Sanjiv Chadha, regional head of State Bank of India UK, tells Douglas Blakey about the bank’s expansion plans, channel strategy, regulatory challenges and product innovation. Says Chadha, transparency, fair pricing and consistency will remain at the heart of SBI’s growing UK operation
The importance of the UK market to India’s largest lender, State Bank of India (SBI) has been highlighted in two very high profile ways during 2015.
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The year kicked off with the appointment of an SBI heavyweight to become UK regional head: Sanjiv Chadha moved to the UK from India where he was global general manager for retail banking.
Prior to fulfilling that role, Chadha was head of mergers and acquisitions and private equity for SBI’s investment banking arm.
In addition to the high profile hire, SBI marked 2015 with plans for major investment in its UK operation via an injection of around $300m to capitalise a new UK subsidiary.
The establishment of a separate UK subsidiary is a regulatory requirement that the bank could have done without; for his part, Chadha has resisted the temptation to criticise the Bank of England.
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By GlobalDataHe told RBI: "We have been in the UK a long time [95 years plus], are committed to the UK and have had constructive dialogue with the regulators, with good progress being made."
SBI will treat the cost of setting up a UK subsidiary as an incremental cost, establish an independent board for the UK and continue with its plans to grow its UK operations.
It remains, said Chadha, an opportune time for the bank to do business in the UK.
"This is the largest international operation of SBI. There are 10 retail branches in the UK with plans to open two new branches.
"Fairness and transparency are at the heart of the bank’s operation and SBI’s brand value depends on that."
On channel investment, SBI has thrown itself energetically into the digital age with the launch in India of a network of digital branches with the aim of broadening the bank’s appeal to the youth and growing mass affluent segment.
The thinking behind the launch of the digital branches is part of a drive to develop a sub-brand sbiINTOUCH to capture the imagination of the youth market by offering a more modern and digitally innovative service.
Lessons learned from the Indian digital branch initiative are being incorporated into SBI’s UK operations.
Chadha said: "We are experimenting with elements of inTOUCH being transferred to the UK. We can, for example now open new accounts inside 15 minutes."
Other customer service enhancements include instant loan approval and interactive LCDs mounted on walls designed to help customers map out their financial plans.
Rich areas
A core competency for SBI in the UK and an area where the bank punches well above its weight is SME lending. It remains, says Chadha, a vibrant sector and an area that continues to offer SBI scope to grow its market share.
Another rich area for SBI to tap into is the provision of safety deposit boxes at all of its UK outlets.
Chadha commented: "There is a large unmet demand here. Each branch has room for 1,000 safety deposit boxes."
With the notable exception of Metro Bank, SBI is very much in the minority in the UK market in promoting its safety deposit boxes. By contrast, the service has been axed by UK banks such as Lloyds, RBS NatWest and HSBC.
SBI will continue to target retail customers in the UK of Indian descent but Chadya stressed the bank’s success in attracting customer from all backgrounds.
"We have growing customer numbers from all backgrounds and the bank is agnostic as regards ethnicity."
The UK Indian business community survived the financial crisis relatively well and SBI has benefitted from that. Product innovation has also boosted the bank’s UK performance.
"The SBI cash ISA has been astonishingly successful," adds Chadha.
Buy-to-let is another area where SBI has outperformed the market. In the first quarter of the year, it accepted buy-to-let loan applications from intermediaries.
"We are very competitive on pricing and have an advantage over some of the larger players by being small enough to be flexible. All lending decisions are made in the UK.
"We will not buy market share by offering products as a loss leader; SBI pricing will remain fair and consistent. That is the heart of what we do.
"For most of our customers, we are not their only bank but by offering excellent service we will remain profitable."
SBI already serves 12m mobile banking customers
India has the youngest mobile banking user base in the world according to research from KPMG and UBS. In India, the median age is 30 compared to 32 in the US, 39 in Italy, Spain and Sweden and 38 in the UK.
The mobile banking adoption rate in India puts Europe into the shade; in India the rate exceeds 50% compared with 38% in UK.
SBI’s latest mobile banking initiative is the launch of a mobile wallet called Batua for feature phones, on offer to SBI customers and non-customers.
SBI’s smart phone mobile wallet, SBI Buddy, was rolled out in August.
Buddy can be used to send money to new and registered customers, book flights, pay for movies, hotels as well as for shopping.
SBI already has 23 million internet banking customers and 12 million mobile banking customers in India.
