Change calls own strength beyond anyone of us. Change pushes you to do your personal best. Change draws out those poised for a new way. Change isn’t for chickens. Change does have casualties of those defeated. Change will cause us to churn or to learn. Change changes the speed of time. Time is so slow for the reluctant, and yet it is a whirlwind for those who embrace it. Change is more fun to do than to be done to. Change seeks a better place at the end and is complete when you realize you are different. Change Management:
Change management is a set of processes that is employed to ensure that significant changes are implemented in an orderly, controlled and systematic fashion to effect organizational change. One of the goals of change management is with regards to the human aspects of overcoming resistance to change in order for organizational members to buy into change and achieve the organization’s goal of an orderly and effective transformation. Organizational change management takes into consideration both the processes and tools that managers use to make changes at an organizational level.
Most organizations want change implemented with the least resistance and with the most buy-in as possible. For this to occur, change must be applied with a structured approach so that transition from one type of behavior to another organization wide will be smooth. SBI: State Bank of India is the largest state-owned banking and financial services company in India, by almost every parameter – revenues, profits, assets, market capitalization, etc. The bank traces its ancestry to British India, through the Imperial Bank of India, to the founding in 1806 of the Bank of
Calcutta, making it the oldest commercial bank in the Indian Subcontinent. The Government of India nationalised the Imperial Bank of India in 1955, with the Reserve Bank of India taking a 60% stake, and renamed it the State Bank of India. In 2008, the Government took over the stake held by the Reserve Bank of India. SBI provides a range of banking products through its vast network of branches in India and overseas, including products aimed at NRIs. The State Bank Group, with over 16,000 branches, has the largest banking branch network in India.
With an asset base of $260 billion and $195 billion in deposits, it is a banking behemoth. It has a market share among Indian commercial banks of about 20% in deposits and advances, and SBI accounts for almost one-fifth of the nation’s loans. * The State bank of India is the 29th most reputed company in the world according to Forbes. * State Bank of India is the largest of the Big Four Banks of India, along with ICICI Bank, Axis Bank and HDFC Bank — its main competitors. Change Trigger: Liberalisation of the Indian Banking system:
During the 1990s, the Indian economy began a period of rapid growth as the country’s low labor costs, intellectual capital, and improving telecommunications technology allowed India to offer its commercial services on a global basis. This growth was also aided by the government’s decision to allow the creation of private-sector banks (they had been nationalized in the 1960s) Private sector banks made their first appearance in January 1993. The private-sector banks, such as ICICI Bank and HDFC Bank, altered the banking landscape in India.
Core banking systems and electronic delivery channels that allowed these banks to introduce new products and provide greater convenience to customers acted as a hurdle for the PSBs. During that period, Public Sector Banks accounted for over three-fourths of total banking industry assets. They were weighed down with huge NPAs(Non-Performing Assets), falling revenues, lack of modern technology and a massive and highly unionized workforce. New entrants began to erode the market share of the nationalized banks, especially in metro cities and urban areas.
The PSBs found it increasingly difficult to compete with the new private sector banks and the foreign banks. These banks also employed state-of-the-art technology, which helped them to save on manpower costs and concentrate on providing better service. Changes in SBI: Drivers for a New Core System Though SBI had undertaken a massive computerization effort in the 1990s to automate all of its branches, implementing a highly customized version of Kindle Banking Systems’ Bankmaster core banking system (now owned by Misys).
However, because of the bank’s historic use of local processing and the lack of reliable telecommunications in some areas, it deployed a distributed system with operations located at each branch. Although the computerization improved the efficiency and accuracy of the branches, the local implementation restricted customers’ use to their local branches and inhibited the introduction of new banking products and centralization of operations functions.
The local implementation prevented the bank from easily gaining a single view of corporate accounts, and management lacked readily available information needed for decision making and strategic planning. The advantages in products and efficiency of the private-sector banks became increasing evident in the late 1990s as SBI (and India’s other public-sector banks) lost existing customers and could not attract the rapidly growing middle market in India. In fact, this technology-savvy market segment viewed the public-sector banks as technology laggards that could not meet their banking needs.
In 2002, SBI adopted a new technology that included the implementation of a new centralized core banking system. This effort encompasses the largest 3,300 branches of the bank that were located in city and suburban areas. The State Bank of India’s objectives for its project to modernize core systems included: • The delivery of new product capabilities to all customers, including those in rural areas • The unification of processes across the bank to realize operational efficiencies and improve customer service. Provision of a single customer view of all accounts • The ability to merge the affiliate banks into SBI • Support for all SBI existing products • Reduced customer wait times in branches • Reversal of the customer attrition trend Challenges for the bank: The bank faced several extraordinary challenges in implementing a centralized core processing system. These challenges included finding a new core system that could process approximately 75 million accounts daily — a number greater than any bank in the world was processing on a centralized basis.
Moreover, the bank lacked experience in implementing centralized systems, and its large employee base took great pride in executing complex transactions on local in-branch systems. This practice led some people to doubt that the employees would effectively use the new system. Initial Conversion Project: The conversion effort began in August 2003, when SBI converted three pilot branches to the BaNCS system. The successful conversion and operation of the pilot branches was followed by the conversion of 350 retail branches with high-net-worth customers between August 2003 and September 2004.
At this point, the bank intentionally halted the conversions to analyze and resolve reported problems. After the software and procedural changes were implemented, SBI converted an additional 800 branches between December 2004 and March 2005. Unlike in the previous conversions, this group of branches included predominantly commercially oriented offices. The conversion effort then refocused on retail branches until November 2005, when the bank paused again to resolve problems that came up during this second group of conversions.
After the second round of changes, the system and processes were functioning smoothly, and management believed the branch conversion could be accelerated. Based on the successful pilot survey, SBI decided to convert the approximately 6,700 remaining SBI branches to the BaNCS system. The conversion of the remaining branches began in June 2006, with the stated goal of completing the conversion by year-end 2008. Managing the change: The factors which helped SBI in managing such a huge change are as follows: * Senior management commitment.
The project was driven by the chairman of SBI, who met every month with the information technology (IT) and the business sector heads. The chairman monitored the overall status and ensured that sufficient resources were allocated to the project. TCS senior managers were thoroughly committed to the project as well and periodically met with the SBI chairman to review the project status. • Staffing and empowerment of project team. The core banking team consisted of the bank’s managing director of IT acting as team head and 75 business and IT people selected by the bank.
TCS also staffed the project with approximately 300 IT professionals trained on the BaNCS system. Importantly, the SBI business people were viewed not just as contributors to a key project but as future bank leaders. This team reported to the SBI chairman and was empowered with all decision-making authority. • Ownership by business heads. The regional business line heads were responsible for the success of conversion of their respective branches and reported the status to the chairman. Thus, the business heads’ objectives were aligned with those of the project team. Focus on training: SBI used its network of 58 training centers across India to train employees on the new system. TCS personnel first educated approximately 100 SBI professional trainers, who then trained 100,000 SBI employees at the centers; the remaining employees trained at their respective job sites. Benefits of New Core Systems Implementation The new core system has resulted in benefits throughout the bank for both the customers and the employees of SBI. For example, the new core banking system has allowed the bank to redesign processes.
It established 400 regional processing centers for all metro and urban branches that have assumed functions previously performed in the individual branches. The customers after implementation of this CBS system were no longer only the “customer of the branch is no longer only the customer of the branch but has also became the customer of the bank”. Meaning, they can carry out any transaction in any branch of the bank. After implementation of this system the bank has reversed the trend of customer attrition and is now gaining new market share.