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Economic Times
19-05-2025
- Business
- Economic Times
SBI's record USD 9.2 bn profit fuelled by relatively small digital cohort
New Delhi: State Bank of India posted record profits of about USD 9.2 billion in fiscal ending March 2025, becoming only the third Indian company, after Reliance Industries and ONGC, to feature in the Global Top 100 companies ranked by net profit. However, bulk of SBI's profits are driven by a relatively small digital cohort, Rajendra Srivastava, who is considered India's Philip Kotler, said in a post on The impressive growth in profitability of India's largest lender lies within a bold digital pivot that began several years ago. "The story of SBI's profitability is, in many ways, the story of YONO," he wrote. The You Only Need One (YONO) app was launched in November 2017. What began as a response to growing fintech disruption has transformed into a pillar of SBI's growth strategy. YONO today has over 74 million registered users, a digital user base that rivals any private player or fintech startup in the country. The platform has enabled over Rs 3.2 lakh crore in loan disbursements since inception and contributes significantly to the bank's retail loan book. Daily logins on the platform exceed 10 million, and 65 per cent of SBI's savings account transactions are now routed through YONO. YONO is much more than a banking app, it's a full-fledged ecosystem or digital marketplace. Users can open accounts, invest in mutual funds, buy insurance, shop online, book travel, apply for loans, and even access government services. This all-in-one strategy is delivering tangible returns by deepening customer lock-in, protecting cash flows, and building long-term resilience. "SBI services over 500 million accounts, making it the largest bank in the world by customer base. However, only around 74 million (approx. 14 per cent) of these accounts are YONO users. This presents a paradox: the bulk of SBI's profits are driven by a relatively small digital cohort, while the remaining 370 million accounts represent low-margin, high-cost liabilities service segment," he wrote. Dormant and low-balance accounts, many of them legacy accounts opened for financial inclusion purposes, continue to weigh on operating costs. Stating that financial inclusion is important, he said the question is whether a sprawling network of 20,000 branches with 220,000 employees is the most efficient way to deliver financial inclusion in 2025. India's Digital Public Infrastructure (DPI) consisting of Aadhaar, UPI, internet connectivity, and smartphone access have revolutionised access to financial services. The very rationale for SBI's physical branches needs re-evaluation when even rural citizens are today transacting seamlessly through mobile phones. "Despite record-breaking profits, SBI continues to trade at a lower Price-to-Book (P/B) ratio of 1.4 compared to its private sector peers. HDFC Bank (2.8) and ICICI Bank (3.3) enjoy higher market valuations because they are perceived as leaner, more agile, and more digitally native by investors," he said, adding the private sector banks operate with lower capex on branches and infrastructure, leaner employee bases with higher productivity, lower NPAs and stronger risk perception in the market. SBI's discounted P/B, compared to its peers in the domestic market, reflects investor concerns about structural inefficiencies in asset utilization, not financial performance per se, he said. Srivastava, who is the former Dean of the Indian School of Business (ISB) and the Novartis Professor of Marketing strategy and Innovation, said SBI must prioritize YONO. "With a relatively small incremental investment, SBI can convert more of its legacy customers into digital users, reducing cost-to-serve," he said. It can also phase out low-ROI physical infrastructure such as underutilised branches and ATMs, trim administrative overheads linked to dormant or low-balance accounts, improve customer lifetime value through cross-selling within the YONO ecosystem and expand its footprint beyond traditional geographies without incremental capex. "This is likely to bring in strategic relevance in an age where fin-techs are redefining customer experience. SBI cannot afford to treat YONO as an ancillary channel, it must become the core engine of customer engagement and revenue generation," he said. Globally, the BFSI sector is undergoing a transformation, driven by digital-first banking models. Operating efficiency, capital-light growth, and personalised digital experiences are no longer luxuries - they are imperatives. "Digital banks have consistently outperformed legacy institutions in metrics like cost-to-income ratio, customer acquisition cost, and return on assets. In India, this trend is visible in the meteoric rise of fintechs like Paytm, PhonePe, and Zerodha. But unlike them, SBI has scale, trust, and regulatory comfort which can be leveraged not only for competitive advantage, but to meet its larger purpose of financial inclusion," he said. SBI, he said, has already proved that it can deliver profits at par with the best in the world. "Now it must prove that it can earn the valuation premium that comes with being future-ready." SBI could potentially double its market capitalisation without doubling its branch network or employee headcount if it were to double YONO user penetration to serve most rural and urban accounts through a mobile app, he said. "In future, SBI can become a beacon for all public sector companies, demonstrating that profitability, efficiency, and inclusion are not mutually exclusive. Higher levels of equity capital add to resources available to compete globally. India needs more financial firepower to fuel its growth ambitions. Doing well will also enable SBI to do good for the nation," he added.
