Strategic Perspectives Sberbank
Over the last several years, the banking industry in Russia underwent a major transformation. As the traditional institutions of the past, have been evolving into global financial centers. This is because they are reaching out to new demographics of customers, in an effort to participate in the rapid growth that is taking place throughout the former Soviet Union. In the case of Sberbank, they have been taking their traditional banking functions and augmenting them with international financing opportunities. A good example of this can be seen by looking no further than, Sberbank playing a major role in helping to revitalize the Russian bond market. Where, 2010 has seen the largest number of offerings ever for Russian companies and the Russian government. (Matermevonsky 2010) This is important, because it shows how Sberbank has evolved from a traditional bank in 1841, to becoming one of the largest employers in Russia. As the company currently has 19,100 retail locations and employs 246,500 people. (Sberbank Today 2010) However, to fully understand this changing role for the bank requires looking at various lending activities to corporate customers. To achieve this objective an examination of this unit will take place through: understanding the context in how commercial banking operates, key strategies for the organization, if they were able to implement these changes / possible barriers, two areas that they are using to enhance core competency / capabilities and actions that the bank needs to take to address current / future issues. Together, these different elements will provide the greatest insights, as to how Sberbank is evolving to deal with the various changes that they are facing.
Understanding and Expressing Context
The Banking Sector
The last several years have brought about tremendous changes for the Russian banking sector. As the various reforms implemented during the 1980's and 1990's, would help to bring the country into the favor with foreign direct investors. However, the main focus of the Sberbank has been on the growth that is taking place in the Russian domestic market and the former Soviet Union / Eastern European satellite states. Part of the reason for this, is because of the increased reforms in these regions and improving demand. Recent evidence of the tremendous amounts of growth that are taking place can be seen with future projections for the banking sectors. Where, it is expected to post annual rates of growth from: 18% to 24% (depending upon the region). (The Russian Banking Sector 2010) This is important, because it shows how the tremendous rates of growth in the banking sector, are forcing various financial institutions to adapt to the changes that are taking place. These issues are causing the bank to keep with these changes, in an effort to maintain their dominance of the sector. At the same time, various foreign banks have begun to become major players in the industry. This is helping to improve the various reforms and push Russia towards adopting the different international banking principals. (Graham 2005, pp. 57 -- 59) When you put these elements together, this shows how the country's banking system would undergo a series of transformations that are helping to fuel demand for host of financial services.
However, when you are looking at the industry it is important to note, that the banking system still has various reforms that need to be implemented. As it has been known for having a lack of transparency and is subject to adverse affects in the Russian economy (most notably oil). This is because any kind of decline in the price of crude; could cause the banking sector to face similar challenges in 1998 (when oil prices were trading below $20.00 per barrel). (Graham 2005, pp. 57 -- 59) This is important, because it shows the tremendous amount of opportunities that exist in the banking sector, while highlighting areas that are the largest challenges moving forward.
The Russian financial system is facing increasing amounts of pressure. One of the main reasons for this is because of: the large amounts of natural resources that are located throughout the country. As a host of international investors are seeking out, increasing access to these areas and other parts of the country that can offer above average growth. When you combine this with the fact, that there is a recession in many developed nations and Russia has continued to provide consistent economic growth during downturn, means that more investors are looking at the country as a viable investment alterative. As a result, this is causing increased competition...
(Sberbank Development Strategy up to 2014-2010) Where, various Russian and international banks are competing against each other, in an effort to be able to increase their market share. Evidence of this can be seen with the total number of Russian banks that are competing against Sberbank to include: VTB Bank, Gazprom Bank, Alfa Bank and Moscow Bank just to name a few. In general, the assets for these banks would range from $3.46 billion rubles (with Sberbank holding the number one position) to $29.53 million rubles (held by Tatfondbank). (Top 50 Russian Banks 2008) At the same time foreign banks would also increase their exposure to include: Citibank, Deutsch Bank and HSBC just to name a few. (Russian Federation Banks 2010) This significant, because it shows how the overall amounts of competition would have an effect on the number of players in the industry. As this is helping to increase the development of the country's financial service sector, to keep up with the changes that are taking place.
Eliciting and Evaluating Strategy
Strategies that Sberbank is Perusing
When you examine Sberbank's strategy for corporate customers, it is clear that they are lagging behind other competitors in this area, as the bank is currently controlling less than 60% of the total market share. Given the fact that Russia is seeing a sizeable improvement, in the total amount of foreign direct investment capital, means that Sberbank must reach out to these customers. To achieve this objective, the bank initiated a number of different programs to include: building a system that is responsive to businesses, using an approach that will address the needs of each customer, and streamlining various internal procedures. Building a responsive system for businesses is when managers and executives are building relationships with various executives throughout the country. This is accomplished by having them reach out to business owners / executives about how the company can help them achieve their goals. At which point, Sberbank will offer all commercial customers the same kind of products and services throughout Russia. This is important, because it is allowing the banks to adapt to the changing market conditions and to improve their market share.
Using an approach that will address the needs of customers, is when the bank will offer a range of different products / services that are geared towards businesses to include: insurance, wealth management, payroll and taxes just to name a few. This is significant, because it shows how Sberbank is addressing this need, by offering customers a variety of different products / services. At which point, the bank can begin addressing the issues of survival and sustaining their current performance, by providing their customers with better products and services.
Streamlining various internal procedures is when the bank will use technology to help reduce the bureaucratic structure. Where, the company is focused on various ways to improve the short- and long-term operating procedures, by eliminating any kind of redundancy as well as waste. A good example of this can be seen with the bank streamlining the various applications and forms. (Sberbank Development Strategy up to 2014-2010) This is important, because utilizing these procedures will help to lower costs and increase the total amount of products / services that are being sold. As this strategy is making the process for corporations to conduct business more simplified, helping to increase demand for these products.
Implementation of these Key Strategies / Possible Barriers
Sberbank is making significant steps to address the issue faced by corporate customers, as the bank has begun to focus on becoming more of an international lending center. This is important, because it is a sign that they are taking aggressive steps to address the needs of customers, by having access to a host of different markets. At the same time, the company is trying to make themselves standout from competitors, by offering outstanding customer service. A good example of this shift can be seen with Sberbank hiring German Gref (the former CFO for Morgan Stanly in Russia). As his connections to Western governments and international markets would allow the bank to have the talent necessary to expand internationally. (Lee 2008) At the same time, Sberbank has been receiving various awards for providing outstanding services to all different sizes of businesses. Evidence of this can be seen with the financial institution receiving an award from Deutsch Bank for excellence,…
Anderson, RW & Chantal K. 1998, Transition banking: financial development of central and eastern Europe, Clarendon Press, Oxford. Barley, S 1983, Semiotics and the study of occupational and organizational cultures, Administrative Science Quarterly, Vol.28, pp.393-413. Blount, E 2004, Bad rap on Russian banking? ABA Banking Journal, no.12, pp.47-52. Brown, J 1987, A review of meta-analyses conducted on psychotherapy outcome research, Clinical Psychology Review, Vol. 7, Issue. 1, pp. 1-23. Bullis, CA & Tompkins, PK