 ID 1020454 - Charlene Louis-Planche (Team Leader)

 ID 1020100 - Ketan Sharma Ramhit

 ID 1020181 - Mohammed Saleh Dhunnoo
 ID 1020314 - Laveesha Brizmohun
 ID 1020488 - Akash Gura Goredo
 ID 1020706 - Diana Chakowa-Colleemallay
 ID 1020731 - Magen Colleemallay
 ID 1020824 - Avinash Dookhun

Submitted to Mr. S. Gokulsingh

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Table of Contents
Executive Summary________________________________________________________________3
1 Introduction___________________________________________________________________4
2 Objective_____________________________________________________________________4
3 The banking sector_____________________________________________________________4
3.1 The Banking business______________________________________________________________4

4 The External Environment_______________________________________________________5

4.1 The PESTEL Framework_____________________________________________________________5
4.1.1 Political Factors_________________________________________________________________________5
4.1.2 Economic Factors________________________________________________________________________5
4.1.3 Social Factors___________________________________________________________________________6
4.1.4 Technological Factors____________________________________________________________________6
4.1.5 The Environmental Factor_________________________________________________________________6
4.1.6 Legal Framework________________________________________________________________________7

4.2 Porter’s 5 Forces Analysis___________________________________________________________7

4.2.1 Competitive Rivalry______________________________________________________________________8
4.2.2 Threat of New Entrants___________________________________________________________________8
4.2.3 Bargaining Power of Suppliers______________________________________________________________8
4.2.4 Bargaining Power of Customers____________________________________________________________8
4.2.5 Threats of Substitutes____________________________________________________________________9

5 The Internal Environment________________________________________________________9

5.1 The Key Success Factors____________________________________________________________9
5.1.1 Strengths______________________________________________________________________________9
5.1.2 Weaknesses___________________________________________________________________________10

5.2 Existing strategies________________________________________________________________10

5.2.1 Diversification strategy__________________________________________________________________10
5.2.2 Focus differentiation____________________________________________________________________10

5.3 The Challenges___________________________________________________________________11

5.3.1 Opportunities__________________________________________________________________________11
5.3.2 Threats_______________________________________________________________________________12

6 Proposed Strategies___________________________________________________________13
6.1 Related Diversification Strategy_____________________________________________________13
6.2 Market development strategy______________________________________________________13
6.3 Focused Differentiation Strategy____________________________________________________13

7 Conclusion___________________________________________________________________14
References______________________________________________________________________15

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Executive Summary
The present document analyses the operating environment and the associated strategy adopted by the SBM
group, the second largest banking institution of Mauritius, in relation to the changes in the local and foreign
environments that enabled it to remain profitable despite the recent global financial meltdown.

The opportunities and threats were analysed using the PESTEL framework for evaluating the various
Political, Environmental, Social, Technological, Environmental and Legal parameters influencing the banking
industry where SBM operates. It was found that the constraints to business expansion would come from the
political, economic and legal areas, while social changes and technological advances were in fact
opportunities for growth and consolidation of its position in the industry.

This was followed by an analysis using Porter’s 5 Forces model, where it was found that Competitive Rivalry
was only a facade, that the Threat of New Entrants was real, but of no major consequence in terms of market
share, that Bargaining Power of Suppliers was virtually inexistent as much as Bargaining Power of Customers
and that there was also very low Threat of Substitutes, to conclude that SBM was operating in a duopolistic
market at maturity stage.

SBM’s Internal Environment was analysed by examining its Key Success Factors, and identifying its
Strengths and Weaknesses which would explain its existing strategies: Diversification strategy and Focussed
differentiation.

Challenges facing SBM were analysed by identifying Opportunities and Threats in its external environment.

By combing the challenges and the key success factors (Strengths and Weaknesses against Opportunities and
Threats: SWOT), three strategies were identified and proposed for pursuit in order to sustain SBM’s
competitive advantage: Related Diversification Strategy, whereby an array of banking products and services
were to be designed for adapting to the changing customer needs, Market development strategy in order to
broaden customer base and maximise profits, and Focused Differentiation Strategy in order to propose
innovative products that are unmatched by competitors.

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1 Introduction
The objective of this paper is to analyse the strategies elaborated by the State Bank of Mauritius Ltd (‘the
SBM’) for the last three years (2009, 2010 and 2011) given the challenging conditions faced by the banking
industry around the world following the sub-prime crisis in the United States. The paper also ambitiously aims
at proposing strategies for the future development of SBM.

