Bank of Baroda answers RBI Governor’s clarion call; looks to revamp operations amid coronavirus

Bank of Baroda (BoB) has decided to revamp its operating model, right from the way it plans its branch channel to the services it offers to corporates. It intends to capitalise on its presence in global centres to increase its share in India’s international trade and relook its organisational structure in line with its digital lending initiative. BoB plans to reduce its cost-income ratio by at least 5-10% over two years and increase its footprint in the micro-lending segment. It also wants to establish a work-from-home policy and enhance the value of its subsidiaries.

The country’s third-largest public-sector bank (PSB) by assets is now looking for consultants who will help it carry out this comprehensive overhaul of its business processes. In a request for proposal (RFP) dated August 28, BoB said, “While the impact of Covid-19 crisis is unprecedented, it provides a unique opportunity for banks to fundamentally re-set the operating model and ways of working to ensure long term sustainability and preparedness for rebound and growth.”

BoB’s strategy is in line with Reserve Bank of India (RBI) governor Shaktikanta Das’s recent statement on the need for banks to reorient themselves in the wake of Covid. The areas of work, he had listed out, included governance, risk management, new business segments and an alignment with global value chains. “…a complete relook at the business strategy and orientation is the immediate need of the hour,” Das had said.

Referring to its recent amalgamation with Dena Bank and Vijaya Bank, BoB said it is now in a good position to draw the synergies arising out of it. It can leverage its existing capabilities and scale to service its current customers across the three erstwhile entities and also reach out to a wider set of customers. The lender has created a digital lending department to digitise customer journeys and provide faster and customised loans to customers.

Simultaneously, it is also strengthening its digital delivery channels to provide seamless services to its customers. One way of doing this will be to position the bank’s mobile app as the centrepiece for customer transactions and the primary delivery channel for a majority of products and services. Other key priority areas for the bank include a revamp of its corporate banking, international banking and other businesses, expanding its reach through alternate formats, leveraging analytics to drive customised offerings for customers and adopting new ways of working.

The lender said that during the pandemic, the need to shift working from centralised and large administrative locations to distributed administration and operations became apparent.

“BoB was able to have the bank fully operational albeit at a fraction of manpower coming to offices, keeping safety of its employees paramount. This has raised interesting possibilities on both need for right manpower and location of this manpower,” the bank said in the RFP. Further, there is a need to infuse many new capabilities and “many more hands” required to take BoB to serve over a hundred million existing and future customers.

The consultant will be required to help the bank reimagine the branch through a branch transformation programme, which will include centralisation, digitisation and simplification. They will also help identify people freed from branches to be moved into sales and revenue-generating roles. In the corporate banking segment, BoB plans to capture the entire corporate value chain, including areas such as cash management and advisory. It will also improve its monitoring capabilities, developing tools and dashboards to monitor its corporate portfolio for risk adjusted returns, compliance and early-warning signals on a real-time basis. The international banking group (IBG) will be positioned as a strategic business unit.

In micro, small and medium enterprises (MSME) lending, BoB will explore partnerships and alliances with a specific focus on co-lending. It will fine-tune and redesign strategies for enhancing commercial vehicle/ construction equipment (CV/CE) lending. The bank will also redesign its approach to increase penetration in the gold loans, tractor loans and agro-industries categories, apart from enhancing its reach in micro-lending.

BoB will analyse the present position in respect of its domestic subsidiaries and recommend measures for unlocking value in all six — BOBCaps, Baroda Financial Services, Baroda AMC, Baroda Global Shared Services, Baroda Sun Technologies and Nainital Bank.

The bank will seek the consultant’s help in designing different work-from-home models for various job roles, including security protocol, productivity and output matrices, work from home kit etc. It will also be taking inputs for new products to improve the bank’s net interest margins (NIMs) and spread the risks. This will include recommendations on area-specific products and schemes.