greater presence in the foreign countries) and nationalized banks (which according to the companies provide lower transaction rates) to get their inward remittances in spite of ICICI being providing one of the most competitive rates. So the bank can promote its EEFC account better and get the key to the door of huge potential market.
Page 8
4. Business advising for smaller Players: The analysis has also indicated that the concept of business advising though very popular with the higher end players is virtually non existent in the lower end of the market. ICICI should take this opportunity to provide business advising to the smaller companies at competitive rates and try to take the first mover advantage.
THREATS
1) Advent of MNC banks: Large numbers of MNC banks are mushrooming in the Indian market due to the friendly policies adopted by the government. This can increase the level of competition and prove a potential threat for the market share of ICICI bank.
2) Dissatisfied Customers: The analysis indicated that though most of the companies are satisfied with the products offered by ICICI bank but the poor customer support/ service is creating a lot of dissatisfaction among the customers, this can prove to be a serious problem as far as the market reputation of the bank is concerned and cane be a major threat in future business acquisition.
3) Ever improving nationalized banks: With PSU banks like SBI going all out to compete with the private banks and government giving them a free hand to do so, it can prove to be serious threat for banks like ICICI.
Page 9
RECOMMENDATIONS
?
A Major revamp of its Customer care - A complete over hauling of its customer care
department is required so as to reduce complaints of customer in turn which may affect its working.
?
Penetration into Rural Market with E – Commerce Facility - Though it is one of the
strategies of ICICI Bank to enter deeply into rural sector, but this step has to be taken up seriously and as soon as possible so as to tap the market the rural market easily and these services should be well equipped with E – Commerce features mainly like Tele – banking and ATM’s etc.
?
Introduction of Smart Cards for New as well as Old Credit Card Holders ICICI Bank should
come up with the concept of smart cards were the data regarding all the accounts & credit cards details of a individual customer is placed in a single cards hence reducing the burden of carrying all credit cards & other necessary items required for banking transaction.
?
Concentrate on Building Brand Image- ICICI Bank is very well known institution for investing
purposes and as well as for its practices involving anti – social elements; therein affecting its name and Brand value of its self and also ICICI group as a whole.
?
Formulation of a Win - Win Situation to reduce Non Performing Assets- It has become a
necessity for ICICI Bank to reduce its NPA’s which have risen tremendously after the merger with ICICI Limited.
?
Completely separation of other alike Businesses like Insurance, Mutual Funds etc .- It is
usually seen the ICICI Bank branches are over crowded with ICICI staff though they don’t belong to that branch or does not even belong to the ICICI Bank, they usually are the agents of its other businesses like Insurance, Mutual funds etc – this annoys the customer and creates a bad impression.
?
Major re-look at working of their Agents- The easiest way to reach to customers is through
agents; and the agents of ICICI Bank are highly skilled in this field but they do it at the cost of customer’s innocence. There are many incidences where in the information provided by the agents is false. Its time for ICICI Bank to look into the matter and rework on its agents policies.
Page 10
?
Reduction of Penalty Fees & Special Service Fees - The penalties & special service imposed
by ICICI Bank is very high as compared to public sector banks; this sometimes adds a negative perspective to ICICI Bank.
Page 11
doc_809743605.pdf
the bank, its operations and its future. It gives the analysis with the help of key financials. It also gives the SWOT analysis of ICICI Bank.
ANALYSIS OF ICICI BANK FROM STRATEGIC PERSPECTIVE
Table of Contents
About ICICI ...................................................................................................................................... 2 Products & Services ........................................................................................................................ 3 BUSINESS OBJECTIVE ...................................................................................................................... 4 SWOT ANALYSIS .............................................................................................................................. 5 STRENGTHS.................................................................................................................................. 6 OPPORTUNITIES .......................................................................................................................... 8 THREATS ...................................................................................................................................... 9 RECOMMENDATIONS ................................................................................................................... 10
Page 1
About ICICI
ICICI Bank was incorporated in 1994 as a part of the ICICI group. ICICI Bank’s initial equity capital was contributed 75.0% by ICICI and 25.0% by SCICI Limited, a diversified finance and shipping finance lender of which ICICI owned 19.9% at December 1996. Effective March 10, 2001, ICICI Bank acquired Bank of Madura, an old private sector bank, in an all-stock merger. Conversion into a bank offered ICICI the ability to accept low-cost demand deposits and offer a wider range of products and services, and greater opportunities for earning non-fund based income in the form of banking fees and commissions. ICICI Bank also considered various strategic alternatives in the context of the emerging competitive scenario in the Indian banking industry. ICICI Bank identified a large capital base and size and scale of operations as key success factors in the Indian banking industry. In view of the benefits of transformation into a bank and RBI’s pronouncements on universal banking, ICICI and ICICI Bank decided to merge. The amalgamation was sanctioned by the High Court of Gujarat at Ahmadabad on March 7, 2002 and by the High Court of Judicature at Bombay on April 11, 2002. The amalgamation was approved by RBI on April 26, 2002. The amalgamation became effective on May 3, 2002. The date of the amalgamation for accounting purposes under Indian GAAP was March 30, 2002.