SBM is owned by nearly 17,000 domestic and international shareholders, and has more than 1,100 employees
and services over 375,000 customers through its network of 48 service units and counters in Mauritius, India
and Madagascar. SBM started operations in 1973 and was listed on the Stock Exchange of Mauritius in 1995.
It is the second largest companies listed on the Stock Exchange of Mauritius, with a market capitalisation of
Rs 29 bn (USD 980 m) as at January 2011, trading shares at a constant Rs82 (as at 12 April 2012) and paying
out R3 per share for the financial year ending June 2011, thus rising shareholders’ equity by 9.0%(SBM,
Annual Report 2011).

The paper will first identify the vision of SBM, to determine what SBM wants to achieve. It will then propose
an assessment of the external environment using the PESTEL model, drilling down to the environment within
the industry through Porter’s 5 forces analysis and work its way down to the micro analysis of SBM by using
the SWOT model. Having understood where SBM stands and where it wants to go, recommendations will
shed light on the proposed strategies given the challenges identified in the market.

2 Objective
SBM envisions in being ‘the leading provider of integrated financial services in the regions of SBM
operations through a dedicated and competent professional team.’ At this point, it is important to identify the
industry in which SBM is evolving. The financial services industry encapsulates two major branches the
banking sector (regulated by the Bank of Mauritius) and the non-banking financial institutions (‘NBFIs’)
(regulated by the Financial Services Commission).

From the consolidated accounts of the SBM Group (‘the Group’), it can be gathered that the core business of
the Group is banking activity. While the paper acknowledges the diversification strategy of SBM through the
setting up of subsidiaries like, inter alia, SBM Mauritius Asset Managers Ltd, and SBM Securities Ltd
involved in non-banking financial business namely asset management, brokerage services respectively; the
paper will focus on SBM’s core competency within the banking sector.

3 The Banking Sector

3.1 The Banking Business
The Banking Act (2004) (section 2) defines the banking business as (i) the business of accepting sums of
money, in the form of deposits or other funds, whether or not such deposits or funds involve the issue of
securities or other obligations howsoever described, withdrawable or repayable on demand or after a fixed
period or after notice; and
(ii) the use of such deposits or funds, either in whole or in part, for –
A. loans, advances or investments, on the own account and at the risk of the person carrying on
such business;
B. the business of acquiring, under an agreement with a person, an asset from a supplier for the
purpose of letting out the asset to the person, subject to payment of instalments together with
an option to retain ownership of the asset at the end of the contractual period; and
C. includes such services as are incidental and necessary to banking.

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4 The External Environment

The external environment of SBM, both locally and internationally, will be analysed using the PESTEL
framework together with Porter’s 5 Forces in order to identify and characterize the influence of market forces
on the banking business

4.1 The PESTEL Framework

The PESTEL framework is used below for identifying the Political, Economic, Social, Technological and
Legal parameters that will influence the banking business.

4.1.1 Political Factors

In 2011, the Fiscal policy of Mauritius has been amended to remove taxation on interest on savings and also
abolished in 2012 Capital Gains Tax.
In the 2011 budget speech, there is clear Government support to the local SME’s through the creation of a
special credit scheme amounting to a sum of Rs 3 billion through selected commercial banks (including
SBM), and on which the government itself has pledged to guarantee to a level of 35% of loans to SMEs. The
Budget also sets up the National Resilience Fund to support the local industry at microeconomic level.

At international level, Madagascar was seen to stagnate in a prolonged political impasse. However following
Mr Rajoelina’s high court confirmation as head of the High Transitional Authority economic growth and
prospects in Madagascar are due to subside, the more so when democratic general elections are called for.
In India, the government is threatening to unilaterally revise the Indo-Mauritian Double Taxation Avoidance
convention. This is a direct threat to offshore business transactions originating from India, where more than
30% of their offshore transactions (representing more than half of the local offshore transactions) transit
through the Mauritian offshore sector.

4.1.2 Economic Factors

Statistics Mauritius estimates economic growth to fall to nearly 3.8% in 2012, compounded by the latest
World Bank Report’s worst case scenario of 1.7%. Unemployment rate is expected to reach 7.9%.

Growth in the construction and tourism sector is expected to be marginal and as reported from the World
Bank Report of 2012, they constitute nearly 40% of total loans, this may negatively impact the banking sector.
On the other, the good health of the financial sector, which contributed to some 10% to the GDP in 2011 and
to one third of incoming FDI, is expected to suffer from the Indian Parliament’s threat of reviewing the non-
double taxation treaty. Since more than half of the Mauritian offshore transactions revolve around Indian
dealings, it is expected that the Mauritian financial sector will slow down.