Time of India
19-05-2025
- Business
- Time of India
SBI's record USD 9.2 bn profit fuelled by relatively small digital cohort
Live Events (You can now subscribe to our (You can now subscribe to our Economic Times WhatsApp channel New Delhi: State Bank of India posted record profits of about USD 9.2 billion in fiscal ending March 2025, becoming only the third Indian company, after Reliance Industries and ONGC , to feature in the Global Top 100 companies ranked by net profit. However, bulk of SBI 's profits are driven by a relatively small digital cohort, Rajendra Srivastava, who is considered India's Philip Kotler, said in a post on impressive growth in profitability of India's largest lender lies within a bold digital pivot that began several years ago. "The story of SBI's profitability is, in many ways, the story of YONO," he You Only Need One (YONO) app was launched in November 2017. What began as a response to growing fintech disruption has transformed into a pillar of SBI's growth strategy. YONO today has over 74 million registered users, a digital user base that rivals any private player or fintech startup in the platform has enabled over Rs 3.2 lakh crore in loan disbursements since inception and contributes significantly to the bank's retail loan book. Daily logins on the platform exceed 10 million, and 65 per cent of SBI's savings account transactions are now routed through is much more than a banking app, it's a full-fledged ecosystem or digital marketplace. Users can open accounts, invest in mutual funds, buy insurance, shop online, book travel, apply for loans, and even access government services. This all-in-one strategy is delivering tangible returns by deepening customer lock-in, protecting cash flows, and building long-term resilience."SBI services over 500 million accounts, making it the largest bank in the world by customer base. However, only around 74 million (approx. 14 per cent) of these accounts are YONO users. This presents a paradox: the bulk of SBI's profits are driven by a relatively small digital cohort, while the remaining 370 million accounts represent low-margin, high-cost liabilities service segment," he and low-balance accounts, many of them legacy accounts opened for financial inclusion purposes, continue to weigh on operating that financial inclusion is important, he said the question is whether a sprawling network of 20,000 branches with 220,000 employees is the most efficient way to deliver financial inclusion in Digital Public Infrastructure (DPI) consisting of Aadhaar, UPI, internet connectivity, and smartphone access have revolutionised access to financial services. The very rationale for SBI's physical branches needs re-evaluation when even rural citizens are today transacting seamlessly through mobile phones."Despite record-breaking profits, SBI continues to trade at a lower Price-to-Book (P/B) ratio of 1.4 compared to its private sector peers. HDFC Bank (2.8) and ICICI Bank (3.3) enjoy higher market valuations because they are perceived as leaner, more agile, and more digitally native by investors," he said, adding the private sector banks operate with lower capex on branches and infrastructure, leaner employee bases with higher productivity, lower NPAs and stronger risk perception in the discounted P/B, compared to its peers in the domestic market, reflects investor concerns about structural inefficiencies in asset utilization, not financial performance per se, he who is the former Dean of the Indian School of Business (ISB) and the Novartis Professor of Marketing strategy and Innovation, said SBI must prioritize YONO."With a relatively small incremental investment, SBI can convert more of its legacy customers into digital users, reducing cost-to-serve," he can also phase out low-ROI physical infrastructure such as underutilised branches and ATMs, trim administrative overheads linked to dormant or low-balance accounts, improve customer lifetime value through cross-selling within the YONO ecosystem and expand its footprint beyond traditional geographies without incremental capex."This is likely to bring in strategic relevance in an age where fin-techs are redefining customer experience. SBI cannot afford to treat YONO as an ancillary channel, it must become the core engine of customer engagement and revenue