FORTUNE 500 COMPANIES IN INDIA
ABN AMRO BANK (INDIA)
Background
ABN AMRO (India) has had a long-standing presence in India, having been in Kolkata and Mumbai since 1920. Traditionally known as a “diamond-financing bank”, it has transformed itself from a bank focusing on the corporate business segment into a bank providing a comprehensive range of services across multiple channels. After the merger of ABN and AMRO worldwide, the bank started expanding in a big way in India, 991 onwards. The Delhi branch was set up in the very same year and ABN AMRO was launched in other Indian cities between 1994 and 1999. Anticipating the emergence of retail banking in India, the bank acquired the retail business of the Bank of America in 1999. Currently ABN AMRO has 16 branches across 11 cities. The Bank had a total income of US$ 248.1 million in 2003-04 and employed about 1,400 people.
ABN AMRO Bank has a strong focus on the consumer and commercial clients business in India and it currently offers a wide range of assets (auto loans, personal loans, loans against securities), liability (current, savings accounts and term deposits) and investment products (mutual funds) to its customers.
One of the largest foreign banks in India
ABN AMRO has emerged as one of the most profitable banks and one of the largest foreign banks in India (in terms of Total assets in 2002-03). Net profits of ABN AMRO (India) have grown at a CAGR of 30 per cent since 1999-2000. Its non-performing assets were amongst the lowest in the industry at 0.88 per cent.
ABN AMRO was awarded the Best Indian Bank in the Business Today-KPMG Best Banks Survey 2002.
ABN AMRO ranks 2nd in terms of Business per branch and 2nd in terms of Operating profit per branch.
Factors for success
ABN AMRO has used technology as the key differentiator to gain competitive advantage and create a unique customer value proposition. ABN AMRO has been successful in India owing to its customer-
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SUCCESS STORIES centric banking approach. By anticipating the needs of customers in advance and launching innovative products, the bank has been able to cash on the retail boom in the country. ABN AMRO has tied up with various financial services institutions (like insurance companies) in order to provide a whole gamut of financial solutions to its customers.
Pioneer in adopting technology
The implementation of a robust core banking solution in 2001 enabled ABN AMRO India to offer 24/7 integrated multi-channel banking and to be the first bank in India to realise the potential of the mobile channel.
The bank launched NetBanking, its e-banking solution, in 2002. It is amongst the best in the country, with advanced transaction and enquiry facilities including Cyber Receipts and Short Messaging Service (SMS) mobile alerts. In order to take advantage of the booming cellular base of India, ABN AMRO has launched Mpower, a comprehensive mobile banking platform.
Retail strategy
The retail assets of Indian banks grew at a CAGR of 25 per cent in the last 3 years (The growth was 35%
last year). With its strategic acquisition of the retail portfolio of Bank of America, ABN AMRO had positioned itself effectively to leverage on this boom.
The Bank’s emphasis on technology has helped it in its aggressive retail banking initiatives that require high transactions processing capability and computing power.
Exemplary customer service:
The relationship approach
ABN AMRO believes in taking the bank to the customer. Continuing with this philosophy, it launched Doorstep banking, where cash and Demand Drafts are delivered at, and cheques picked up from the customer‘s doorstep.
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FORTUNE 500 COMPANIES IN INDIA In 2001, ABN AMRO developed Van Gogh Preferred Banking (VGPB). VGPB is a relationship banking approach for high net worth customers, professionals and business owners. A dedicated Relationship Manager, whose focus is to anticipate and provide for the client’s every financial need, gives VGPB customers personalised service.
In order to ensure a pan India reach for customers, ABN AMRO tied up with UTI Bank for sharing its ATM networks. This has also helped ABN AMRO minimise capital expenditure required for an extensive ATM network.
One stop shop for financial services needs of customers
Apart from its focus on consumer and corporate banking activities, in order to provide a complete range of financial solutions, ABN AMRO has tied up with Aviva for life insurance needs of its customers.
It has tied up with ICICI Lombard General Insurance Company to launch ‘LoanProtect’, an insurance cover as an add-on facility on all its consumer loans (home, personal, as well as auto loans). The bank also offers Broking services, Depository participant services and advice on investing in Mutual Funds to its customers.
With the Indian economy poised for robust growth and offering abundant investment opportunities, ABN AMRO has launched a mutual fund in June 2004.
Low borrowing costs due to captive liability base
ABN AMRO Bank has been successful in keeping low borrowing costs by effectively packaging products to suit individual customer
requirements. At 1.95 per cent in 2003-04, the bank had amongst the lowest cost of funds in the Indian banking industry. The net interest margin of the bank was amongst the highest in the industry at 4.9 per cent.
Leveraging the India Advantage
ABN AMRO has been leveraging India for back-office and software development operations:
Off-shoring business processes
Leveraging India’s large pool of highly talented and English-speaking workforce, ABN AMRO has outsourced business processes from about 18 countries to its back-offices in Chennai, Mumbai and Delhi. The headcount in these centres is about 1,200.
ABN Amro has found that off-shoring business processes to India is paying off, not only in terms of cost reduction and quality enhancement, but also in enabling it to scale up its business across the globe.
Future plans
ABN AMRO Bank NV has identified India as a key growth market for its business and has significant future plans for India.
• ABN AMRO has recently given the India operations a “Home Bank” status , which signifies that India is one of the Top Three priority markets for the Bank.
• ABN AMRO Bank plans to invest US$ 1 billion in India for selective acquisitions. Besides acquisitions, the bank plans to spend the proposed amount to build its franchise and to enhance its brand name in the country. According to the bank’s roadmap, it hopes to be in 100 Indian cities in the next few years, with an initial plan to expand to 30 cities.
• The Bank also intends to focus on the organic growth model and has applied to the Reserve Bank of India (the regulator for Indian Banks) for converting its branch licence to that of a subsidiary.
ABN AMRO is the first foreign bank to apply for subsidiary status to the regulator.
• ABN AMRO plans to double the headcount of its Business Process Outsourcing (BPO) division to 2,400 employees by the end of the year.
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