With the easing down of the inflationary pressures from 6.5% in 2011 to 6.2% in February 2012, the
Monetary Policy Committee brought about a 50 point reduction in the Repo Rate to 4.9%with direct
consequences to rates applied in the banking sector.

It is also noted that the Mauritian Economy is still highly dependent on European market for Export and
Tourism, which implies that it will remain exposed to heavy challenges on the European economy with
Portugal, Spain and Italy being on the brink of crisis. This happened despite signs of stabilisation in the euro
zone following the implementation of recent measures by European authorities to address the sovereign debt
crisis.
On the other hand, the US economic outlook has been improving while emerging economies like China and
India continued to record strong growth rates, despite slowing pace in the second half of 2011 due to
monetary tightening in a bid to mitigate the effects of their domestic inflation levels.

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4.1.3 Social Factors

The change in lifestyle toward nuclear family demonstrates continuing demand in the housing sector. The
general trend of aging population is maintained and with the fact that the baby boomers reaching retirement
age have financially planned their retirement and have a need for optimal wealth management.
A new emerging generation of successful young professionals make full use of their technological literacy.
This clientele has very specific needs in terms of banking services – tailor-made access to banking services.
It can be observed that the Mauritian is increasingly financially literate and is moving from being a saver to an
investor.

4.1.4 Technological Factors

Since the last decade, with the reduction of internet tariff, and accessibility (wireless, increase in bandwidth)
the rate of penetration of the Internet in Mauritian household has been increasing (from 22% in 2009 to 25%
in 2010), thereby bringing more users to be exposed to the advantages of e-banking: this was evidenced by
the steady increase in the number of taxpayers filing their returns and paying their taxes online.
However, the growing demand for e-business and online banking can only be supported by establishment of
state-of-the art IT infrastructure in order to provide
• Reliability and security of transaction
• Convenient banking on an all-time, all-day basis (aka 24/7)
• Transaction channels for e-commerce, mobile banking, and operation of PoS (Point of Sale) machines
There is continuous research and development towards a more reliable and effective information technology
platform both at the hardware and software dimension for e-banking and e-commerce, while taking into
account the persisting risk of hackers and phishers to fraudulently divert funds by electronic means.

4.1.5 The Environmental Factor

The concept of ‘Maurice Ile Durable’ (MID) aims at reducing dependence on fossil fuels. One of the most
important pillars of the project is to decrease its dependence on fossil fuel by 65% by 2028. There exists a
demand for sustainable electricity-generating units such as photovoltaic panels and wind turbines

4.1.6 Legal Framework

In response to the recent financial crisis, the Basel Committee issued new regulations for providing a more
stable banking system that is less prone to excessive risk-taking. The Basel Committee on Banking
Supervision issued the detailed components under the new Basel III regulatory framework which implies
tighter capital and liquidity requirements with the objective of improving the capacity of the banking sector to
absorb shocks in case of crisis, i.e., limit spillover effects of crises into the real economy. Basel III framework
is due to be optimized under Basel III which is due to come into force in 2019.
Also there was an amendment to the Banking Act in 2012 to integrate the concept of Islamic Banking
The Bank of Mauritius has been encouraging banks to increase lending and to develop a secondary market for
Treasury Bills by the introduction of a new limit on the holdings of Treasury Bills by banks. In July 2011,
banks are required to maintain in their banking book T-Bills equivalent to 18% instead of 20%..
Compliance to the Code of Corporate Governance is mandatory since July 2009 for all public interest bodies
(which includes banks)
In India the Reserve Bank of India (‘RBI’) aims at promoting greater stability and control within the banking
system in India, by changing the regulatory environment relating to the mode of presence of foreign banks in
the country. Soon, the RBI will require local incorporation by foreign banks such that only wholly-owned
subsidiaries will be allowed to operate instead of mere branches of foreign banks.

Following the study of the external environment, restraining forces and precursors which will affect the
strategic choice of players of the banking sector have been identified.