Page 2
Segmental Information: The business operations of the Bank have the following segments: ? Retail Banking includes exposures which satisfy the four criteria of orientation, product, granularity and low value of individual exposures for retail exposures laid down in the Basel Committee on Banking ? ? ? Wholesale Banking includes all advances to trusts, partnership firms, companies and statutory bodies which are not included under retail banking. Treasury includes the entire investment portfolio of the Bank. Other Banking includes hire purchase and leasing operations and other items not attributable to any particular business segment. All liabilities are transfer priced to a central treasury unit, which pools all funds and lends to the business units at appropriate rates based on the relevant maturity of assets being funded after adjusting for regulatory reserve requirements.
Products & Services
Personal Banking
? ? ? ? ? ? ?
Deposits Loans Cards Investments Insurance Demat Services Wealth Management
NRI Banking
? ?
Money Transfer Bank Accounts Page 3
? ? ? ?
Investments Property Solutions Insurance Loans
Business Banking
? ? ? ? ? ? ?
Corporate Net Banking Cash Management Trade Services FXOnline SME Services Online Taxes Custodial Services
BUSINESS OBJECTIVE ? Vision
To be the leading provider of financial services in India and a major global bank.
? Mission
? ? ? ? ? We will leverage our people, technology, speed and financial capital to: be the banker of first choice for our customers by delivering high quality, world-class service. Expand the frontiers of our business globally. Play a proactive role in the full realisation of India’s potential. Maintain a healthy financial profile and diversify our earnings across businesses and geographies. Maintain high standards of governance and ethics. Page 4
? ?
Contribute positively to the various countries and markets in which we operate. Create value for our stakeholders.
SWOT ANALYSIS
SWOT analysis is done for a company, to find out its overall Strengths, Weaknesses, Threats and opportunities leading to gauging the competitive potential of the company. The SWOT Analysis enables a company to recognize its market standing and adopt strategies accordingly. Here SWOT analysis of ICICI bank is made to understand the positioning of the bank better: Strengths ? ? ? ? ? ? ? ? ? Brand Name Market share Huge network Diversified Portfolio Salary Accounts Working Hours Treasury Department Aggressive Marketing Technology Threat ? ? Advent of MNC banks Dissatisfied customers Improving nationalized banks Weakness ? ? ? ? ? Transaction cost Focus on high-end customers Defensive approach in lending Marginal presence outside India Poor customer service/care
Opportunity ? ? ? ? New IT &ITES Companies Dissatisfied customers of other banks Remittances Business Advising for smaller players
?
Page 5
STRENGTHS
1. BRAND NAME: ICICI Bank has earned a huge Brand equity in banking in a very short span of time. It has earned a reputation in the market for extending quality services to the market with respect to its competitors.
2. MARKET SHARE: ICICI Bank has the largest market share of 34% in the IT & ITES industry in Hyderabad according to our survey (within the limitation of the sample size.)
3. HUGE NETWORK: ICICI Bank has the highest number of linked branches in the country. The bank operates through a network of 450 BRANCHES AND over 1800 ATMs across India, thus enabling them to serve customer in better way.
4. DIVERSIFIED PORTFOLIO: ICICI Bank has all the products under its belt, which help it to extend the relationship with existing customer. ICICI Bank has umbrella of products to offer their customers, if once customer has relationship with the bank. Some Products, which ICICI Bank is offering are:
Retail Banking, Business Banking, Merchant Establishment Services (EDC Machine) Personal loans & Car loans Demat Services with E-Broking Mutual Fund (ICICI Bank is the Distributor of all Mutual Fund) Insurance Housing Loans
5. SALARY ACCOUNT: One very interesting thing that we have observed in our survey is that ICICI is having an edge over other banks in case of Salary Account. Most of the companies are having their
Page 6
Salary Account with ICICI even if their Current Account is with any other Bank. This is mainly because of the huge network of ATMs and branches of ICICI. 6. WORKING HOURS: ICICI is the only bank which is having its working hours from 8 to 8 which is one of the major strength of ICICI Bank with respect to IT & ITES Industry. As most of the IT & ITES companies are global players and their Parent company is in US, so they have to work according to their office time. Thus some have their Office time in the morning and some have it in the evening so if the working hour of the bank is 8 to 8 it is very convenient for them.
7. TREASURY DEPARTMENT: ICICI is the only bank which is having its treasury department especially for Hyderabad Customers. So customers can get the best rates for foreign exchange.
8. AGGRESSIVE MARKETING: ICICI Bank is known for its aggressive marketing of its products. Recent Endorsement of its product by AMITABH BAHCHAN proves the same. This gives ICICI an edge over other banks.
9. TECHNOLOGY: From its inception, ICICI Bank has adopted a policy of selecting internationally proven and specialized Packaged Systems for its technology. ICICI bank’s technology platform has been acknowledged globally as one of the best in terms of robustness, flexibility and cost efficiency. ICICI Bank is in a position to leverage this platform to further build cost and service advantage.
