Q1. What were the reasons behind implementation of the transformation effort in State Bank of India?

SBI had been losing market share for over two decades to private and foreign banks. During the
early years of this century, the decline was even worser
It had lost its voice significantly in the economic sphere, in the industry, in the government circles
It had to evolve to meet the changing requirements of the growing retail segment and the
aggressive international aspirations of Indian companies
SBI realized that business process reorganization had to accompany the technology
transformation exercise and therefore simultaneously embarked on a path of transforming its
processes
SBI was also losing customers to its competitors as they were neither respected nor treated well
SBI was perceived as a classical old type banking institution which was not seen as a leader in
product innovation, marketing or distribution
It was perceived as a government bank whose main purpose was to pay government officials
salaries and dispense pension. Even family members of the staff believed that SBI was a bank for,
of and by the senior citizens
SBI became an inward looking bank with no focus on market share or customer segmentation. It
never focused on young customer
Most of the banks employees were not aware of the problems that it was facing due to limited
contact with seniors and communication was one way, from top to bottom
There were no specific goals, vision or commitment in the organization. From the very top down
through the branches, everybody was pulling in different directions
Also SBI didnt have the technology platform to offer the products and services that competition
was offering

All the reasons mentioned above are the key drivers for implementing transformation effort in
State Bank of India.

Q2: What specific steps did the SBI undertake during the transformation effort and what were
the results of these steps?

During the transformation SBI undertook following 6 major steps in leadership of Mr. Bhatt to
enhance the culture of the organization and to provide customers with best services:
1. Establishing Leadership
In the initial stage people did not believe in the leadership of Mr. Bhatt. To tackle the
situation while not excessively showing off his authority he took some of the major decisions
that were in the benefit of the organization. For example he stopped the immediate roll out
of CBS despite criticism and which later on proved to right. Thus he established his
credibility.
2. The Cascading Conclaves- Communicating Vision to the Future
In the next step a series of conclaves for different levels of employees were started to
communicate the vision for which the SBI was working. By communicating vision to each
and every employee in different levels of conclave it was ensured that everyone was clear
 about it. In some of the conclaves it gave great results and employees became proactive in
achieving it
3. Enabling initiative
Some enabling decisions such as winning IT platform, Efficient Operating Processes and
Branch Network Process Reengineering, Develop Consistent customer services, Other
Initiative such as strengthening and integrating its risk management system, creating system
for measuring business performance were taken. This empowered the organization to move
towards the goal to be achieved.
4. People Initiative
Through some Broad based Communication and storytelling initiatives for the people
through Parivartan communicated the message of transform to the people who were not
covered in the conclave. To meet the trained people required for better services they
initiated Changing training and capability Building system and Changing Individual
Performance Management System. It actually changed the way employees treated the
customer and now they started giving more and more time to the customer to satisfy their
expectations. It improved SBIs performance in many parameters such as customer
satisfaction rose from 46% to 56%, employee level of voluntarily explaining services to the
first time customer reached to 31%.
5. Business Initiatives
Some of the business initiatives to Win back the Indian Middle class Consumer, Own rural
India, Rebuild profitable Wholesale Bank were taken. By positioning SBI in different ways
they tried to win back the consumer that they lost due to lack of consumer orientation.
Through more and more branches and ATMs to reach out to the left out areas of semi urban
centres and through more and more inclusive society in villages it was aimed to get back
that customer base back.
6. Other Initiatives
In some other initiative SBI consolidated its treasury operations and brought in a stronger
profit focus. Also focused on small and medium enterprises with turnover less than 1 billion.
Also to increase its fee based business and attract upwardly mobile and high net worth
clients, SBI ventured in to new business areas in India such as custodial services, private
equity, pension funds, general insurance and financial planning and advisory services.

Q3. Challenges facing Mr. Bhatts successor:

One of the major challenge for Mr. Bhatts successor was to maintain the new
environment which encouraged participation from a large number of employees
irrespective of their position in the hierarchical structure of the organization. In order to
reap benefits of the transformation efforts it was important to involve the employees in
the decision making process which was one of the key feature of the changes brought
by Mr. Bhatt.
SBI was growing at a breakneck speed, every year they have been opening upwards of a
thousand branches and more than 2000 or 3000 ATMs. They needed to stop and
identify the challenges that lie ahead. Also they needed to improve on parameters such
 as efficiency, sustain the drive and stay ahead of competition. The successor was
required to remain engaged, be willing to sweat, to take risks and take tough decisions.
One of the major reasons for the growth of SBI during MR. Bhatts tenure was the
Economic slowdown in 2008 as large number of customers shifted to SBI in search of
safety. Thus, now when the economy is on the path of recovery it is difficult to maintain
the same level of growth. Even to maintain the current level of growth Bhatts successor
has to make sure that SBI stays ahead of competition.
SBI was doing well to attract the middle class customers, but the high-income segment
still believed that SBI is not their type of bank, as it was lacking the convenience that
some of the private banks offered to these customers.
In the area of corporate banking, SBI needed to meet the capital and other
requirements of Indian companies that were becoming increasingly global. Of the top
500 global companies, 8 were Indian and McKinsey predicted the number to increase to
16-20 by 2020. They needed to retrieve their leadership in corporate banking. They had
chances to perform better at corporate lending, treasury and tenor management front.
SBI was trying to live up to its purpose of being a banker to every Indian. On the retail
banking front SBI needed to adapt its products and services to cater to the needs of a
new clientele- the 30 million people that were being added to Indias middle income
group every year.
By moving to the centralized processes, SBI was losing touch with the customer. As
customer becomes better informed, it was important to move along with them through
making the processes a bit decentralized. Also, there was gap in the high-income
segment , they did not believe that SBI is their type of bank. This segment has not been
offered the kind of convenience they want.
SBI had raised 160 billion in March 2008 through a rights issue and was planning to raise
another Rs. 200 billion by March 2011 but they had no prediction of the sufficient
amount to be raised. It was required to do forecasting of markets and come up with
proper planning and implementation of how much capital to raise.
The biggest challenge was to meet Bhatts aspirations for the bank. India needed a very
strong banking system to sustain its current growth rate of about 9% over the next
decade. Currently, India lacked such system, however, SBI is in the best position to take
this leap in terms of size, sophistication and reach.