Tamilnad Mercantile Bank draws up road map for biz, tech transformation

Bank takes on board McKinsey, Deloitte and Oracle to realise goal

Thoothukudi-headquartered Tamilnad Mercantile Bank (TMB) has drawn up a road map for its business and technology transformation, for which it has taken on board global majors like McKinsey, Deloitte, and Oracle. The benefits of this transformation are expected to be visible through faster growth, starting from the second half of the next financial year (H2FY26), a top bank executive said on Thursday.

 

The bank has joined hands with global consultancy firm McKinsey for overall business reengineering, including revival of micro, small, and medium enterprises (MSMEs), and the entire process of credit underwriting. With a special focus on MSMEs, the bank has already started its first credit management centre (CMC) on a pilot basis at Thoothukudi in Tamil Nadu, and is planning to set up such centres in all 12 regions of the bank by the first quarter of FY26. The idea behind CMCs is to carve out credit from the branches and refocus the branches on strengthening liability franchise.

 

"This will also help us in managing the credit portfolio much better and also help the branches focus on strengthening our liability franchise. We are sitting with McKinsey to redraw the contours of how MSME hubs can be upgraded into CMCs, which will also be looking at the retail segment and the agri-investment credit. The scope is going to be large," said Salee S Nair, managing director and chief executive officer (MD & CEO), TMB. The bank is in the process of identifying vendors for the technology solutions for this. "Almost 35 per cent of the workforce in CMCs will be outward-looking relationship managers," Nair said.

 

On the other hand, to transform the company's customer experience, human resources management software to handle employee productivity, and vendor management solutions for end-to-end expense management, Deloitte and Oracle have been taken on board.

 

"We are also looking to automate our own expenses. We have signed packages with reputed software providers and also roped in Deloitte on the CMS (cash management services) journey to automate. We have roped in Oracle and Deloitte for our customer experience journey too," Nair added.

 

The bank is also targeting an increase in the size of MSME accounts. "Our focus on MSMEs is beginning to pay off. When I look at accounts above Rs 50 lakh, they have grown by 11.88 per cent year-on-year (Y-o-Y)," he said.

 

During the third quarter of the current financial year (Q3FY25), the share of the retail, agri, and MSME (risk assessment model, or RAM) segments in its portfolio increased to 92.39 per cent from 90.87 per cent during the same period of the previous financial year, which in actual terms was Rs 39,277 crore in Q3FY25. Out of this, the share of MSMEs alone comes to around 35 per cent.

 

The bank said that it also expects a short-term impact on its net interest margin (NIM) due to a potential rate cut by the Reserve Bank of India (RBI), and is working on plans to maintain NIM at around 3.7 per cent. This is because around 50 per cent of its advances are linked to the repo rate. The RBI will take a call on rate cuts during the bi-monthly review meeting of the monetary policy committee (MPC), scheduled between February 5 and 7.