As the name suggests, State bank of India or SBI is a public sector bank which has branches in most parts of India. Even though SBI still controls a substantial portion of Indian banking industry, competition from private banks and foreign banks is causing big problems to SBI.
Some of the major problems facing by SBI at present, are related to marketing, HR, customer service and technology. Private sector banks, such as HDFC and ICICI compete strongly with SBI now. ICICI Bank has already overtook SBI in terms of market capitalization. Rural marketing is another big problem for SBI. Even though SBI has many branches in India, most of these branches are located in urban areas. Rural population still consists of many unbanked people and SBI failed to exploit this community.
Lack of employee motivation and communication problems are the major HR problems in SBI. Poor compensation and heavy workloads are some of the reasons for demotivation of SBI employees. Communication is usually taking place in SBI only through one way. from top to the bottom. As a result of that, even talented employees were unable to use their capabilities properly.
Customer service is another area in which SBI is facing problems now. Many of the SBI customers have the complaint that they were neither respected nor treated properly by the SBI employees. The high income customers of the SBI believe that they are not getting enough recognition from SBI even though they contribute more than 80% of SBI’s turnover.
Lack of product innovation and the technologies feasible to exploit the banking possibilities in rural areas are some of the technology related problems in SBI. SBI still uses old technologies and the company does not bother very much about developing a technology suitable for the rural communities in India.