generation," he the BFSI sector is undergoing a transformation, driven by digital-first banking models. Operating efficiency, capital-light growth, and personalised digital experiences are no longer luxuries - they are imperatives."Digital banks have consistently outperformed legacy institutions in metrics like cost-to-income ratio, customer acquisition cost, and return on assets. In India, this trend is visible in the meteoric rise of fintechs like Paytm, PhonePe, and Zerodha. But unlike them, SBI has scale, trust, and regulatory comfort which can be leveraged not only for competitive advantage, but to meet its larger purpose of financial inclusion," he he said, has already proved that it can deliver profits at par with the best in the world. "Now it must prove that it can earn the valuation premium that comes with being future-ready."SBI could potentially double its market capitalisation without doubling its branch network or employee headcount if it were to double YONO user penetration to serve most rural and urban accounts through a mobile app, he said."In future, SBI can become a beacon for all public sector companies, demonstrating that profitability, efficiency, and inclusion are not mutually exclusive. Higher levels of equity capital add to resources available to compete globally. India needs more financial firepower to fuel its growth ambitions. Doing well will also enable SBI to do good for the nation," he added.
Time of India
15-05-2025
- Business
- Time of India
Kotler's fifth P: Can it work for brands?
HighlightsPhilip Kotler's four P's of marketing—Product, Price, Place, and Promotion—have long been foundational, but he recently introduced a fifth P: Purpose. Purpose-driven branding can backfire if not aligned with a brand's core values, as demonstrated by Unilever's struggles and Procter & Gamble's Gillette campaign failures. Research indicates that consumer loyalty based on stated social purpose is low, with only 18% of consumers consistently buying from brands for their social initiatives. Successful purpose-driven campaigns, like those by Patagonia and Nike, are rooted in the brand's authentic mission rather than being retrofitted for marketing appeal. Cultural and market-specific sensitivities are crucial; what resonates in one region may fail in another, highlighting the need for careful consideration in purpose-driven messaging. The foundation for all marketing strategies has been the four P's of Philip Kotler : Product, Price, Place, and Promotion. For decades marketers are sworn by his bible, Principles of Marketing Management. Just recently, Kotler has started promoting a fifth P: Purpose. A purpose-driven branding may appeal as noble, is it practical? Brands that had force-fitted purpose into their identity have seen setbacks on bottom-line, probably due to consumer scepticism or brand dilution. Unilever CEO had publicly admitted this as a major issue for under-performance and moved away from the practice. Experience of Gillette and many other brands also paint a picture that purpose cannot find universal application like the other P's. In Kotler's opinion, purpose is about aligning a brand with a higher societal goal such as sustainability , gender equality, or social justice. He argues that today's consumers, especially the Millennials and Gen-Z, prefer brands that stand for something beyond profits. But, purpose cannot be an afterthought or an artificial construct – Consumers can see through that and will quit buying from such brands. Unilever's is a classic example of backfired purpose. Its proclaimed purpose-driven branding under the then-CEO Alan Jope has not delivered results for many of its brands. Seems over-emphasising purpose above business goals is a bad idea. There have been some successes like the Dove's 'Real Beauty' campaign, but this was built organically over time. When the other brands tried to force-fit purpose, confusion and declining profits ensued. Take the example of Hellmann's mayonnaise, which attempted to justify its existence with sustainability messaging. Consumers rightly questioned: 'Do we buy mayonnaise for sustainability?' Unilever's overemphasis on purpose led to investor backlash, with activist investor Terry Smith famously accusing the company for 'losing the plot.' Consequently, they had to scale