Vysya Bank's strategy road map

BABGALORE, MAY 8. The seven decades old Bangalore based Vysya bank has embarked upon a major restructuring exercise that will prepare it to face competition in the rapidly transforming financial sector. The bank's top management has rightly given the nomenclature ``Future Strategic Road Map'' to the restructuring exercise, which aims to create six strategic business units (SBUs) - retail banking, corporate banking, commercial banking, rural banking, treasury and investment banking and retailing of products and financial services.

Explaining the salient features to The Hindu, Mr. K. R. Ramamoorthy , Chairman and CEO, said the basic premise on which the road map has been drawn is to create a technology-driven ``core banking solution'', which will shift the processing of banking transactions from the branch level to a central level.

This means that while the branches will remain the first points of contact with customers, a substantial portion of processing, follow-up and other formalities connected with any type of banking activity will be done at one central place. A new state- of-the-art data centre and a new telephone banking centre are being set up. Simultaneously new systems and procedures are being put in place to take care of both - the redefined business strategy as well as the reoriented staff.

Mr. Ramamoorthy feels that there will be several tangible benefits. It should be possible to strengthen the Bank (Vysya Bank) brand instead of stressing the image of the branch only. Standards of customer service can then be elevated uniformly across the entire bank. Besides, ``anytime, anyhow, anywhere'' banking can be undertaken by a significant number of branches. Branch connectivity has of course become necessary not only for customer service but also for enhancing accounting efficiency. The retail banking thrust will be given by 75 branches which will dispense a number of tailor made products, such as debit and credit cards, ATMs and telebanking. Under corporate banking, 10 to 20 designated branches will undertake credit, forex business, capital market and merchant banking activities, cash management services and B2B electronic banking.

The bank will provide trade finance and fund small and medium sectors besides meeting their entire banking needs through its proposed commercial banking strategic unit. Around 50 branches will focus on these activities.

The SBU relating to rural banking, covering 195 rural and semi- urban branches, will devise new products for the rural sector, effect micro-lending and give personalised services to the rural clientele. The Treasury and Investment Banking Unit will cover both domestic and forex markets and money market operations.

The bank will distribute mutual fund products and undertake depository and demat work and investment advisory services through another SBU. In course of time, it proposes to leverage the network for distributing other financial products including insurance.

Mr. Ramamoorthy also indicated other significant organisational initiatives. Vysya Bank has taken a 26 per cent stake in ING Asset Management Company, the mutual fund arm of the Dutch financial services group. It has also signed an MOU with the ING group for entering the life insurance business. Interestingly, Vysya Bank already has a foreign equity partner. Bank Brussels Lambert (BBL) of Belgium currently holds 20 per cent of Vysya's equity and has two of its nominees on the board. The second ranking officer, next only to Mr. Ramamoorthy is from BBL. The board is being further broadbased. The Indian promoter group has around 25 per cent of the equity.

Where will the road-map lead the organisation? A proactive initiative, the new restructuring is expected to make the bank more profitable, competitive and streamlined. Along with the technology absorption the key ingredient for success will be in the related area of staff deployment. Will they manage the change?

Mr. Ramamoorthy feels that there will be opportunities for all in the new set-up. Vysya Bank currently has a staff strength of 5,802 and a network of 481 outlets (377 branches and 104 extension counters). Last year it made a net profit of Rs. 44.31 crores and achieved a capital adequacy of 12.24 per cent.