Senior managers of Indian public sector banks attending a leadership session at the Kellogg School of Management were told that they had to change their work ethos radically to survive the inevitable entry of foreign banks.
Ashok K Kini, State Bank of India managing director, stressed inertia could be a threat to survival. A competitive, globalised environment and younger, more demanding customers had led to a shift in the qualities that customers valued the most - from trust to efficiency.
"We cannot seek comfort in avoiding reality," said Kini, "we have to get away from the (present) state of denial."
Kini did not mince his words. "If I am a 25-year-old in India, I am no longer enamoured of nationalised (public sector) banks," he said. "For too long, we have lived on the trust symbol. The profile of the new account holders today is worrisome. They do not trust us anymore. Five years from now, you could have a major crisis (in public sector banks)."
"The young bank customer today is looking for modernity, sparkle and efficiency. They have high aspirations, and we have to match those aspirations. Everybody is aspiring to become Narayana Murthy (chairman of Infosys) or Azim Premji (chairman of Wipro). The young are also looking for an environment where they are respected."
The Indian banking sector, he said, had been left behind in the march towards global competitiveness. "Worldwide, the banking system is a symbol of efficiency. But modern banking has not even touched the fringes of the public sector banking system (in India). Most senior managers in public sector banks are content with the 'quarterly fix' - they cannot think beyond the quarterly results. But are we planning for the future?"
"In the State Bank, we have 200,000 employees. We have not exploited their talent. Most foreign banks have automated to the extent that you do not come in contact with a teller. In our banks, we have the luxury of having people the clients can deal with, something we need to exploit," Kini said.
Kini cited the example of a State Bank employee with a master's degree who, for over two decades, did nothing beyond punching customers' passbooks. "The organisation has to bring conditions where the individual can thrive," he said.
The process of effective leadership is not about maintaining status quo, Kini said. "I have a big problem with the command and control system in our banks. Large well run organisations are run by leaders at all levels. Many of our rules today encourage people to take decisions only on setlines. Moreover, internal communication in the public sector is negligible. You don't talk to people, you talk down to them," he said.
Kini also asked the managers to do the unthinkable. "I know this may seem like heresy, but to be an effective leader, you may have to take on (the ethos) of your own organisation. Banking is about risk. Your staff will know that if you, as the boss, don't take risks, the price of failure is very high."
Kini said that effective leadership should move from being "transactional to a transformational one".
"Banks exist at the front line (the tellers) for over 95 per cent of customers. I suggest that when the bank makes a mistake, we apologise. An institutional apology has never been heard of in banks. If the 15,000 State Bank tellers start apologising to customers for errors, two things will happen - the staff's ownership in the organisation will go up, for he or she is apologising on behalf of the bank, and personal responsibility will go up. We want the front line (the tellers) to start thinking about customers, not the head office, first."