ICICI BANK: CEO K.V. Kamath is convinced that speed of rollout is key to the bank's success

In what must surely rank as the banking industry's equivalent of participating in back-to-back triathlons, on September 26 this year HDFC Bank opened five branches for business across three states, Gujarat, Haryana, and Delhi. In 2002, the bank opened 80 branches for business in some 202 working days. India's other homegrown retail banking powerhouse, ICICI Bank, isn't an organisation to be left behind. By the end of this year, ICICI Bank would have expanded its network by around 100 branches. For the record, in one day in March, the bank's ATM network grew by 50 to 1,675; all told, in 2002-03, HDFC Bank added 1.1 million retail customers to its tally; ICICI Bank, 1 million. And this year, both plan to do more.

If there's anything more fascinating than the growth story of the two banks, it's the sheer mathematics of it: both HDFC Bank and ICICI Bank are expanding their network at the rate of a branch every two-and-a-half days. Pace, the two banks seem to have realised, is a critical part of a successful retail banking strategy. Indeed, ICICI Bank CEO K.V. Kamath is fond of remarking that the speed of rollout (or rollout capital) is one of the three Cs of banking; the other two are human capital and technology capital. "Earlier, it used to take us 14-15 days to open a branch after the physical infrastructure was ready," says C.N. Ram, the head of information technology at HDFC Bank. "Now it takes just five."

It's The Technology

The secret of the rapid rollouts is, literally, a page away. The graphic on page 166 is what engineers call a Gantt Chart, and it is more common on the shop-floor than a bank. ICICI Bank, however, has one such drawn up for each branch it opens. And at both HDFC Bank and ICICI Bank, everything from selecting the location of the branch to the décor to the technology-infrastructure is standardised, a fact that probably explains why an ICICI Bank branch at Prabhadevi in Mumbai, looks pretty much similar to one in Manipal or Dubai.

HDFC BANK: Last year it opened 80 branches and added 1.1 million retail customers to its account

The first step in opening a branch is to acquire an RBI licence. Licence obtained, three departments-retail infrastructure, hr, and retail technology-get on to the job. According to O.P. Srivastav, the head of retail infrastructure at ICICI Bank, it takes about 30 days for a bank to put the physical infrastructure in place. The process, as evident from the Gantt Chart, is mapped out extensively. "If the physical component is excluded, we could open a branch in less than five days," says Pravir Vohra, Head, Retail Technology, ICICI Bank.

Once the physical infrastructure is ready, the techies move in and take over. A basic local area network is installed, and PCs acquired for the six to eight people who are to man the branch. "The installation of the PCs and the server at a branch should take less than a day," says HDFC Bank's Ram. "The server is populated with the appropriate software offsite (to save time)."

Technology is the real secret behind the rapid retail rollout of HDFC Bank and ICICI Bank. None of the branches of these banks has a back-end; the branches merely deal with the customers. Data from all branches of HDFC Bank, for instance, converges on a zonal hub, and is then channelled to the data centre at Chandivili, a Mumbai-suburb. In effect, much like consumer product companies that produce at one or more locations and then distribute their offerings across the nation, the banks process information centrally, but serve customers-some of them have never seen the inside of a branch; they interact with the bank over phone, through ATMs and drop boxes, and the internet-wherever they wish to be served.

This centralised model allows the two banks to add user ids for employees in the new branch and codes for transactions even before the branch is ready for business; most banking software allows users to create virtual branches on the go and pipe in real transactions when the branch opens for business. The technology is scalable enough to make the opening of a new branch a non-event. "Many times, I do not even know we are opening a branch," laughs Vohra. HDFC Bank and ICICI Bank also use business process management software such as Staffware to standardise processes, render them more efficient, cut costs, and improve quality of service. That, though, is another story. For the moment retail banking's power-twins are busy figuring out ways to expand their network. As HDFC Bank's Ram puts it, "We keep on asking, 'Can we do it faster?'"

ISO Country
With an estimated 8,000 ISO certifications, India is it.

Redefining fabric care: White Tiger's Rajeev Sekhri at his ultra-modern ISO 9001 laundry and dry cleaning unit at Noida

The seventeen-coach Bhopal express that connects Delhi's Hazrat Nizamuddin station with Bhopal's Habibganj one, is a talking point of sorts in this quiet central Indian city. So, it was only in the fitness of things that the country's first ISO 9001:2000 certified train (yes, you read that right) was rechristened Shaan-e-Bhopal Express (Pride of Bhopal) in January this year. Later in July Bhopal's Divisional Railway Manager Subodh Jain managed a grand double for the city's denizens by obtaining a similar certification for the Habibganj railway station.

Delhi, a few hundred kilometres north of Bhopal, is home to White Tiger, a laundry and dry cleaning chain with a similar USP: it's the country's first ISO 9001 certified laundry. White Tiger's 42,000 square feet laundry plant in Noida, near Delhi, is a miracle of modern science. Steam presses, mechanised processes that keep human contact to the minimum, washed, pressed clothes, cellophane wrapped and delivered, the factory boasts the works.

The obsession with the ISO certification is understandable in a country where clutter is a way of life. Down south, in Chennai, for instance, engineering colleges, jewellers, and astrologers abound. And they evoke the same levels of skepticism. Advertising an ISO not only cuts ice with the customers, but also helps practitioners of some much-maligned trades win some trust. (See The Certified Astrologer, BT, October 12, 2003).

By the Geneva-based International Organization of Standardization's (it is the body that lays down the guidelines for certifications) last count (in December 2002), India is home to more than 8,000 organisations that have received ISO certifications; 2,300 were handed out in 2002 alone. The ISO rush started in the mid 1990s when Europe made the quality standard mandatory for exports from countries such as India. The Indian government instituted a subsidy of Rs 75,000 for small scale industrial units that wanted to get themselves audited for the certificate. In India, the Bureau of Indian Standards (BIS) is the primary body that carries out the certifications. But there are estimated to be around 40 other private agencies that do it as well. "The smaller certifying outfits are often corrupt, and incompetent to measure performance. Today, one can get an ISO certification for as little as Rs 5,000," says N.S. Singhal, a management systems consultant and a crusader for tighter regulation on certifications.

"ISO 9000 is just a technological tide, just as TQM (Total Quality Management) was. We require more verified methods suited to developing economies to measure performance and perception. Even internationally the craze for this certification is diminishing," says Goutam Dutta, Professor and Chairman of Production and Quantitative Methods Area at IIM-Ahmedabad.

Theoretically, anyone providing any service or producing any product can receive an ISO 9000. There needs to be proper documentation of the consistency of processes and an assurance of constant improvement based on customer feedback.

So what next? ISO certified plumbers, cab drivers, maybe even journalists!

-T.R. Vivek