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4.2 Porter’s 5 Forces Analysis

As at 2012, the banking industry comprises of 20 banks, which in 2011 contributed nearly 5% of the GDP,
and grew by 5.9% despite the economic crisis as compared to a growth of 3.9% in 2010 (CSO 2010)

Taking a closer look to the banking sector, it can be observed that the market is segmented into retail banking,
corporate banking, private banking and offshore banking and those players in the banking industry have been
adopting different strategies to sustain growth. It can be also be noted that while banks like the State Bank of
Mauritius and the Mauritius Commercial Bank had traditionally been in retail banking; international
subsidiaries as the Deutsche Bank (Mauritius) Limited deals mainly in the offshore banking, even if HSBC
Ltd is the leader in the offshore banking market segment; AfrAsia Bank Limited leveraged on corporate
banking while new comers as the Century Banking Corporation Limited target the Islamic banking niche –
just to name a few. Further, it is also noted that traditional bankers adopted a vertical integration approach and
diversified in the financial services.

The maturity of the banking sector and the limited market size forced bankers, especially that, of retail
banking to expand their operations in foreign markets and to reinvent the banking business through the
diversification of the product lines into innovative product and to pull on latest technological development.

As seen in the PESTEL analysis, it is undeniable that the turmoil triggered by the sub-prime crisis in 2008 in
the US which affected the world in an unprecedented manner, stumbling over the Euro zone on its way, and
inevitably reached our shores. While observers agree to say that Mauritius has shown resilience, the Porter’s
5 Forces Analysis will give a deeper insight on how the banking industry in Mauritius has been faring given
the features of the sector, described above.

4.2.1 Competitive Rivalry

Given the size of the Mauritian market and the high number of competitors in the industry (20 banks), one
would be tempted to conclude that there is a high level of rivalry in the banking industry. However, despite
the denials of the main actors of the industry, it can be observed that there is a covert collusion amongst all the
players to, for example, maintain the spreads (the difference between lending and savings rate, currently at
about 8% and 4% respectively) at an abnormally high level (generally ranging between 4 to 5 percent) in the
absence of a price war.
There is no offensive move in terms of lending rates to poach clients from rivals and retain existing customers
by lowering financing, preferred rates and investment services offerings. A trend has also developed among
banks to offer highly differentiated services, confirming the low level rivalry in the banking industry.

4.2.2 Threat of New Entrants

According to Section 20(1)of the Banking Act 2004, a stated capital amounting of not less than 200 million
rupees held in asset or the equivalent amount held in asset are, inter alia required to hold a banking licence.
The high capital, elaborated IT systems, and market and technical knowledge are very important to establish a
new bank. The presence of strong brands within the industry would appear to be an obstacle for newcomers.
Yet, within the past 5 years, not less than 6 banks have secured a banking licence and have all started
generating profits. It can be concluded that the threat of new entrants in the banking industry is medium to
high.

4.2.3 Bargaining Power of Suppliers

At this stage it is important to define the suppliers of the banking business. Those are depositors,
Development Finance Institutions (DFI’s), and international banks

Availability of cash depends on savings and economic conditions of the local economy. However, high net
worth individuals (‘HNWI’)are rare, as the market is characterised by large number of consumers and few
cash-affluent individuals. Indeed, the consumers depositing cash have no bargaining power, as the industry is
setting the rates. However, the HNWIs possess some bargaining power as they can shop around the 20-strong
competition.

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Moreover, liquidity level in the banking sector being still high – despite tighter regulation and continual
intervention by the Bank of Mauritius – should have encouraged banks to soften conditions to access credit or
loans, but the banks did not do so. And in so doing causes deposit-taking less attractive due to already low
savings rates, thereby causing the bargaining power of suppliers of cash to be greatly reduced. The
Bargaining Power of Suppliers may thus be considered as low.

4.2.4 Bargaining Power of Customers

As mentioned above, there exists collusion among banks in the industry conducive to an environment where
the absence of price war leaves no alternative to customers seeking banking services. The banking
environment is notoriously conservative and reluctant to lower entry barriers for loan seekers, for instance,
even large corporate bodies face difficulties in securing advances, loans and overdrafts, and when they are
successful, it is normally at the expense of prohibitive rates exercised industry-wide. It is therefore concluded
that the Bargaining Power of Customers is low.

4.2.5 Threats of Substitutes

Strictly speaking the banking business as defined as per section 2 of the Banking Act has no substitute.
However, it has been noted that some of the services offered by banks, such as loans were being offered by
NBFI’s operating in the financial services industry, e.g., insurance companies.

The above analysis helped to broaden the perspective of players operating in the banking sector. Having
captured the above, it is now imperative to drill down to understand the reaction of SBM within this given
environment.

