‘Karnataka Bank’s transformation journey will be inclusive, exciting and rewarding’

Mahabaleshwara MS

With the banking landscape witnessing changes in recent years, 93-year-old Karnataka Bank has felt the need to reposition itself with a focus on technology and keeping intact its core values and identity. The bank has embarked upon a transformation project with Boston Consulting Group (India) Pvt Ltd in this regard.

In an interview to BusinessLine, Mahabaleshwara MS, Managing Director and Chief Executive Officer of the bank, shares his plans on the bank’s transformation project — ‘KBL Vikaas’. Excerpts:

At a time when an old-generation private sector bank is performing better than some of the public sector banks, what made you to think of transformation initiatives?

Even though we are a well-governed and admired bank with adequate capital (CRAR at 12.46 per cent) and relatively less NPAs (gross non-performing assets of 4.13 per cent), as the banking landscape is fast changing, a continuous process of transformation is required to reposition the bank as a relevant and significant entity.

This transformation initiative is totally forward-looking and is also a bold and timely step in preparing the bank for its second century.

How do you prepare yourselves for transformation exercises?

There will be ‘boardroom strategies’ followed by ‘battlefield actions’. Digital transformation and HR transformation will lead the change in all spheres of banking. The ‘transformation document’, to be prepared by the ‘transformation cell’, in consultation with the ‘transformation partner’ BCG (India), will define the contours of change.

This is a long journey and, at the end, one can see the emergence of the ‘new KBL’. I am sure this transformation journey will be inclusive, exciting and rewarding.

Can you elaborate on some of the intervention areas in this exercise?

The growth management strategies, HR transformation, digital transformation, etc., are some of the intervention areas in our transformation exercise. As the entire ecosystem of banking is changing, we have identified the above initiatives as critical to emerge stronger.

From the growth strategy point of view, it is not just terminal numbers or growth rate, but also the qualitative aspects of the growth and its sustainability.

As far as HR transformation is concerned, I see human resources as the change agent and hence, they will have to acquire new skills to turn the challenges into opportunities.

In the era of new-age banking driven by technology, the scope for brick-and-mortar branches needs a re-look. Digital presence by means of increased digital touch points and making available banking services online would gain popularity. Hence, digital transformation would become inevitable to take banking not just to the doorsteps of clients but even to their fingertips.

To quote my own example, in our bank around 25 per cent of transactions were happening over digital channels and the rest over physical channels five years ago. Now, around 70 per cent of transactions are happening in the digital channel.

I am aiming for a minimum of 80 per cent transactions through digital channels within another two years.

What will be the duration of this exercise?

Initially, the duration of this exercise is three years, and eventually we are aiming for 2024, our centenary year.

What will be the role of BCG in this exercise?

BCG as consultant will be our transformation partner. They will help in preparing the ‘Transformation Document’ and in its implementation. We entered into an agreement in this regard on November 29. They will have a dedicated team which will work closely with our transformation team.

Who all from the bank will be involved in the exercise?

As the bank is aiming for total transformation, a General Manager has been designated as Chief Transformation Officer. We have already formed a ‘transformation cell’ with adequate staff. This is an inclusive project and, hence, all staff members will have a definitive role to play.

What is the resistance you expect, or have faced, in this exercise?

The need for change is being felt across the cadre. As there will be total participation and involvement of all, right from the board till the messenger, I am very optimistic of the outcome. However, there could be some implementation challenges influenced by global and domestic economic factors, which we are confident of tackling with appropriate strategies.

There is a project steering committee headed by me. It takes overall decisions related to transformation. We meet every week. My general managers are part of this committee. I have made the general secretaries of the recognised unions of the bank as permanent invitees.

The committee reviews what happened in the transformation project in the previous week, and discusses the following week’s plans.

I have already started conducting town hall meetings. I addressed all my staff through video conferencing. There will be direct communication from the MD to the peon level also.

How will you judge the success of this exercise? What targets or numbers do you hope to achieve?

The success of the project would be judged in terms of improved perception, increased market share and market capitalisation, improved performance ratios, increased customer base, and stakeholder value appreciation. Doubling the business in three years and strengthening of all financial parameters could be the benefits of this exercise.