back the purpose-centric approach after profit margins fell short of expectation. P&G's Gillette experienced the mishap by over-moralising, when it launched its 'The Best Men Can Be' campaign, addressing toxic masculinity. The ad was aimed to redefine masculinity positively. But it alienated a large segment of core consumer base because they saw it as virtue signalling rather than genuine advocacy. When the sales plummeted, they brand quickly recalibrated the messaging. Costly lesson? The purpose must align with core brand values and consumer expectations. Simply put, brands cannot afford to lecture their customers. Similarly, many Indian brands has struggled with purpose-driven messaging. FabIndia faced severe backlash when it tried to market its Diwali collection under the name 'Jashn-e-Riwaaz.' It was trying to be inclusive, but was perceived as an unnecessary deviation from tradition. Tanishq faced controversy when it showcased interfaith marriage – a blasphemy in the New India in the time of Love Jihad rhetoric. The company was forced to withdraw the campaign, of course, causing substantial dilemma for many other brands. Purpose may attract diminishing returns in India. The Western society has evolved into social activism over many years, and deeply ingrained into the social fabric. Indian consumers are more price- and quality-conscious. While ethical business practices matter, over-emphasising purpose can alienate many Indians who look at affordability and reliability first. Is consumer loyalty through purpose a myth? Many marketers, perhaps inspired by Kotler, believe that purpose imbibes deeper consumer loyalty, but research suggests otherwise. A 2021 Forrester survey found that only 18% of consumers consistently buy from brands due to their stated social purpose. Most consumers still evaluate quality, price, and convenience. Purpose-driven messaging might appear inauthentic, and lead to consumer scepticism. Brands like Pepsi (with its failed Kendall Jenner protest ad) have learned this the hard way. Does purpose work for any brand? While purpose has failed for many brands, there are cases where it has worked – but with crucial distinctions. Patagonia, for one, has successfully integrated environmental activism into its brand DNA. The key difference is that sustainability was part of Patagonia's mission from the beginning; it was not retrofitted onto the brand for marketing appeal. Similarly, Nike's advocacy for racial justice has worked because it aligns with the brand's long history of supporting athlete activism. That brings up the question of when Kotler's fifth P works and when it doesn't. Here are four scenarios: Purpose should be organic, not force-fitted: If a brand's core identity doesn't align with a purpose-driven cause, force-fitting it can be detrimental. Hellmann's attempt at sustainability messaging failed because consumers don't associate mayonnaise with ethical consumption, or Vim's #NazariyaBadlo campaign backfired because most Indians culturally don't accept men washing dishes. Purpose should not replace product and profitability: Unilever's experience demonstrates that a brand cannot afford to put purpose over financial performance. Companies exist to generate profits, and consumers buy products primarily for their utility, not their moral stance. Avoid over-moralising and alienating consumers: Gillette's failure shows that if a purpose-driven campaign comes across as judgmental or preachy, it can backfire. Marketers must strike a balance between advocacy and engagement. Market-specific sensitivity matters: As the examples of FabIndia and Tanishq show, cultural and political sensitivities can heavily impact how purpose-driven campaigns are received. What works in one market may fail in another. Kotler's fifth P of Purpose is not inherently flawed, but its indiscriminate application is problematic. If purpose is aligned authentically with a brand's identity, it could work. When purpose is force-fitted, it risks alienating customers. Marketers must remember that consumers buy products for their intrinsic value, not because of a brand's promoted ideology. In the end, the Four P's remain more than sufficient to drive successful marketing strategies; purpose is best left for brands that can genuinely integrate it into their DNA.