5 The Internal Environment

Having considered the international and domestic economy, and analysed the industry’s reaction within that
economy, it is now proposed through the SWOT model, to take stock of the key success factors of SBM
through an assessment of its strengths and weaknesses. Prior to considering the challenges faced by SBM (i.e.,
the opportunities and threats in the banking sector), it is also important to identify the existing strategies
adopted by SBM during the last 3 years to ascertain consistency in final recommendations.

5.1 The Key Success Factors

5.1.1 Strengths
Originally, set up in 1973 to be “la banque du people”, SBM has acquired over time a solid reputation of
trustworthiness. Indeed it has been rewarded several times by different recognized international institutions
and rated inter alia, the highest amongst its peers in Mauritius by Moody’s Investors Service. SBM has built
up by a loyal customer base satisfied with the structured and customised facilities offered to them. Indeed to
achieve the above, SBM has successfully been able to adopt a diversified business model approach, which
include, Retail Banking, SMEs, Private Banking and Wealth Management, Corporate, International and
Investment Banking.
Further, SBM has been a pioneer in the banking sector in Mauritius to set-up an e-commerce platform and
introduce the Europay-Mastercard-Visa chip debit card technology. It has also been investing in superior
technology to consolidate its E-business segment through, e-commerce portal, mobile banking services,
extensive network of Point Of Sale machines, while maintaining enhanced security standards for internet
transactions. The above combined strengths allowed SBM to be closer to its customers.
While SBM has a solid national branch network, it is also building a growing international presence, through
international coverage- India and Madagascar and cross-border transactions in a number of countries and has
acquired local & international recognition.
It can also be noted that SBM has a robust risk management and governance. The risk management structure
is independent from the business-generating areas to avoid conflicts of interest.

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Equipped with a strong management team and trained and motivated employees and banking on its key
attributes, i.e., innovation, flexibility, accessibility, SBM has been able to continuously offer innovative
products and services and be focused on efficiency while generating for the last three years profits above
MRU 2billion.
Further SBM successfully implemented the recommendations of Basel II with respect to risk management
practices and more risk-sensitive capital requirement and certain internal risk measurement models complying
with the Bank of Mauritius guidelines.

5.1.2 Weaknesses
SBM is highly dependent on the internal economy. As a result of pressures within the environment between
2008 and 2009, trade volume was subdued, credit demand slowed down, yields on treasury builds came down
and credit spreads came under pressure. Indeed, the fall in credit demand in large projects by private sector
weakened the position of SBM.

5.2 Existing strategies

Some of the major internal determinants forcing banks nowadays to diversify are increased volatility of
financial parameters, cost of operation, costs of conformance to regulatory environment and technological
change while external determinants are economies of scale, dynamics of bank competition and global
presence of financial conglomerates.SBM Ltd has been transcending its normal business operations and
diversifying its activities in response to economic and financial sector reforms in order to strengthen its
competitive advantages and building market share on their long-standing abundant resources. SBM has
therefore well consolidated its position in the banking market.

5.2.1 Diversification strategy

Using the Ansoff product-market matrix, SBM adopts the diversification strategy specifically horizontal
diversification strategy by adding new products and services to existing market in order to match internal and
external determinants.
In so doing, SBM focuses on developing new products and services for its corporate and individual customers,
both domestic and international, through Wealth Management services, Small and Medium Enterprises and
Card services.

5.2.2 Focus differentiation

SBM differentiates itself through superior service by proactively responding to client needs and continuously
improving their service quality. It has been able to bring the bank to not only the home, but also to the reach
of greater segments of the market via mobile banking. Transactions are easily done on a 24/7 basis using

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connectivity resources which include wireless networks. Ranging from tailor-made loans to SMEs, Home
loans to Internet banking, the SBM has been able to adapt to the continuous change in social environment and
technology to meet the expectations of all types of customers.
SBM relies on its people to achieve real productivity gains and shift to superior levels of service. Therefore it
aims at sharpening its internal capabilities through sustained investment in technology and a comprehensive
review of processes to enhance efficiency and improve customer service. It further enhances HRM to make
human capital a key differentiating factor in providing superior service to their customers.

5.3 The Challenges

5.3.1 Opportunities
The banking sector is a buoyant one. There has been indeed at the domestic level, changes in the Banking Act
to allow for Islamic banking, the introduction of the Cheque Truncation System (electronic system to clear
cheques) and fall in the Key Repo rate by 50 basis points to 4.90% per annum, i.e., elements which could
bring customers who are sensitive to competitive loan characteristics.

