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Global Trust Bank's Rewiring Act

The Hyderabad-based bank wakes up to the digital realities of today's financial world. The result: a radical re-orientation of strategy.

By E. Kumar Sharma

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GTB's Ramesh Gelli: Blue-sky thinkingLike most progressive companies, the Hyderabad-based Global Trust Bank (GTB) organises an annual retreat for its senior managers-a two-day brainstorming session that decides the bank's strategy. Those who attended the 1999 edition of the off-site meet-at an unlikely venture, the sprawling Ramoji Film City in Hyderabad-claim it, the sixth of its kind, was the most radical retreat of them all. No single imperative emerged from the exercise: what did emerge was a feeling that everything-structures, strategies, processes-needed to change, and change radically. In many ways, the moment was epiphanic: it was time, GTB's managers realised, for their bank's story to take a surprising turn, much like the plot of one of Ramoji Rao's Telugu melodramas.

Which is why Ramesh Gelli's decision to quit as CEO of the group, taken just over a year after the Ramoji-retreat, wasn't altogether unexpected. The 54-year-old chairman-he retains that post-who can easily be mistaken for an academic (it must be those glasses) intends to restrict the ambit of his responsibilities to what he terms ''seeing the bank in a bigger picture''. Gelli is candid about the changes happening at GTB: ''The banking business has undergone some fundamental shifts that call for different business practices. We are working on creating an organisation that can respond to these.''

GTB's tech-imperative

The Three Phases of GTB's Growth

Phase I: 1994-1996
Objective: to build scale so as to make investments in products and technology viable
Results: deposits grew to Rs 1,300 crore and loans to Rs 1,000 crore by March 1996
Phase II: 1996-2000
Objective: to create a strong base in terms of branch-network and number of customers
Results; number of branches grew from 15 in 1996, to 73 in 2000; accounts, from 1 lakh to 4 lakh
Phase III: 2000
Objective: to leverage technology to grow existing businesses and tap new ones

Change GTB must. For, despite being ranked 14th in the 1999 version of the BT-KPMG survey of the best banks, GTB's spread (the difference between the rate at which it mobilises funds and deploys them) is, at 2.42 per cent, significantly below that of some of the others, like HDFC Bank's 4.74 per cent. Its competitors, such as HDFC Bank and ICICI Bank, are widely perceived as being far more ready to embrace change and the opportunities that come with it. Agrees a banking analyst at a leading FII: ''GTB does not have the first-mover advantage. It also does not have a strong parentage.''

And GTB's deposits of Rs 6,198 crore, total income of Rs 879 crore (March 31, 2000), and 76 branches a make it an ideal mid-sized catch for a predator seeking to consolidate its operations. Indeed, that could well explain the sudden interest in the company's scrip, which touched a low of Rs 48 on August 22, 2000, before starting a rather steep upward climb to Rs 95.15 on September 8, 2000.

The bank, predictably, plays down the possibility that it could figure in someone's sights. Says Sridhar Subasri, 46, Executive Director, GTB: ''To me, this does not seem likely.'' Instead, Gelli talks about the rash of initiatives that the bank has unveiled since January. First, in February, it hired hr consulting firm Noble & Hewitt to restructure its organisation. The objectives: to make every department more customer-focused; to get the front-end processes to emphasise sales and marketing; to get the back-end to focus on centralised processing; and to foster the discipline of specialisation among branches.

Then, in April, the bank hired infotech services firm MindTree Consulting to help it finalise its e-space strategy (GTB's e-banking service was launched in December, 1999, and now boasts a customer-base of 15,000). In May, it forged alliances with horizontal portal Indiainfo, and personal investment vortals Sharekhan and Indiainfoline, becoming, in effect, a payment gateway for transactions on these sites.

In August, it forged two more alliances, this time with Tata Cellular and BPL Mobile, to offer mobile banking facilities in Andhra Pradesh and Mumbai. And its future plans include: alliances with more dot.coms and mobile phone companies, and a soon-to-be-launched clutch of on-line services-like cash-flow management-targeting corporates. ''We see electronic banking as a common thread that will run across the business,'' says Gelli.

Still, perceptions about the company losing out to fleet-footed rivals remain. Avers Sangha Mitra, 25, Portfolio Adviser, SSKI: ''The bank has sustained a growth rate of over 35 per cent for the last four years-mainly with its plain-vanilla banking. This is good, but it needs to catch up on technology.''

Gelli demurs: ''We have constantly looked at (technology-created) opportunities and their viability. Often, it does not pay to be the first in technology implementation. ''Indeed if Gelli is to be believed, GTB has stuck to the script of the business strategy it wrote for itself in 1994 (See The Three Phases Of GTB's Growth).

GTB's diversification imperative

In keeping with this strategy, now, the bank claims, is the best time to invest in technology. Like the 350 ATMs, and the bank's e-initiatives. ''We are confident that these will increase our customer base from 400,000 to 1 million by March, 2002, without adding significantly to our 900-odd staff,'' says P.C. Narayan, 45, the bank's Executive Vice-President (it and Retail). GTB's competition has the same idea: ICICI Bank proposes to double the number of its ATMs to 500 by March, 2001.

To further its technology quotient, GTB plans to identify a partner to which it can sell a 20 per cent stake, in return for what Gelli terms ''value-added support in terms of technology''. And, it hopes that its tech onslaught and diversification into areas like capital market infrastructure will help balance its revenue pie (See Now And Then: GTB's Revenue Split).

Only, others have an eye on these markets. Says H. Srikrishnan, 38, Head (Transactional Banking & Operations), HDFC: ''We have identified corporate banking, retail, treasury operations, and capital market infrastructure, and are e-enabling in each area.'' GTB's efforts to broad-base its revenues also include proposed extensions into the distribution of mutual funds and insurance products, an entry into insurance, and venture finance. Says Gelli: ''Our goal is to emerge as a provider of the entire range of financial products.''

Having articulated the bank's objective, Gelli must now get down to the actual task of achieving it in an intensely competitive market. One that will require GTB to think, and act, global.


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