CASE STUDY OF

AXIS BANKBanking on Technology and Market Segments for Competitive Space

Introduction

AXIS bank (formerly UTI Bank) is the first new

generation private sector bank to be established

in India under the overall reform programme

initiated by the govt. of India in 1991.

The bank promoted by Unit Trust of India, the

largest mutual fund in India, holding 87% equity.

Axis bank’s first capital raising post – inception

was in 1998through public offering.

The present shareholding pattern is :

Administrator of the

specified undertaking

of the AXIS

27.33%

LIC 10.34%

GIIC & four PSU

Insurance companies

5.28%

Non – promoters’

Holding

16.96%

Foreign Shareholding 40.09%

AXIS Bank performance in 2008 The bank has developed a branch network

which is built on customer convenience &

service , helping it in acquisition of low cost

retail deposits, retail assets, etc.

As on march 31, 2008, bank had 651 branches

as against earlier year, it was 508.

Out of 651 branches,

158 branches are in semi – urban & rural areas.

SHIFT IN STRATEGY Initial business model: the bank started to give more

corporate loans, as they offered higher yields during

FY96 to FY99.

But the overexposure to corporate loans impacted the

bank’s asset quality.

In 1999, the bank’s net NPAs to advances ratio

jumped to 6.3% in FY99 from 3.7% in FY97.

Realizing the risk of overexposure to this segment,

AXIS bank started shifting its concentration to retail

finance, which presented immense growth

opportunities.

Contd…

Strategy shift: AXIS Bank started focusing on

both physical & technology infrastructure,

which it thinks are key to acquire customers in

retail finance segment.

Braches increased to 450 from just 35 in FY99.

It is the 1st Indian Bank to have a remote

disaster recovery management system to

protect its business from any eventualities.

AXIS’s Current Strategy

The bank follows a broad differentiation

strategy.

They are:

1.Managing changing customer needs:

Powerful back office hubs

Bank’s centralized phone banking center

Zonal level Nodal officers

“Know your customer” norms

Contd…

2. Risk management:

Risk limits are set according to

number of criteria including relevant

market analysis, business strategy &

management experience.

Risk limits are monitored &

reviewed regularly.

Contd…

3. Dealing with regulations:

The bank calculates capital charge on

operational risk under both the Basic Indicator

Approach & the standardized approach.

The bank has simultaneously undertaken

internal studies on several lines of business

for an evaluation of the risk profile, capturing

of losses incurred & identifying the key risk

indicators.

Contd…

4. Keeping pace with the technology :

The bank’s IT system developed a

process called “SETU” ( Seamless

Electronic Transfer to AXIS Bank)

The sale & redemption of 58 AXIS

Mutual Funds Schemes was an additional

service through the ATM channel.

Contd…

5. Product & service innovation:

Bank set up low cost rural ATMs at

Anand.

A channel finance hub was created

The strategy making, strategy execution process for AXIS Bank

Revise as needed in the light of actual erformance, changing

conditions, new opportunities , & new ideas

Growth Strategy

Objectives Increasing the market share in various business

resulting in an enhancement in its core income streams.

Improve the quality of its income streams.

Complementary Strategies for Business Growth And Development Strategic alliances and Collaborative Partnerships

Tie-ups with Maruti & Hyundai For selling car loans. Co-financing pact with India In infrastructure Finance

Company Ltd.(IIFCL) for infrastructure projects. Tie-up with Bajaj Allianz General Insurance Tie-up with Metlife as Bancassurance Partner. ATM sharing based on alliances with other banks

such and multi-bank shared payment networks. Economic Times Remit2India for money transfer.

Outsourcing Selected value-chain Activities Outsourcing recruitments to

MonsterIndia.com Outsourcing Print Operations to Xerox. Outsourcing of Electronic Bill

Payment(EBP)

Offensive Strategic Moves

Superior customer service Range of Service on ATM machines. Aggressive Growth in cards business. Expansion Of Geographical reach. Financial Advisory services. Launched an e-Payment Facility for

payment of central excise & service tax. I-trade

Evaluation Of Growth

Year Net Profit

% increase

s2004-05 334.58 ----

2005-06 485.08 44.98

Scope of Future Growth

Governance & Ethics Structure To enhance long term interest of its share

holders and to provide good management ,and the adoption of prudent risk management techniques and compliance with the required standards of capital adequacy. Thereby safeguarding the interest of its other stakeholders such as depositors, creditors, customers, supplies and employees.

To identify and recognize the board of Directors And the management of the bank as the principal instruments through which good corporate governance principals are articulated and implimented.

Innovation and Entrepreneurship Experimented new delivery models for

Credit, including low cost ATMs at Anand. Such application of technology provides convenience as well as product innovation.