ICICI Bank rewrites the rulebook: Redefining service and value to captivate customers

Karmanye Vadhikaraste ma phaleshu kadachana, this Sanskrit phrase from the Bhagavad Gita (it roughly translates to “You have the right to perform your duties, but you are not necessarily entitled to the fruits of your actions”) seems to be the motto of ICICI Bank under Managing Director and Chief Executive Officer Sandeep Bakhshi.

Focussing on efforts and responsibilities rather than obsessing over results seems to have helped Bakhshi effect a complete turnaround at the bank, not just in terms of financial numbers but also in the way it provides its services.

Those efforts include the ‘One Bank, One Team’ strategy, through which ICICI Bank is making products simpler to understand, decongesting processes, and shunning hard selling. And it seems to be paying off. The bank has emerged as the Best Large Indian Bank in the BT-KPMG Survey of India’s Best Banks and NBFCs. A high-powered jury chaired by Jayant Sinha also unanimously recognised its achievements by awarding it the Bank of the Year title.

At a time when the banking sector is finding it hard to mobilise deposits, the Mumbai-headquartered bank has emerged as an outlier, achieving the highest growth in low-cost current account and savings account (CASA) deposits in the BT-KPMG study. This crucial metric not only drives higher returns for the bank, but it is also visible in the growing market share and stable deposits base of ICICI Bank.

What is fuelling this? Surprisingly, it’s not higher interest rates on deposits or an aggressive branch expansion spree. Instead, ICICI Bank’s edge lies in its unique strategy. “We don’t consider CASA growth in isolation. Instead, we prioritise enhancing services for our customers, each with their unique needs. Our goal is to earn and maintain their trust, ensuring they choose to stay with us, whether through CASA or FDs,” reasons Sandeep Batra, Executive Director of ICICI Bank.

Bakhshi and his team consistently emphasise in town halls, emails, quarterly results calls, and every interaction with employees the importance of the risk framework, philosophical framework, trust framework, customer framework, and product framework—principles that are considered sacrosanct and non-negotiable at the bank. “The principles of ‘Return of Capital,’ ‘Fair to Customer, Fair to Bank,’ and ‘One Bank, One Team’ will continue to guide our operations,” Bakhshi said in a recent call with investors.

Hiring Right

The bank places a strong emphasis on employees serving customers with humility, reflecting the values of brand ICICI. It tries to reinforce this culture by hiring the right talent, providing top-notch training, and nurturing its workforce—a strategy that continues to attract and retain customers in an increasingly competitive market. The result: With a workforce of more than 140,000, ICICI Bank is reaping significant productivity gains, boasting the highest profit per employee at Rs 30 lakh. Simultaneously, ongoing digitisation efforts on the back end have driven substantial cost efficiencies, resulting in the lowest cost-to-income ratio at 0.4%.

The higher productivity is the direct result of the ‘One Bank, One Team’ strategy, the management feels. This approach requires every employee to take the whole bank to the customer. The bank’s ‘customer-oriented’ approach, known as Customer 360°, encourages employees to take up new roles and not restrict themselves to specific areas.

For career and skill development, the bank offers employees opportunities to explore diverse roles and functions to give them a chance to develop expertise in different domains. “Our HR policies and compensation structure are built on the belief that collective efforts make a difference, not individual actions. We continuously reinforce this principle within our bank,” says Batra.

When the bank adopted this approach in 2019, under Bakhshi’s leadership, there were apprehensions among investors and stakeholders about increased attrition.

The bank’s attrition rate is 24.5% as of March 2024. “Major banks, including ICICI Bank, saw a surge in attrition rates in FY23, but the trend moderated in FY24. Attrition is usually higher in the case of junior/entry-level employees. In FY23, the bank saw a higher attrition as it focussed on increasing its presence and expanding via branch expansion. The branch expansion and other efforts to increase productivity led to lesser focus towards employee growth and welfare measures,” says Shweta Upadhyay, Research Analyst at financial services firm Asit C Mehta Investment Intermediates Ltd.

Make it Simple

A lot of effort has been put into decongesting processes and simplifying products in a sector that could at times appear to thrive on arcana. “We have been a bank for many years, and we have emphasised the importance of delivery throughout this time. This includes both our processes and technology. The key is to simplify both, ensuring that everything we do eases our customers’ experience,” says Batra.

Towards that end, in the last year or so, the bank has eliminated 80 variants of credit cards. In mortgage, it has discontinued 60 variants, and in savings accounts, it knocked off some 20 variants. “The leadership has reiterated many times: If you believe the customer profile or the counterparty is not right, step back,” says a bank employee.

The retail business, with a 55% share in the loan book, continued to be a key driver of growth in financial year 2023-24, as the bank pursued a strategy of building a diversified and granular loan portfolio.

In the current year, the bank has extended its iLens platform for mortgages to personal loan and education loan offerings. iLens, created in November 2022, is a digitised mortgage lending platform for seamless onboarding of customers without the physical movement of paper. In order to capture the growing opportunities in the rural market, the bank has also merged retail and rural business groups within one structure. The rural portfolio currently accounts for less than 10% of its advances.

On the corporate side, the bank’s approach is centred on building meaningful and holistic relationships with clients. “Our aim is to evaluate the entire cash flow of our customers and leverage the full strength of the bank to meet their needs. It’s not just about assisting with one aspect of their business, but about becoming a true partner in their growth journey,” says Batra.

It’s not just employees and customers who seem to be benefitting; even investors are reaping the rewards of the bank’s strong performance. ICICI Bank has been an outperformer on the stock market, delivering 40% returns between November 2023 and October 2024—outperforming key benchmarks like the NSE Nifty 50 and Nifty Bank indices. Investors and analysts remain bullish on ICICI Bank due to its consistent growth, profitability, and efficient management. Its price-to-book ratio of 3.51 times surpasses that of major competitors like HDFC Bank and Axis Bank.

“The bank has taken various steps to improve the way it was underwriting and sourcing its portfolio in terms of customer segments,” says Upadhyay of Asit C Mehta. Its key challenges are those that confront the banking sector as a whole, she says. “Net interest margin compression is seen throughout the sector, mainly due to lower CASA and higher cost of funds. This, however, is a systemic issue and isn’t specific to the bank.”

As Bakhshi continues in this third term, set to end in October 2026, the bank remains focussed on delivering to its customers. As it navigates the headwinds facing the sector, the bank is firmly focussing on customer service and building values within the bank rather than looking solely at short-term outcomes.

@anandadhikari