The Indian prime minister’s initiative to get India’s underbanked banked is indicative of the rude health India’s banking sector is in and how India’s banks have won the trust of their consumers since industry privatisation in 1991, writes Anna Milne
Global market research company Millward Brown has recently carried out a study, Brandz, to quantify the value of Indian brands and has compiled a list of the top 50. Banks occupy first, second and third positions, and represent almost a quarter of the top 50 (20%). Banks also represent 35.8% of the total brand value of the top 50. This is impressive stuff, considering the lamentable state of much of the rest of the world’s banks’ reputation amongst consumers. The Brandz study was carried out in Brazil and China also and financial institutions didn’t fare nearly as well.
Go deeper with GlobalData
The PM’s launch led to 15m accounts being opened on day one. And it can grow a great deal further, especially with PM Narendra Modi latest drive. So, yes, it would be surprising if banks didn’t top the list. However, what they’ve done and how they’ve done it is interesting. They have not just ridden an inevitable wave of greed; they have carefully tethered their rise to the core values of Indian people, building a banking culture based on trust and serving the aspirations of the young, not the fantasies of foolhardy executives.
Trust is the lynchpin to an Indian bank’s success, according to Millward Brown’s managing director for South Asia region, Prasun Basu. Pre-1991, the public sector banks were pillars of trust and this legacy is something that the newer, private banks have had to work like stink to uphold, or else face failure.
While Indian private sector banks are more about customer orientation, customer service, micro segmentation, new age products and alternative channels, if they don’t have trust underpinning the whole operation they may as well forget it.
So what’s the secret of this brand success? To achieve meaningful differentiation, build both scale and depth, says Basu. This dual focus is particularly relevant in India because of the diversity of the country. Building scale requires serving the particular interests and tastes of many different consumer segments. For international brands, India should be treated as Europe, a large geography with states that are unified yet distinctive. Depth is about creating an emotional connection or affinity with the brand, for example family values and trust. For Indian brands, achieving both scale and depth can help sharpen the competencies necessary for overseas expansion.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataHDFC Bank, number one in the top 50, and established in 1994, has done a great job of both. It has managed to combine innovation and forward-looking customer service oriented banking with a very high trust quotient. HDFC has set up a network of mini branches to serve the rural communities. The running costs are not high and with a small Indian village containing easily 20-30,000 people, this is massively beneficial, for both village and bank alike. But it has the trust factor, without which it is nothing. It does help that HDFC is an off-shoot of a large old housing development and finance corporation so when it branched off as a bank, excuse the pun, it brought with it the old brand value legacy.
Banks globally could learn a lesson or two from all this, not least in growing their business around trust and respect for the consumer but in being realistic and holistic. New banks should certainly take note; scale without depth just amounts to greed.
