Dear Stakeholder,

In my letter last year, I described our mission to transform Bank of Baroda into a contemporary Bank that uniquely combines the trust of public sector banks with the innovation, agility and performance of the leading private sector banks. Unlike air travel or power generation, banking cannot be left purely to market forces and private sector players. India needs well-run, profitable public sector banks because these institutions serve as the vehicles for inclusive economic development.

The biggest challenge for most public sector banks, including ours, is maintaining a high degree of competitiveness and differentiation given the evolving banking scenario. This is a more fundamental challenge than the issue of stressed assets that has dominated the discourse. The challenge is to reverse the erosion of market share and our best customers to private sector competitors. Banks need to fundamentally make a significant shift in behaviors and practices that have created the current situation of stressed assets plaguing the sector. Banks need to respond to the challenge posed by “Fintech” firms that are attempting to disrupt legacy banks, leaving them with costly infrastructure and the least profitable customers.

To accomplish its mission, our Bank has embraced a massive transformation called “Project Navoday” which entails a fundamental change in strategy, products and virtually every process of the Bank. More details about Project Navoday have been included in the MD & CEO’s Statement as well as in the Directors’ Report. The key to the success of this transformation lies in a significant upgradation of talent, capabilities and culture. Like every business, banks have become knowledge and technology intensive enterprises. Banking now requires incredible depth in areas such as risk management, project appraisal, treasury, credit assessment, fraud detection, real-time monitoring of millions of streams of data and deep analytics. In other words, banking is now an information business in which technology becomes the central nervous system.

It is therefore of little wonder that globally, banks are among the biggest users of IT with the best banks competing closely with Google and Facebook to hire PhDs in computer science, mathematics and physics.

Our Bank is in the midst of a complete overhaul of its technology and digital capabilities. A major upgrade to our Core Banking System and our internet and mobile banking capability, new systems for loan management, enterprise risk management, fraud detection, substantial investments in big data and analytics capability, alliances and partnerships with many innovative Fintech startups and cutting-edge pilots in the use of machine learning, Block-chain and robotic process automation are just some of the initiatives underway to catapult our Bank to a leader in the use of IT.

An even more sweeping transformation is underway in the way our Bank thinks about talent and people capability. There is a strong board-led focus on employee engagement, on role definition, performance and talent management, continuous learning, leadership development and succession planning.

Finally, we sustained our focus on improving Board governance. We were fortunate to have two talented new Directors join the Board. This year, we conducted an external Board evaluation for the first time and implemented many improvements to our Board processes. A very high level of participation and active engagement by every director is a distinguishing characteristic of our Board.

The seeds of transformation that we planted last year are beginning to germinate. We can see evidence of changing mindsets, enthusiasm and performance in most parts of the Bank. I am optimistic that the best years for Bank of Baroda lie ahead of us.

Ravi Venkatesan


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