On the international level, Basel II framework is due to be optimized under Basel III which will come into
force in 2019. SBM has already geared up to meet the most stringent ratios (requirements in terms of capital
and liquidity parameters), and is set to meet the intermediate milestones set for 2016 well in advance of the
guidelines yet to be issued by the local central bank, reinforcing the banking framework.

As a pioneer in internet banking, SBM can leverage its internal strong IT capabilities on the fast technological
development of Information Technology and the fact that the ICT segment is in the growth phase in
Mauritius. This resulted in an increasing penetration of internet in Mauritian household while Mauritians are
more and more technology savvy

It has been noted that the domestic economy has maintained its recovery in 2011, and that there is room for
international business expansion, with new markets being opened by trade agreements (SADC, COMESA),
thus an opportunity to increase geographical coverage. As for the Indian economy, notwithstanding a
slowdown in the latter half of 2011, it will continue to deliver one of the strongest growth rates in the world,
as an emerging economy, which is driving solid banking sector performance.

The world economy has picked up with globally positive growth rates since 2011. The rupee, which gained
13.3% and 9.2% against the euro and the pound sterling respectively over 2010, while remaining stable
against the dollar on a point-to-point basis. In August 2011, the US dollar, on average, depreciated vis-à-vis
the euro, Pound sterling and Japanese yen.

The Mauritian demographics are also changing rapidly. The population is ageing and with the IRS scheme,
there is diversification in the population bringing a shift in banking culture. The increasing rate of literacy and
the growing income by young professionals open new avenues for growth.

‘Maurice Ile Durable’ - the debate about the scheme being a utopia does not really matter here. The Mauritian
is connected to the world. The rise of ethical consumerism will soon increase the bargaining power of the
Mauritian consumers. This will have a two-fold effect, the extent to which SBM is viewed as green by its
clients and the extent to which SBM can help its clients to be greener.

5.3.2 Threats
The traditional banking business is at maturity on the Product Life Cycle in a market whose marginal
propensity to grow is limited. In such environment consumers, especially corporate clients have high
bargaining power due to low product differentiation. Further, other players on the market are implementing
apparently offensive moves to attract and retain customers. As observed earlier, the banking sector now
operates within the financial services industry. Non-banking financial institutions like insurance companies,
which do not hold a banking licence, operate a parallel shadow banking industry, through offering of loans
and financial services to customers at competitive rate.

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The rate of inflation in the domestic market has been constantly rising over the past three years being at end of
2011 at 8% %, causing a fall in purchasing power causing a slowdown in growth and a decline in investment
and consumption (http://www.indexmundi.com/g/g.aspx?c=mp&v=71) .Further, the Mauritian economy is
highly depended on the European market for its exports. In the aftermath of the crisis, the ripple effect was
felt in the Mauritian textile and tourism sectors. It can be noted that the world is becoming increasingly
interconnected. Abrupt changes in environment, the price of oil and commodity process rising, the global food
and energy crisis, the mounting of trade imbalances, inter alia, are causing high volatility in the business
environment and will definitely affect the way SBM is doing business.

The Madagascar economy has been marred by a political impasse, which is having an adverse impact on
growth and investment, but is otherwise offering higher rates of returns on placements

Emerging markets such as China and India have, for their part, continued to post strong growth, albeit at a
slowing pace in the 2nd half of the financial year linked to policy tightening in response to mounting inflation

It can also be noted that the fast pace at which technology is growing also increases the risk of internet
hacking, acting as a deterrent to e-banking.

As a matter of fact, analysing the key success factors and the existing strategies of SBM provides a solid base
to leverage on the challenges to provide strategies, which will help SBM to achieve its goals by continuously
enhancing customer service, capacities, capabilities, competencies, delivery channels and operating
efficiencies as well as maintaining a balanced, acceptable and quality risk profile while effectively managing
its balance sheet.

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6 Proposed Strategies
Following observations and analysis of the macro and micro environment of SBM, the following strategies are
being proposed, as a means for SBM to meet its goal to continuously improving and innovating SBM’s lines
of business and achieve strong and sustainable returns for the shareholders.

