Banking on people

P K Gupta

How United Bank of India's new HR initiatives helped it gain one million new accounts?

There's a lot of baggage attached to being a nationalised bank "" you are accused of incompetent customer service, low employee motivation and inertia. Then along comes the Verma Committee and labels you one of the weakest public sector banks.

It would be enough for the most hardened employees to throw in the towel right there. The Kolkata-based United Bank of India, on the other hand, decided to focus on its people. The result: over a period of 15 months, it generated one million new accounts. Here's how it happened.

Figure it out
In 1997, United Bank's accumulated losses were Rs 1,434 crore. It got rid of the "weak bank" tag in 2002, after posting profits from 1998 onwards, but this was primarily from the money generated by selling government securities.

According to a 1999 report by the Reserve Bank of India, the reasons for United Bank's poor performance were weaknesses in the areas of operations, HR and management (What was left?). In 2004, Business Standard Research Bureau's ranking placed United Bank squarely last in the pack, ranking it 23rd.

Then, in March 2006, United Bank presented a clean balance sheet to a packed press conference in Kolkata. Business had crossed Rs 45,000 crore (up from Rs 37,187 crore in 2004-05) and the bank's gross non-performing assets had dropped to 4.66 per cent from 6.14 per cent.

The credit-deposit ratio improved from 46.5 per cent to 54.6 per cent. And, for the first time in 14 years, the bank paid a dividend of Rs 46 crore to the government.

As performance improved, United Bank climbed the ladder in Business Standard Research Bureau's ranking as well "" it was in10th place in 2005.

Last month, announcing the results for April-December 2005-06 "" business stood at Rs 54,190 crore "" P K Gupta, chairman and managing director, United Bank of India, announced that the bank is targeting a business of Rs 100,000 crore by March 2009.

Getting rid of the losses was the easy part. As mentioned above, sales of government securities ensured that the bank registered profits, but the money was being used to balance earlier losses: accumulated losses of Rs 14,200 crore in 1997 came down to Rs 278 crore by March 2005.

That's when the bank requested the government to set off the losses against its capital. The government agreed "" this escape route of nationalized banks has been used in the past by Dena Bank and UCO Bank as well. "One could wish the bank had exercised this option back in 1997 itself," rues Gupta now.

Room for growth
The real challenge for United Bank, though, was with its people. With over 18,000 people and 1,310 branches, it is one of the most overstaffed banks in the country. The issue wasn't one of laying them off or even downsizing "" not really an option in trade union West Bengal, in any case.

Rather, it was to energise them to go seeking fresh business. The track record hadn't been too encouraging, after all: from Rs 22,300 crore in 2000, business had grown just Rs 5,000 crore over the next two years, when the bank mobilised Rs 27,100 crore. Compare that with State Bank of India: deposits grew from Rs 196,821 crore to Rs 270,560 crore over the same period. Things clearly needed to change. And fast.

"United Bank employees needed a change of attitude. From being tight-fisted bankers waiting for customers, they needed to switch to a feet-on-street mindset," says Prashant Mishra, professor of marketing, Indian Institute of Management, Calcutta, who was involved with training the bank's staff.

Mission Million or Mission Impossible?

When Gupta took over as CMD of United Bank in May 2005, he made it clear at his first meetings with regional managers itself that he would be going after the growth. "To increase our business, we need more customers," he would emphasise.

Remember, United Bank isn't "" or rather, wasn't "" a bank used to the fast life. Known as the "tea bank", it had gotten used to the slow pace of business in East India, as generated by the tea estates and managing agency houses. And then came Mission One Million.

In June 2005, Gupta and his team announced the bank's new goal: one million new savings accounts to be mobilised in the next 12 months. As officers across the bank's 1,300-odd branches threw up their arms in despair, the managing team broke the seemingly-unattainable goal into more manageable targets.

In 2005, United Bank had opened 300,000 new accounts "" that meant less than one account a day for each branch. A million accounts, then, would translate into just three or four new accounts everyday for each bank (making allowances for holidays and the like). Now, that seemed more do-able.

Getting started
Even as Mission One Million kicked off, the bank decided to revitalise its tie-ups with Tata AIG and Bajaj Allianz.

Although the associations had been created a couple of years earlier to distribute the insurance companies' products through the bank, little had really been accomplished. United Bank's board then put forward a proposal to the insurance companies "" would they train 1,000 bank employees in the finer details of marketing financial products?

Tata AIG and Bajaj Allianz agreed to conduct week-long sessions each, and the bank created a marketing division "" a first "" under a general manager, to focus on the new products in its portfolio.

Meanwhile, the bank seemed to have acquired a taste for training "" after all, points out Gupta, bank employees were reacting to it very favourably. This time, the bank turned to academia. Two hundred high-performing managers were identified from the most efficient branches (the ones generating the most business).

They were then sent to the Indian Institute of Management, Calcutta, to brush up on market planning, identifying segments, invigorating sales teams and customer relationship management. "The bank realised that it was time for it to realign practices with current demands," points out Mishra.

