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ICICI Bank: Internet is the way

Sep 20, 2000

The concept of online banking in India is catching up fast. More players are joining the bandwagon. ICICI Bank is the first bank in India to offer Internet banking. Internet banking is an additional channel through which a customer can transact apart from the normal brick and mortar banking. It helps banks gain substantially in terms of transaction costs.

Internet banking is a volume game. ICICI Bank has consistently increased its net banking customers from 110,000 as on March 2000 to 140,000 as on July 2000. It has invested around Rs 50 m in this initiative to offer Net banking products. As per the bank’s estimate there will be around 30 m Internet banking users in the next 3-5 years. ICICI Bank will be able to gain a big share because of its early foray into this segment. Currently the bank is facing strong competition from HDFC Bank and Citibank among others.

ICICI Bank is planning to tie up with computer manufacturers such as Compaq to provide computers at concessional prices. It has also tied up with NIIT for providing basic training and has forged alliance with Internet service providers such as Satyam Online for providing Net access. It has planned to provide touch screen kiosks at its ATM centres.

The retail segment has emerged as a key thrust area for ICICI bank. The bank is primarily targeting middle and upper middle class customers, leveraging on its strong brand equity to deliver high quality products and services. To begin with, the bank through the launch of new products such as kid-e-bank for small children and bank@campus for students has associated its products with all stages of a person’s life cycle. The bank has also launched array of new products in the personal segment, which includes web-enabled credit cards and loans against shares. The expanding retail reach should help the bank to reap the benefits of lower funding costs and cross-selling opportunities.

Over the past few years, ICICI Bank has positioned itself to leverage on competitive technological advantages to grow its retail clientele. The bank’s initiatives on developing and aggressively expanding its multi-channel distribution strategy of branch, ATM and Internet banking would add value to its retail franchise and improve its deposit mix. Its enhanced services like depository services, bill payments and mutual fund distribution would help enhance customer loyalty. Its strong parentage and increased capital base after the recent ADR issue would also increase flexibility in the corporate banking business.

Comparative valuations
ParticularsHDFC
Bank
ICICI
Bank
Global Trust
Bank
UTI
Bank
Market Price230.0167.066.035.9
P/E30.320.45.47.3
Book value30.958.443.518.2
Price/Book value7.42.91.52.0

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