6.1 Related Diversification Strategy

It has been observed that the banking industry in Mauritius is already mature. Therefore SBM has been
adopting a product development strategy by improving present products / services or developing new ones.
Indeed, SBM has been pioneering mobile banking in Mauritius by proposing its clients to access their
accounts from their mobile phone. With the increasing popularity of smart phones and easy access to internet
through the democratisation of ‘wifi’ hotspots, SBM can provide an augmented banking service through
“mobile banking services” based on the development of smartphone applications (leveraging onto the
reputable IT backbone of SBM), thus meeting the need of professionals and other tech-savvy individuals
whose occupation or lifestyle cause them to remain constantly on the move.

Other worthwhile pursuits need to be investigated in order to bring value to the SBM group, as outlined
below:

6.2 Market development strategy

One of the concerns identified in the banking industry, is an increasing number of players in a restricted
market. However, given the experience acquired by SBM through international coverage and sustained growth
in emerging economies, like the BRICS, SBM could explore other potential international markets like China.
This can be done through joint strategic alliances with local banks by focusing on the privileged Sino-
Mauritian relation, already established by the presence of Jin Fei in Mauritius.

6.3 Focused Differentiation Strategy

Finally, as reported by the World Bank Report 2012 growth in the tourism and construction shall be marginal
for 2012. Indeed, in its 2011 annual report, SBM observed that credit demand slowed down. Given the current
trends, it is therefore proposed that SBM adopts a focussed differentiation strategy, by targeting a narrow
market niche with specific needs and preferences of customers, like those operating in the financial services
and the ICT sector, or even the SMEs under SME credit scheme proposed in the last Budget Speech.

SBM could also secure competitive advantage from rivals competing in the same niche market, for example,
by the design of a pension scheme aimed at young professionals, provide an investment fund aimed at
financially stable ageing population

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7 Conclusion

SBM has accumulated a series of successful ventures consistently over the past decades in proposing new
banking products. The constant scanning of the environment provided SBM with the vital market intelligence
to remain in phase with the changing needs of its customers. SBM engineered a combination of market
development, focussed differentiation and related diversification strategies for successfully developing
innovative customer-centred banking solutions in order to develop segments of the market, while growing in
size and revenue and remaining profitable at all times. New emerging markets were penetrated and
developed by leveraging the technological infrastructure and human capital with the result of the growing
array of SBM’s unique banking products that are unmatched by the industry to date. SBM has therefore
managed to ingrain successful innovation culture into its corporate structure and is therefore set to become
synonymous with innovation in the banking sector.

This demonstrates the endeavour of the management team to develop capable and talented human capital and
a robust IT infrastructure in order to correctly identify the needs of the company while pursuing the vision of
becoming the provider of premier financial services.

- End of Document -

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References
AXYS Stockbroking Ltd - The Mauritian Economy: 2012 Outlook (available at
http://www.axysstockbroking.com)

Bank of Mauritius, 02 April 2012: Minutes of the 25th Monetary Policy Committee Meeting (19 March 2012)

businessmega.mu, 03May, 2011: Mauritius central bank says inflation 7.8% in June. [Internet].
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Central Depository and Settlement Co. Ltd – Annual Report 2011 (available from
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Indexmundi.com, 13 April 2012, http://www.indexmundi.com/g/g.aspx?c=mp&v=71

lemauricien.com. 2011. BANQUE Placements sur les marchés financiers — La SBM lance sa plate-forme de
Trading international. [Internet]. Available at: http://www.lemauricien.com/article/banque-placements-sur-
les-march%C3%A9s-financiers-%E2%80%94-la-sbm-lance-sa-plate-forme-de-trading-intern

Lemauricien.com. 2011. ENVIRONNEMENT: SBM et Leal s'associent en faveur de l'énergie renouvelable.

[Internet]. Available at: http://www.lemauricien.com/article/environnement-sbm-et-leal-sassocient-en-faveur-
de-l%C3%A9nergie-renouvelable

Lemauricien.com. 2011. EXERCICE 2010-2011: La SBM repasse la barre de Rs 2 milliards de profits nets.
[Internet]. Available at: http://www.lemauricien.com/article/exercice-2010-2011-la-sbm-repasse-la-barre-rs-
2-milliards-profits-nets

Lemauricien.com. 2011. MONÉTIQUE: La SBM lance deux cartes prépayées. [Internet]. Available at:
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%C3%A9es

Lemauricien.com. 2011. PARTENARIAT SBM/MITD : 100 bourses d’études aux élèves nécessiteux du TVET.
[Internet]. Available at : http://www.lemauricien.com/article/partenariat-sbmmitd-100-bourses-d
%E2%80%99%C3%A9tudes-aux-%C3%A9l%C3%A8ves-n%C3%A9cessiteux-du-tvet

