Wednesday, January 9, 2013

ICICI Bank fire-fighting case study

It was October 2008 when ICICI Bank stood accused of having overleveraged its exposure to the devastating sub-prime crisis, consequently endangering its very existence. Today, when the worst of the crisis is over, has the brand regained the hallowed position it held before the crisis? 4Ps B&M gleans out four critical crisis management lessons from the ICICI Bank fire-fighting case study

Lesson #2: Lose the aggression in the branding message; show the human face
Says Namita Chhetri, President, Indian Council for Market Research (ICMR), “Actually, it wasn’t just about the quantity of money invested by ICICI Bank but the quality of the branding message. The bank worked on a new branding strategy altogether. Right after the hurdle, the bank was quick enough to tweak its communication strategies. It moved away from its arrogant communiqué of ‘Lead life on your terms’ to the ‘Power of belief’.” The inherent softness in the bank’s communication was evident in their positioning campaigns post the crisis. The bank moved the full mile in ensuring that the civil society appreciated the bank’s efforts in being transparent about their operations.

Lesson #3: Increase and internalise live customer touchpoints; at least during the crisis
The biggest turning point for the bank has been its change in focus on the operations front. The bank, which once discouraged its customers from coming to its branches and promoted the use of ATMs, since the crisis has continuously been persuading customers to visit its branches. The aim is clearly to create a direct contact between the bank and the customers, which will not only help create a better relationship between the two, but also strengthen customer faith. Giving this careful consideration, the bank has even reduced its huge army of direct selling agents by almost 70% with a target of zero reliance on any outsourcing for business acquisition and collections. All this has certainly helped the bank gain some ground in the eyes of the customers, most of who have in the past, experienced the irrational behaviour of external agents.

Lesson #4: Follow up the message with intent; and publicise it
Interestingly, it was around this time (on May 1, 2009) when Chanda Kochhar took up the responsibility as MD & CEO of ICICI Bank. Immediately after taking charge, she implemented a simple 4Cs strategy – namely, capital conservation, cost efficiency, CASA (current accounts and savings accounts) and credit quality. While the so-called strategy was publicised to gain brownie points from the analysts’ population, there was actual work too done in this regard. The result: While the profitability of bank improved from Rs.37.58 billion in FY2009 to Rs.51.51 billion in FY2011, net NPA ratio went done from around 2% in March 2009 to 0.83% in December 2011. Even CASA deposits as a percentage of total deposits increased significantly, from 28.7% on March 31, 2009 to 43.6% as on December 31, 2011.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
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