Union Bank of India is aiming to become largest public sector bank in domestic operations after State Bank of India by 2020, which is its centenary year, said Mr M. V. Nair , in an interview with Business Line just before he retired on March 31. With this in mind, the bank has started taking steps like wooing the Gen Y customer through its remodelled branches and technology offerings, as also tapping the unbanked population.
Excerpts from the interview:
Is there any project that was initiated but did not take off during your tenure?
We had deployed a ‘lending automation solution.' We invested two years of time on this software. It offered the entire package of solutions — origination, credit analysis, monitoring and rating. But it was not successful.
The way we had envisaged it is that a corporate can upload his entire data directly and the software would do the analysis. Maybe, somewhere we erred. For small accounts like agriculture, one has to feed the whole data. That takes more than an hour and there are a large number of such accounts. Neither the bank staff nor the farmer who comes to borrow has that kind of time.
Recruitment: While today we have one of the best productivity ratios, looking back, I would have approached recruitment differently. We had a continuous focus on productivity. When I look back, I would have recruited more people every year and staffed them in branches. We did recruit reasonably. We recruited 10,000 in the last six years. But if I go back in time and start, I would have recruited more and exploited the potential.
Is there anything you wanted to do but could not?
Until I took over as CMD, Union Bank did not have any foreign branches. The plan was to have branches in 10 centres abroad by 2012. But that could not happen because the approval process from overseas regulators is time-consuming.
Second is with regard to subsidiaries. After we set up our first joint venture subsidiary for insurance, we also planned for a mutual fund subsidiary, to be followed by a subsidiary for wealth management. Our Data warehousing, Customer Relationship Management and remodelled branches are all oriented towards increasing sales.
We wanted to launch the wealth management for high net worth individuals by March 2012. But it is slightly behind schedule. We had opened up discussion with largest wealth manager in the world two years back. But then issues like global slowdown and economic downturn cropped up. There was also the issue of increase in NPAs. We had to slow down. These were some of the things we did not anticipate.
What is the long-term vision for Union Bank?
All the capabilities we have built are in keeping with the vision that we set for ourselves. By 2012 our vision was to achieve customer excellence. We want to be the best in customer experience. By 2020 we want to become the largest bank in domestic operations after SBI, because we enter our centenary year.
How would you say the Indian banking industry has changed over the years?
So much has changed in the last 40 years. The way banking is carried out, the profile of the customer has changed. If I had joined the industry today I would have considered myself very fortunate because the next 30 years are going to be the most happening for all banks.
India is getting into a super cycle of growth. When you get into a super cycle, growth happens for the entire generation. Primarily, it is driven by demographics and reforms. When an economy goes through a super cycle, one of its sub cycles is banking. So, for banking it is the best of times. In the next 10 years, retail banking is expected to grow 10 times.
The number of people getting added to the middle income group is about 180 million. So, about 350 million NextGen customers are getting added. As of now the entire industry handles only 400 million customers. If a bank gets its act together, Gen Y customers will have a wonderful time. And we have focused exactly on this. We have built channels and done recruitment keeping exactly this in mind.
Then, there is another large group joining. That is the unbanked group. It's an investment now. Going forward it will be a great opportunity. When we started acquiring them (unbanked customers), we thought it would be a losing proposition for five years. But technology changed that.
With Banking Correspondents and Aadhar, the acquisition cost has come down. So these accounts are becoming profitable faster than we expected.
What are your post-retirement plans?
I will be connected to the financial sector. I will be based in Mumbai. The financial sector is my forte and transformation is my strength. At the same time, I would like to share my experience with the young generation and organisations. I might also take up something on the teaching side.
(The first part of the interview with Mr M. V. Nair appeared on March 26.)