Lemauricien.com. 2011. PROJET SOCIAL ET SPORTIF: La SBM offre Rs 500,000 au CSSC. [Internet].
Available at: http://www.lemauricien.com/article/projet-social-et-sportif-la-sbm-offre-rs-500000-au-cssc

Lemauricien.com. 2011. SBM: Investissements dans la plateforme technologique. [Internet]. Available at:
http://www.lemauricien.com/article/sbm-investissements-la-plateforme-technologique

Lemauricien.com. 2011. SECTEUR BANCAIRE: La SBM offre Rs 6,5 M à la Gandhian Basic School.
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%C3%A0-la-gandhian-basic-school

Lemauricien.com. 2011. SICOM: Des plans d’assurance proposés par la SBM. [Internet]. Available at:
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Lemauricien.com. 2012. BANKING PRACTICES: Apology of Greed. [Internet]. Available at:

http://www.lemauricien.com/article/banking-practices-apology-greed

Lemauricien.com. 2012. BANQUE — GROUPE SBM: Croissance de 17,3 % des profits après impôt.
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173-des-profits-apr%C3%A8s-imp%C3%B4t

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Lemauricien.com. 2012. INVESTISSEMENT SBM: Profiter de la croissance en Inde avec un minimum de Rs

3 000. [Internet]. Available at: http://www.lemauricien.com/article/investissement-sbm-profiter-la-croissance-
en-inde-avec-minimum-rs-3%C2%A0000

Lemauricien.com. 2012. INVESTISSEMENT: Partenariat SBM Asset Managers Ltd-Fidelity. [Internet].

Available at: http://www.lemauricien.com/article/investissement-partenariat-sbm-asset-managers-ltd-fidelity

Lemauricien.com. 2012. PME: Des crédits bancaires de Rs 111 millions approuvés. [Internet]. Available at:
http://www.lemauricien.com/article/pme-des-cr%C3%A9dits-bancaires-rs-111-millions-approuv%C3%A9s

Lemauricien.com. 2012. SBM INDIA FUND:Clients et opérateurs économiques sensibilisés. [Internet].

Available at: http://www.lemauricien.com/article/sbm-india-fundclients-et-op%C3%A9rateurs-
%C3%A9conomiques-sensibilis%C3%A9s

Lemauricien.com. 2012. SBM SCHOLARSHIP SCHEME: 76 bourses à des étudiants nécessiteux du tertiaire.
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des-%C3%A9tudiants-n%C3%A9cessiteux-du-tertiaire

Lemauricien.com. 2012. THE FUNDAMENTALS OF A DISCUSSION: Cats Among The Pigeons. [Internet].
Available at: http://www.lemauricien.com/article/fundamentals-discussion-cats-among-pigeons

Lexpress.mu. 2010. La SBM en Inde pour des sources de revenus à cause du manque de dynamisme local.
[Internet]. Available at: http://www.lexpress.mu/services/archivenews-18949-la-sbm-en-inde-pour-des-
sources-de-revenus-a-cause-du-manque-de-dynamisme-local.html

Lexpress.mu. 2011. La Banque européenne d’investissement prête Rs 1,2 milliards à la State Bank. [Internet].
Available at: http://www.lexpress.mu/services/archivenews-24809-la-banque-europeenne-d-investissement-
prete-rs-1-2-milliards-a-la-state-bank.html

Lexpress.mu. 2011. La SBM introduit le service de Bancassurance. [Internet]. Available at:

http://www.lexpress.mu/services/archivenews-27902-la-sbm-introduit-le-service-de-bancassurance.html

Lexpress.mu. 2011. SBM Ecoloan : Pour encourager l’utilisation du système solaire photovoltaïque.
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Lexpress.mu. 2011. State Bank of Mauritius : bénéfices en hausse grâce aux frais bancaires et aux
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mauritius-benefices-en-hausse-grace-aux-frais-bancaires-et-aux-commissions.html

Lexpress.mu. 2012. Education tertiaire : 3 000 ordinateurs décernés aux étudiants nécessiteux. [Internet].
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decernes-aux-etudiants-necessiteux.html

Lexpress.mu. 2012. Fonds d’investissements : la SBM conclut un accord avec Fidelity Worlwide Investment.
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lexpress.mu. 2012. La State Bank of Mauritius fait son entrée sur le marché indien du capital-investissement.
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State Bank of Mauritius Group Annual Reports 2008, 2009, 2010, 2011

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