State Bank of India is ramping up its retail banking
offering in the UK with plans to grow its branch network, roll out
a mobile banking service and grow its product range. Its latest
product initiative is the launch of its first mortgage product for
the UK market. Meghna Mukerjee reports
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State Bank
of India (SBI) has entered the UK buy to let mortgage market with
the soft launch of a product that offers sums between £50,000
($77,315) and £1.5m to professional landlords and customers owning
second homes.
SBI is also set to roll out a
mobile-banking service in the UK by year end.
The moves comes as part of SBI’s
plans to increase the size of its UK retail division. Another key
feature of SBI’s ambitions for the UK market is to widen its appeal
beyond just the 1m people of Indian origin in the UK.
More product roll-outs can be
expected by early 2012, including the launch of a retail banking
mortgages.
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By GlobalDataFor its buy-to-let product, SBI
plans to offer loans for a period of five to 25 years with a
loan-to-value ratio of 60%, at base rate plus 3.99%.
The product has a £150 booking fee,
£1,990 arrangement fee, and no early repayment charge.
“We plan a full-scale launch of
this mortgage offer for our customers over winter,” Lax Seshan,
head of product and marketing for SBI in the UK, told
RBI.
Seshan was speaking at a seminar
highlighting the changing face of Indian banking sector in the UK,
held at the House of Commons by the Indo European Business
Forum.
SBI has so far “followed Indians
and Indian businesses” but, having regard to the current market
situation, especially with new regulations announced by the
Independent Commission on Banking, SBI believes it is important to
offer products that target non-Indian UK residents as well.
“We have thousands of non-Indian
customers but we will launch more simple lending and savings
products for them in the next few months to increase the numbers,”
added Seshan.
Regarding the new m-banking
service, Rajnish Kumar, regional head for SBI in the UK, told
RBI: “SBI has already launched m-banking in a big way in
India and we plan to offer it to our UK customers in the next
couple of months.”
More products are in the pipeline
and, according to Kumar, the “policy framework for these new
products is ready”.
The technical and organisational
side, however, still need work.
“These things require time and
money. We want to concentrate on a single product at a time,” said
Kumar.
In
May, Deepak Ahuja, head of consumer banking and wealth at SBI’s UK
operation, told RBI that high-end, high-value wealth
products will form the basis of SBI’s focus on growing its share of
the mass-affluent sector.
“Such products are in the pipeline
and now at the design stage,” said Ahuja.
SBI, India’s largest lender, does
not want to compete with the major UK high street banks, said
Kumar.
He also stressed that at a time
when customers are being increasingly tempted to change their main
current accounts, SBI’s advantage is their great customer service
and relationship based banking.
“Now more than ever it is important
to provide your customers with personalised attention and we are
concentrating on constantly improving our customer service across
branches,” said Kumar.
SBI launched two new branches – in
Wolverhampton and Coventry – in September and will think of further
branch expansion when the need arises, said Kumar.
The branch openings complemented
the launch of SBI’s branch in East Ham, London in May.
The three branch openings this year
increased the size of SBI’s UK network to 10 outlets.
In the middle of last year, SBI revamped and relaunched its UK
website; by the middle of this year, it had tripled its number of
internet savings accounts.
