The State Bank of India (SBI) has achieved a record profit of $9.2 billion for the fiscal year ending March 2025, making it one of the top 100 companies globally in terms of net profit. This success can be attributed to the bank’s strategic shift towards digital banking, particularly through its YONO app. Launched in 2017, YONO has become a cornerstone of SBI’s growth strategy, with over 74 million registered users and over 10 million daily logins. The app has enabled more than Rs 3.2 lakh crore in loan disbursements and has become a significant contributor to the bank’s retail loan book.
However, despite its success, YONO accounts for only a small portion of SBI’s overall customer base, with only about 14% of its 500 million accounts actively using the app. This has raised questions about the efficiency of SBI’s expansive network of 20,000 branches and 220,000 employees. Rajendra Srivastava, a prominent marketing expert, has pointed out that the bulk of SBI’s profits come from a small digital user base, while the remaining 370 million accounts are primarily low-margin, high-cost liabilities.
Srivastava has suggested that SBI focus on expanding YONO’s reach to convert more of its legacy customers into digital users, reducing the cost-to-serve. He has also proposed that the bank phase out underutilized physical infrastructure and trim administrative costs tied to dormant accounts. By doing so, SBI could improve customer lifetime value through cross-selling within the YONO ecosystem and extend its footprint without additional capital expenditure.
Despite its record-breaking profits, SBI trades at a lower Price-to-Book (P/B) ratio of 1.4 compared to its private sector peers, reflecting investor concerns about its structural inefficiencies in asset utilization. Srivastava believes that SBI can improve its P/B ratio by improving its operational efficiency and expanding its digital presence. By doing so, the bank can become a beacon for all public sector companies, demonstrating that profitability, efficiency, and inclusion are not mutually exclusive.
Overall, SBI’s success with YONO is a testament to the power of digital banking in India. However, the bank needs to focus on expanding its digital presence and improving its operational efficiency to remain competitive in the financial services landscape. With a relatively small incremental investment, SBI can convert more of its legacy customers into digital users, reducing costs and improving customer lifetime value. By doing so, the bank can gain strategic relevance and become a leader in the Indian banking sector.