Which meant bank employees also needed to go back to school for lessons on customer interaction. This time, United Bank turned to rather more unconventional sources. It brought in trainers from leading hotel management institutes to educate its frontline staff on the correct way of greeting customers, dealing discreetly with trouble-makers, and being pro-active with addressing complains.

In addition, the Ramakrishna Mission sent over instructors for introductory lessons on yoga and meditation. "You have to maintain adequate pressure on your people to get them to perform. But never forget that the devil lies in the details," says Gupta.

The CMD realised that first-hand when he read the results of a National Institute of Bank Management (NIBM) study, which had been underway at the time he took charge.

According to the report, most employees of United Bank did not have even basic knowledge about the bank, its management or the products it offered. Of course, this isn't an issue confronting only United Bank "" "all public sector bank employees need to be reskilled and retrained," points out Ananda Bhoumik, senior director, Fitch Securities. Still, it was a problem that needed to be addressed and solved immediately.

The result was a "know your bank" test, which has now become a regular twice-yearly exercise. As a form of recognition "" and to drive participation "" those who scored more than 60 per cent were given a cash prize of Rs 2,000, as well as a signed certificate from the CMD.

Gupta claims that what started as competition has now become "a natural exercise in staying abreast of changes in the organisation".

There was another welcome fallout of the NIBM study results: it drove home to United Bank the need for constant communication with its people. The bank, therefore, launched more than five intra-department newsletters, which not only tell the employees what is happening in their department at other branches, but also is a medium of communication for top management.

The regular newsletters mark a distinct change in communication style at United Bank "" earlier, interaction was limited to announcements of changes in management.

Reaching out
How did all these initiatives help Mission One Million? Gupta and Mishra both point out that United Bank employees now have a distinct bias towards customers "" and are more welcoming of new business than before. The results of the training programmes, enhanced communication and empowering initiatives were visible almost immediately.

While the Hooghly region organised 100 customer meets and 12 road shows, apart from local advertising, the Ernakulam branch in Kerala celebrated the bank's nationalisation day by organising a deposit mobilisation camp.

Door-to-door campaigns and camps during important festivals such as Chhath and Sankranti were held in Bihar, while the Kolkata (north) region invited local footballers such as Biswajit Bhattacharjee and Bikas Panji as guests of honour at deposit camps.

Next came a new accounts monitoring system for the head office to get daily reports from each branch, something that was not done earlier. The reports were shared among regional heads and monthly "report cards" were printed and distributed to all employees, which showed everything from the number of new accounts, the regions and branches that fared the best, down to star performers of the month.

"It was a way of recognising excellence and making the process transparent," says Gupta. Here too, United Bank took note of the need for recognition "" each month, the five top branches were awarded Rs 5,000 each, to be spent by consensus (choices varied from music systems to family picnics).

Customer management experts point out that the biggest danger in acquiring new customers is to forget existing ones. With a nationalised bank, the challenge of retaining customers is even greater.

Accordingly, United Bank made this a priority area within the Mission One Million goal "" it has devised 17 programmes for clerks and six for peons and messengers, all of which focus on customer management.

Among the areas covered were issues like communication, team work and customer service. Six batches of 200 people each have already completed the training and management consultant and trainer S M Devdason claims the difference in attitude is already being noticed in several branches.

Perhaps the most noteworthy change is in the role of the office boy: new uniforms, new attitude (thanks to the training) and now, new designation. The lowly peon is now a United Mitra (friend). The office "boys" (some of whom have been with the bank for decades) are being educated on the importance of their role: as frontline staff, they are often the first point of contact with the customer and may well help define the customer's entire experience and opinion of the bank and its services.

"We are trying to make them look beyond their job profile and realise how important their role is," points out Gupta.

Of course, it's not been too easy. There has been some resistance from employees and breaking established practices has been tough at times. Devadason points out, for instance, that many managers are still reluctant to conduct feedback meetings with the staff after a training session "" although it is mandatory to do so. "Attitudes take time to change," he says.

Still, the results made the effort worthwhile. In July 2006, United Bank had a million new savings accounts "" it had generated Rs 500 crore worth of low-cost deposits. Of course, it was three months past the deadline, but Gupta isn't complaining. "This was Mission Impossible to begin with. So making it happen in an extra 90 days is good enough."

QUICKBITE
Miles to go....

Where financial institutions are into the next phases of IT upgradation, United Bank lags behind in basic facilities such as tele-banking, ATMs, debit cards and mobile banking. While its branches are computerised, they aren't networked. Now, core banking solutions are planned, with Ernst & Young being roped in as consultant for the project.

Also, the bank will have to step into geographies that have been neglected. Although Gupta is positive United Bank will further penetrate parts of India other than the east and the north-east "" where it has 75 per cent of its branches "" not much is being done in terms of visibility.

Although there are ads in newspapers in the Hindi-speaking belt, the effort is miniscule. Even in East India, the bank has just the odd ad on Bangla TV channels, which fail to grab attention.