WEAKNESS
1. TRANSACTION COST: ICICI Bank charges high cost for its transactions. Through our data analysis we have find out that most of the small companies prefer nationalized banks only because of this cost factor. Also the group has found out that there are companies which are going for multi bank system i.e. they are using only those facilities of ICICI Bank which are provided at cheaper rates (read Salary Account) and for other services they are going to nationalize banks and MNCs (read Forex). So there exists a huge potential for ICICI Bank if they are ready to make their transaction cost flexible.
2. FOCUS ONLY ON HIGH END CUSTOMERS: The bank targets only the top bracket of clients and does not cater to the needs of small customers. Due to this reason the bank may sometimes loose good clients.
Page 7
3. DEFENSIVE APPROACH IN LENDING: ICICI Bank has a defensive approach in lending. Mainly to IT & ITES companies Bank do not provide loan as these companies are not having collaterals so bank hesitate in giving loans to them. Because of this policy companies prefer nationalized banks and ICICI Bank in turn sometimes loose potential customers.
4. LITTLE PRESENCE OUTSIDE INDIA: ICICI Bank is having little presence Outside India, because of which companies are preferring MNC Bank, mainly Citibank. So if ICICI Bank tries to emerge outside India then it has a huge potential of customers.
5. POOR CUSTOMER CARE/SERVICE: With its aggressive marketing ICICI Bank is rapidly increasing its customer base. They are not however, increasing the number of employees accordingly. This is leading to deterioration of the standard of customer service.
OPPORTUNITIES
1. NEW IT & ITES COMPANIES: IT & ITES sector is on a boom in the Indian market context, with new companies mushrooming in the market; it opens the door for ICICI bank to capture the huge untapped market.
2. Dissatisfied Customers of Other Banks: The group from its survey and analysis of IT companies have found out that there are many companies which are not satisfied with its current bank, so ICICI with its superior service quality and long working hours can capture those customers.
3. Remittances: From the analysis group has also found out that ICICI bank has very little presence as far as the EEFC account is concerned. Companies prefer to bank with MNCs (which have greater presence in the foreign countries) and nationalized banks (which according to the companies provide lower transaction rates) to get their inward remittances in spite of ICICI being providing one of the most competitive rates. So the bank can promote its EEFC account better and get the key to the door of huge potential market.
Page 8
4. Business advising for smaller Players: The analysis has also indicated that the concept of business advising though very popular with the higher end players is virtually non existent in the lower end of the market. ICICI should take this opportunity to provide business advising to the smaller companies at competitive rates and try to take the first mover advantage.
THREATS
1) Advent of MNC banks: Large numbers of MNC banks are mushrooming in the Indian market due to the friendly policies adopted by the government. This can increase the level of competition and prove a potential threat for the market share of ICICI bank.
2) Dissatisfied Customers: The analysis indicated that though most of the companies are satisfied with the products offered by ICICI bank but the poor customer support/ service is creating a lot of dissatisfaction among the customers, this can prove to be a serious problem as far as the market reputation of the bank is concerned and cane be a major threat in future business acquisition.
3) Ever improving nationalized banks: With PSU banks like SBI going all out to compete with the private banks and government giving them a free hand to do so, it can prove to be serious threat for banks like ICICI.
Page 9
RECOMMENDATIONS
?
A Major revamp of its Customer care - A complete over hauling of its customer care
department is required so as to reduce complaints of customer in turn which may affect its working.
?
Penetration into Rural Market with E – Commerce Facility - Though it is one of the
strategies of ICICI Bank to enter deeply into rural sector, but this step has to be taken up seriously and as soon as possible so as to tap the market the rural market easily and these services should be well equipped with E – Commerce features mainly like Tele – banking and ATM’s etc.
?
Introduction of Smart Cards for New as well as Old Credit Card Holders ICICI Bank should
come up with the concept of smart cards were the data regarding all the accounts & credit cards details of a individual customer is placed in a single cards hence reducing the burden of carrying all credit cards & other necessary items required for banking transaction.
?
Concentrate on Building Brand Image- ICICI Bank is very well known institution for investing
purposes and as well as for its practices involving anti – social elements; therein affecting its name and Brand value of its self and also ICICI group as a whole.
?
Formulation of a Win - Win Situation to reduce Non Performing Assets- It has become a
necessity for ICICI Bank to reduce its NPA’s which have risen tremendously after the merger with ICICI Limited.
?
Completely separation of other alike Businesses like Insurance, Mutual Funds etc .- It is
usually seen the ICICI Bank branches are over crowded with ICICI staff though they don’t belong to that branch or does not even belong to the ICICI Bank, they usually are the agents of its other businesses like Insurance, Mutual funds etc – this annoys the customer and creates a bad impression.
?
Major re-look at working of their Agents- The easiest way to reach to customers is through
agents; and the agents of ICICI Bank are highly skilled in this field but they do it at the cost of customer’s innocence. There are many incidences where in the information provided by the agents is false. Its time for ICICI Bank to look into the matter and rework on its agents policies.
Page 10
?
Reduction of Penalty Fees & Special Service Fees - The penalties & special service imposed
by ICICI Bank is very high as compared to public sector banks; this sometimes adds a negative perspective to ICICI Bank.
Page 11
doc_809743605.pdf