LUNCH WITH BS: K V Kamath

'You can't wish away the pressure cooker'

ICICI Bank's CEO says the only important thing to keep in mind while adding to the pressure in the vessel is to ensure that it doesn't explode!

Had he not gone to IIM Ahmedabad, Kundapur Vaman Kamath would have been happy managing his father's roofing tile business near his ancestral village, Kundapur, which is 100 km from Mangalore. During his four years at a local engineering school, Kamath helped run the family business for a few hours every day while his father, who became a Mayor of Mangalore later, was busy in local politics. But Kamath says the opportunity to study at India's premier B-school changed his world forever, writes Shyamal Majumdar.

The only link he still has with the business (it's run by his brother now) is his rare trips to Kundapur, just to relive the good old days. "The emerald tangle of palm and paddy that dots the Mangalore coastline and the fresh green colour of the ponds seem like a dream," ICICI's Bank's CEO & MD says, looking wistfully at the vacant plots outside that give you a rare sense of space in Mumbai.

We are at Emerald, the dining room on the 11th floor of the bank's imposing headquarters at the Bandra-Kurla complex. Taking a bite from the well laid-out salad, Kamath says he wanted to work in ICICI for two years before going back to his family business. But ICICI's all-pervasive mood of transformation had an instant rub-off effect, forcing him to change his career path.

The 6-foot-2-inch banker has been at ICICI since 1971, with a hiatus from 1988 to 1996, when he worked at the ADB, funding projects in other developing Asian nations. The experience helped him position the once state-owned ICICI to become the growth machine it is today. The expansion over the last decade has been breathtaking: from a project finance company to a universal bank with around 3,500 ATMs, 35,000 employees in 20 countries and over 25 million customers.

Kamath, a keen Formula 1 racing fan, says ICICI Bank has grown just at the right speed. "A higher speed would have been imprudent," he says, as the steward takes the cue from his quick nod and starts serving food at great speed. The starters "" grilled pomfret and aloo chaat "" taste much better than the standard five-star fare.

Keeping pace with the speed of growth has meant almost a pressure-cooker existence for key employees, but Kamath says that's inevitable. "When the economy is growing nearly 10 per cent, the financial services industry has to grow by 30 per cent. There is no point in wishing away the pressure cooker. One has to just make sure that it doesn't explode," he says with a smile. He is through with the steaming hot tomato soup even as I am just about halfway through and give up any hope of keeping pace with him.

He has a simple mantra on how to increase efficiency. "I have always followed the 80:20 rule, which is prioritising the vital few and trivial many," Kamath says. As the steward serves chicken, mixed vegetables, dosa and stuffed rotis, he explains that the rule essentially means that you focus 80 per cent of your time and energy on the 20 per cent of your work that is really important.

He started following this rule when he was a student at IIM. The Written Analysis and Communication course (WAC), a case study-based analysis, was an integral part of the course. While other students put a night-out the day before the assignment was due for submission, Kamath used to submit his papers on Tuesday for a Saturday deadline. "I was open to the trade-off: an A for an A+ is okay if you can utilise the time for doing other critical things," Kamath says. The chicken dish is left untouched and he seems to be interested in only the dosas.

Another favourite management mantra has been what he calls the 90-day rule, a phrase he picked up from a dotcom seminar in New York. The start-ups were taking products from concept to market in 90 days because if they didn't, somebody else would.

He talks about ICICI Ltd's ADR issue in 1999. The merchant bankers said it will take at least a year before ICICI could float the issue as it had to go in for US GAAP first. But Kamath gave them a 90-day deadline. He remembers how his team along with other external agencies worked round the clock in three shifts (the office kitchen was working 24x7) and managed to list within 74 days. Six months later, when ICICI Bank went in for an ADR, the new deadline was 74 days!

The key to success, Kamath says, is not allowing silos to grow. "I tell people that if I see a silo, I'm going to take a big stick to it. If you don't do that, silos grow, they get set in stone, and you find you can't do business anymore," he says.

The main course is over and the steward serves a generous amount of dessert: fresh fruits, sweets and ice-cream. Kamath says the key is technology efficiency in an environment where the average customer transaction and ticket size in one-tenth of that in the West. At a time when there were fewer than 100 ATMs in the whole country, ICICI Bank said it would roll out 1,000 ATMs in the first year. Looking back, Kamath says people thought they were mad. "Who would use them? How would we get connectivity? Nobody asks those questions any more."

To put this in context, five years ago, 90 per cent of all ICICI Bank transaction took place through branches. Today, it's less than 15 per cent. More than 20 per cent of all transactions are now done on the Net. Instruments that go directly to the back office for processing, without hitting a branch, account for about 10 per cent.

Even as the steward passes on a chit, indicating that it's time for his next meeting, Kamath orders coffee and says ICICI Bank is quite paranoid about what will happen next. After Net banking, the next challenge is cell phones. "Are they going to change the way customers interact? Will banks face a new challenge from payment systems that can be embedded in mobile phones and managed by the telephone companies? These are the questions my team is grappling with," he says.

Another big challenge "" and a topic clearly closest to his heart "" is banking for the unbanked. There are 600 million people in India with no banking facilities at all. They live in 600,000 villages spread over 600 districts. "Can you imagine what this market will do to banks' valuations and volume of business in future?" Kamath says, and gives a fascination account of the challenge ahead: new technology platforms at a fraction of the costs of the current technology and a new delivery architecture which can't be based on branches, but a partnership model.

The other challenge, and potentially a more critical one, is that the average age of Indians will be 27 years in another 10 years. "You need young minds to manage their aspirations. The average age of ICICI Bank employees is already around 27 years. The question we are asking ourselves is what should be the average age of people who will manage these 27-year olds. Should it be 35 or 45?" Kamath asks.

As we walk towards the lift, Kamath says the only way he relaxes is to take "family breaks" once in a while outside Mumbai. "There is so much to do even on weekends," he says. It seems Kundapur will have to wait a while before its famous child can make his next trip there.