In the early nineties, the process of liberalization and deregulation were setting the tone for the creation of new private sector banks in India. The Reserve Bank of India opened the doors of the banking industry to new players, and the era of the “New Generation Banks” was about to begin. Gelli was at the forefront with his dream turned reality: Global Trust Bank.
Private sector banks were the in-thing and each was vying with the other to get a lead in this unbelievably huge market. There was a heady sense of anticipation in this industry and the expectations were high. Global Trust Bank was probably the only well known private sector bank started in those days that did not have a powerful established lineage and a huge deposit base. Giant financial organizations like HDFC, ICICI and UTI started banks and were able to leverage their reputation and cash reserves to establish credibility and financial stability.
But the market was large enough for several competitors. A burgeoning 200 million strong middleclass was awaiting new banking options after growing tired of the poor service of nationalized banks (and not yet able to afford the multinational banks).
Global Trust Bank opened its first branch in Secunderabad (Andhra Pradesh) on October 30, 1994, and on the first day of operation collected Rs 100 crores (1 billion rupees, US$ 21M, 18M euros) of deposits—a truly commendable achievement. The brand’s amazing opening showed that it could stand shoulder to shoulder with its powerful competitors. The New Generation Bank, as GTB called itself, was making waves.
GTB’s weaknesses were in perceptions that a private sector bank wasn’t as safe as a public sector bank, and that it didn’t have a powerful lineage to add credibility or a parent company with billions of rupees to create the image of financial stability. Therefore the bank had to capitalize on its good start and get its act in place very fast to provide excellent operations that enhanced the customer’s brand experience.
With a combination of ambitious planning and diligent execution, promoted through smart advertising and aggressive marketing, the brand expanded rapidly both in terms of locations, and products and services.
Although, the positioning was not very clear—communications talked of “redefining banking” for consumers who had no vision of what banking could evolve to be and what they should expect—it didn’t seem to matter much. In a large market with few players and unlimited opportunity, the bank managed to attract new customers and delight existing ones.
After a brief period of trying to prove that it was as fast as its competitors and therefore as good as them, Global Trust Bank settled down to focus on keeping its customers happy. Here it achieved what few banks do—quick powerful foolproof systems that give the front office attendant time to provide the customer with a warm personal touch. The human side of the bank was friendly and simple. There was no effort to impress or intimidate the customer, and transactions were quick and uncomplicated. The brand owners also performed well on moving the brand beyond the personality of its Chairman. The promise of expertise was fulfilled and the transition to a warm but systems driven brand was complete.
But while the brand and consumer encounters worked well there seemed to be a lot of trouble behind the scenes. The problems were brought to the fore when allegations of rigging of the GTB share price started surfacing. As a result GTB’s proposed merger with UTI Bank (another medium size bank) was called off. Gelli was also allegedly sacked and instructed not to hold any post. More problems later arose when the Securities and Exchange Board of India prohibited GTB from raising money from the capital market. But GTB was apparently suffering from overexposure to the capital market and the stock market fall left it with reportedly Rs 11 billion of non-performing assets and a negative net worth ($ 237M, 197M euros).
As of now, Global Trust Bank has fallen to its lowest depth, with the government issuing a 3-month moratorium. During this period the Reserve Bank of India (RBI) will consider various options, including amalgamation of GTB with another bank to provide the necessary capital infusion. Customers are permitted to withdraw only up to Rs 10,000 ($216, 179 euros). This comes as a hard blow to the million odd customers of the bank who now face the possibility of losing their money.
Customers are suddenly unable to transact because of a paralyzed bank account, and those who need more than Rs 10,000 are out of luck. The loss of trust and the anger and betrayal that customers feel toward the bank mean that this brand likely has no possibility for comeback.
A classic case of a brand getting its marketing right but its priorities wrong.