axis bank n
TRANSCRIPT
CASE STUDY OF
AXIS BANKBanking on Technology and Market Segments for Competitive Space
Introduction
AXIS bank (formerly UTI Bank) is the first new
generation private sector bank to be established
in India under the overall reform programme
initiated by the govt. of India in 1991.
The bank promoted by Unit Trust of India, the
largest mutual fund in India, holding 87% equity.
Axis bank’s first capital raising post – inception
was in 1998through public offering.
The present shareholding pattern is :
Administrator of the
specified undertaking
of the AXIS
27.33%
LIC 10.34%
GIIC & four PSU
Insurance companies
5.28%
Non – promoters’
Holding
16.96%
Foreign Shareholding 40.09%
AXIS Bank performance in 2008 The bank has developed a branch network
which is built on customer convenience &
service , helping it in acquisition of low cost
retail deposits, retail assets, etc.
As on march 31, 2008, bank had 651 branches
as against earlier year, it was 508.
Out of 651 branches,
158 branches are in semi – urban & rural areas.
SHIFT IN STRATEGY Initial business model: the bank started to give more
corporate loans, as they offered higher yields during
FY96 to FY99.
But the overexposure to corporate loans impacted the
bank’s asset quality.
In 1999, the bank’s net NPAs to advances ratio
jumped to 6.3% in FY99 from 3.7% in FY97.
Realizing the risk of overexposure to this segment,
AXIS bank started shifting its concentration to retail
finance, which presented immense growth
opportunities.
Contd…
Strategy shift: AXIS Bank started focusing on
both physical & technology infrastructure,
which it thinks are key to acquire customers in
retail finance segment.
Braches increased to 450 from just 35 in FY99.
It is the 1st Indian Bank to have a remote
disaster recovery management system to
protect its business from any eventualities.
AXIS’s Current Strategy
The bank follows a broad differentiation
strategy.
They are:
1.Managing changing customer needs:
Powerful back office hubs
Bank’s centralized phone banking center
Zonal level Nodal officers
“Know your customer” norms
Contd…
2. Risk management:
Risk limits are set according to
number of criteria including relevant
market analysis, business strategy &
management experience.
Risk limits are monitored &
reviewed regularly.
Contd…
3. Dealing with regulations:
The bank calculates capital charge on
operational risk under both the Basic Indicator
Approach & the standardized approach.
The bank has simultaneously undertaken
internal studies on several lines of business
for an evaluation of the risk profile, capturing
of losses incurred & identifying the key risk
indicators.
Contd…
4. Keeping pace with the technology :
The bank’s IT system developed a
process called “SETU” ( Seamless
Electronic Transfer to AXIS Bank)
The sale & redemption of 58 AXIS
Mutual Funds Schemes was an additional
service through the ATM channel.
Contd…
5. Product & service innovation:
Bank set up low cost rural ATMs at
Anand.
A channel finance hub was created
The strategy making, strategy execution process for AXIS Bank
Revise as needed in the light of actual erformance, changing
conditions, new opportunities , & new ideas
Growth Strategy
Objectives Increasing the market share in various business
resulting in an enhancement in its core income streams.
Improve the quality of its income streams.
Complementary Strategies for Business Growth And Development Strategic alliances and Collaborative Partnerships
Tie-ups with Maruti & Hyundai For selling car loans. Co-financing pact with India In infrastructure Finance
Company Ltd.(IIFCL) for infrastructure projects. Tie-up with Bajaj Allianz General Insurance Tie-up with Metlife as Bancassurance Partner. ATM sharing based on alliances with other banks
such and multi-bank shared payment networks. Economic Times Remit2India for money transfer.
Outsourcing Selected value-chain Activities Outsourcing recruitments to
MonsterIndia.com Outsourcing Print Operations to Xerox. Outsourcing of Electronic Bill
Payment(EBP)
Offensive Strategic Moves
Superior customer service Range of Service on ATM machines. Aggressive Growth in cards business. Expansion Of Geographical reach. Financial Advisory services. Launched an e-Payment Facility for
payment of central excise & service tax. I-trade
Evaluation Of Growth
Year Net Profit
% increase
s2004-05 334.58 ----
2005-06 485.08 44.98
Scope of Future Growth
Governance & Ethics Structure To enhance long term interest of its share
holders and to provide good management ,and the adoption of prudent risk management techniques and compliance with the required standards of capital adequacy. Thereby safeguarding the interest of its other stakeholders such as depositors, creditors, customers, supplies and employees.
To identify and recognize the board of Directors And the management of the bank as the principal instruments through which good corporate governance principals are articulated and implimented.
Innovation and Entrepreneurship Experimented new delivery models for
Credit, including low cost ATMs at Anand. Such application of technology provides convenience as well as product innovation.