Mumbai: On Monday, Bank of Baroda (BoB) became India’s third largest lender, with the merger of Vijaya Bank and Dena Bank with itself. The consolidated entity has deposits worth ₹8.75 trillion and advances of ₹6.25 trillion. BoB now has more than 9,500 branches, 13,400 ATMs, and 85,000 employees to serve 120 million customers. P.S. Jayakumar, managing director (MD) and chief executive officer (CEO) of the combined entity, believes it will take 12 months for the merged entity to stabilize. Edited excerpts from an interview:
How easy or difficult was the merger process?
It turned out to be smoother and a lot easier than what we started out with. It has got to do with a bunch of reasons. One reason was that within the individual bank identity, we also have a public sector identity. The leadership role played by both (R.A.) Sankara Narayanan (MD and CEO, Vijaya Bank) and Karnam Sekar (MD and CEO, Dena Bank) was critical. So, their organizations have rallied behind. The government through the department of financial services supported us extensively in making it happen. We were also fast in getting the statutory regulatory approvals, documentations in place. There was plenty of guidance from the Reserve Bank of India (RBI). In general, everybody helped this happen.
BoB was in the midst of a digital transformation. How will the merger affect this?
We are looking at two parallel step processes. First, with regard to customer experience for instance use of tablets, digital tablets, mobile banking, and phone-based banking—that follows its own path. Then, you have system integration from a core banking system (CBS). The customer experience part of it will get done much earlier than the core banking system integration. In BoB, we book all our savings accounts using tablets. The interface between a tablet system and a particular CBS is a lot easier than merging to CBS. Once you get the tablet experience, the customer experience becomes uniform. What we are doing is to make sure that customer experience gets unified. That requires more effort, but takes less lead time compared to CBS.
When do you expect the merger process to be completed?
When we went from Finacle 7 to Finacle 10, it took 18 months for the process to be completed. It took us nearly 12-13 months for the pre-planning exercises. Then the entire conversion process with its conversion challenges took us four-five months before it stabilized. We will take 12 months. It is not all a big bang theory that one day it happens. The first set of interoperability has already gone live in March. You may be an erstwhile Dena Bank customer, but you can go to any of the branches of the banks and get the details on funds transfer, balance enquiry. Customers see themselves as customers of their branches more than customers of a bank. What is available to customers immediately is a wider range of products so that customers get the existing set of distribution.
Would you look at re-branding?
It will work in two steps. The brand is still Vijaya Bank but it has still got part of it which says ‘Now Bank of Baroda’. As and when we get through with system integration, we can migrate to a single brand. The name of the brand will be BoB. The idea is to make the customer feel comfortable. We need to give time to people to communicate what we are doing.
What are your plans on branch rationalization?
The ability to migrate customers from one bank to another branch, their convergence to technology will take some time. It’s not something that we can do tomorrow. The good news is that in rural areas we hardly have any overlap. When we come to semi-urban market, we do have overlap. At the same cost we could get a more diversified pool of customers and revenues. However, this will have to wait a little bit. For six to nine months, we don’t expect anything. Thereafter, it will be a thoughtful exercise. For about 1,000 branches, if you were to take a pin ccode, more than one branch are there in the same pin code, which is around 12% of the total number of branches. It’s a challenge but not overpowering.