Time of India
24-04-2025
- Business
- Time of India
Brand storytelling vs. digital performance: Finding the right marketing mix for startup success
Brand storytelling or digital marketing – The dilemma for startups Startups looking for quick sales leads are often unclear about whether to invest in traditional marketing efforts or digital marketing. Traditional marketing clarifies the positioning of a brand, associating it with the right consumer segment, generating awareness, and putting forward the differentiating factors that set the brand apart. This is called the Brand Storytelling. On the contrary, investing in performance marketing (digital marketing), which essentially works on the bottom of the sales funnel, takes precedence. Understanding the sales funnel Bottom of the sales funnel constitutes the stages at which the customer finally evaluates the available choices and makes a purchase decision. Top of the funnel is associated with creating awareness and interest, subsequently influencing the customer to consider the brand for final evaluation. Given the fact that performance marketing tracks the ROI, it comes as an easy to justify marketing expense. The impact of traditional brand marketing such as positioning and brand storytelling is not quantifiable, hence it takes a back seat. Traditional marketing: The foundation of brand trust Since the 1980s, brand positioning has been recognized as the battle for the customer's mind. It is essentially a compelling promise that marketers convey to win the customers' minds and hearts. To exhibit true brand integrity and win customers' trust, marketers must fulfil this promise with a solid and concrete differentiation through its marketing mix. The data indicates that customers having an emotional connection with a brand tend to be loyal over time. To establish strong equity, a brand must have a clear and consistent positioning as well as an authentic set of differentiating factors to support the positioning. Digital marketing: ROI-focused, data-driven growth In the digital economy, customers are now facilitated and empowered to evaluate and even scrutinize any company's brand-positioning promise. With this transparency (due to the rise of social media), brands can no longer make false, unverifiable promises. Companies can position themselves as essentially anything, but unless there is a community-driven consensus, the positioning amounts to nothing more than corporate posturing. The balanced approach: Merging digital & traditional The question therefore is whether spending on traditional marketing is worthwhile or should companies focus on digital marketing. The answer is that it has to be a balance of both. The 5A's Model: Mapping customer behavior 5 A's model by Philip Kotler explains various stages a customer traverses while making a purchase decision and how each stage calls for a different marketing approach. The five A's are AWARE, APPEAL, ASK, ACT, ADVOCATE. In the Aware stage, they are passively exposed to numerous brands through advertising, experiences, and word-of-mouth. During the Appeal stage, certain brands stand out by creating emotional or rational connections that make them memorable. This leads to the Ask stage, where customers actively research and validate these brands through conversations, online reviews, and social media, making their decisions more social. In the Act stage, they make a purchase or engage with the brand, and the quality of the experience during and after this interaction becomes critical. Finally, in the Advocate stage, true loyalty is demonstrated when customers willingly recommend and promote the brands they trust. The above model clearly indicates that at the initial stages of marketing, the traditional approach of branding, positioning and segmentation hold primary importance. As the customer moves from Aware and Appeal stage towards Ask and Act, the share of the traditional marketing gradually reduces. As the customer engagement increases, digital marketing must step in. The O³ Model: Converting Prospects into Customers? What must companies learn about the journey of the customers through the Five A's (Aware → Appeal → Ask → Act → Advocate) in order to turn them into brand advocates? Marketers must understand and leverage three key sources of influence, collectively called the O³ Zone: 1. Outer Influence – Brand-driven efforts like advertising, promotions, and touchpoints (sales, service). These are controllable but vary in impact based on execution and customer experience. 2. Others' Influence – Comes from friends, family, online communities, and social media. This is less controllable but highly impactful—especially among youth, women, and netizens (YWN). 3. Own Influence – A customer's personal judgment, shaped by past experiences, emotions, and preferences. While internal, it is shaped by both outer and others' influences. These three types of influence are intertwined and affect customers in varying degrees. Typically: – Outer influence sparks awareness. – Others' influence builds trust and credibility. – Own influence drives final decisions. Key Insight Customers today rely more on others' influence (e.g., word of mouth and online reviews) than on advertising or personal preferences. For instance, Nielsen (2015) found: – 83% of consumers trust recommendations from friends and family. – 66% trust online opinions from other consumers. Strategic Use of O³ – If outer influence dominates → Focus on marketing communications. – If others' influence dominates → Invest in community marketing. – If own influence dominates → Prioritize post-purchase experience and brand engagement. Understanding the balance of O³ helps marketers allocate resources smartly and effectively to drive advocacy. Conclusion: Integrating Strategy for Sustainable Marketing. The best marketing strategies acknowledge the complementary roles of both traditional and digital efforts. Traditional marketing builds the foundation with brand trust and emotional connection, while digital marketing activates these sentiments into measurable actions. Startups must focus not on choosing one over the other, but on aligning their marketing mix across the full customer journey to create advocates, not just buyers. Facebook Twitter Linkedin Email Disclaimer Views expressed above are the author's own.
