State Bank of India posted record profits of about $9.2 billion in fiscal ending March 2025, becoming only the third Indian company, after Reliance Industries and ONGC, to feature in the Global Top 100 companies ranked by net profit.
However, bulk of SBI‘s profits are driven by a relatively small digital cohort, Rajendra Srivastava, who is considered India’s Philip Kotler, said in a post on medium.com.
The impressive growth in profitability of India’s largest lender lies within a bold digital pivot that began several years ago. “The story of SBI’s profitability is, in many ways, the story of YONO,” he wrote.
The You Only Need One (YONO) app was launched in November 2017. What began as a response to growing fintech disruption has transformed into a pillar of SBI’s growth strategy. YONO today has over 74 million registered users, a digital user base that rivals any private player or fintech startup in the country.
The platform has enabled over Rs 3.2 lakh crore in loan disbursements since inception and contributes significantly to the bank’s retail loan book. Daily logins on the platform exceed 10 million, and 65 per cent of SBI’s savings account transactions are now routed through YONO.
YONO is much more than a banking app, it’s a full-fledged ecosystem or digital marketplace. Users can open accounts, invest in mutual funds, buy insurance, shop online, book travel, apply for loans, and even access government services. This all-in-one strategy is delivering tangible returns by deepening customer lock-in, protecting cash flows, and building long-term resilience.
“SBI services over 500 million accounts, making it the largest bank in the world by customer base. However, only around 74 million (approx. 14 per cent) of these accounts are YONO users. This presents a paradox: the bulk of SBI’s profits are driven by a relatively small digital cohort, while the remaining 370 million accounts represent low-margin, high-cost liabilities service segment,” he wrote.
Dormant and low-balance accounts, many of them legacy accounts opened for financial inclusion purposes, continue to weigh on operating costs.
Stating that financial inclusion is important, he said the question is whether a sprawling network of 20,000 branches with 220,000 employees is the most efficient way to deliver financial inclusion in 2025.
India’s Digital Public Infrastructure (DPI) consisting of Aadhaar, UPI, internet connectivity, and smartphone access have revolutionised access to financial services. The very rationale for SBI’s physical branches needs re-evaluation when even rural citizens are today transacting seamlessly through mobile phones.
“Despite record-breaking profits, SBI continues to trade at a lower Price-to-Book (P/B) ratio of 1.4 compared to its private sector peers. HDFC Bank (2.8) and ICICI Bank (3.3) enjoy higher market valuations because they are perceived as leaner, more agile, and more digitally native by investors,” he said, adding the private sector banks operate with lower capex on branches and infrastructure, leaner employee bases with higher productivity, lower NPAs and stronger risk perception in the market.
SBI’s discounted P/B, compared to its peers in the domestic market, reflects investor concerns about structural inefficiencies in asset utilization, not financial performance per se, he said.
Srivastava, who is the former Dean of the Indian School of Business (ISB) and the Novartis Professor of Marketing strategy and Innovation, said SBI must prioritize YONO.
“With a relatively small incremental investment, SBI can convert more of its legacy customers into digital users, reducing cost-to-serve,” he said.
It can also phase out low-ROI physical infrastructure such as underutilised branches and ATMs, trim administrative overheads linked to dormant or low-balance accounts, improve customer lifetime value through cross-selling within the YONO ecosystem and expand its footprint beyond traditional geographies without incremental capex.
“This is likely to bring in strategic relevance in an age where fin-techs are redefining customer experience. SBI cannot afford to treat YONO as an ancillary channel, it must become the core engine of customer engagement and revenue generation,” he said.
Globally, the BFSI sector is undergoing a transformation, driven by digital-first banking models. Operating efficiency, capital-light growth, and personalised digital experiences are no longer luxuries – they are imperatives.
“Digital banks have consistently outperformed legacy institutions in metrics like cost-to-income ratio, customer acquisition cost, and return on assets. In India, this trend is visible in the meteoric rise of fintechs like Paytm, PhonePe, and Zerodha. But unlike them, SBI has scale, trust, and regulatory comfort which can be leveraged not only for competitive advantage, but to meet its larger purpose of financial inclusion,” he said.
SBI, he said, has already proved that it can deliver profits at par with the best in the world. “Now it must prove that it can earn the valuation premium that comes with being future-ready.” SBI could potentially double its market capitalisation without doubling its branch network or employee headcount if it were to double YONO user penetration to serve most rural and urban accounts through a mobile app, he said.
“In future, SBI can become a beacon for all public sector companies, demonstrating that profitability, efficiency, and inclusion are not mutually exclusive. Higher levels of equity capital add to resources available to compete globally. India needs more financial firepower to fuel its growth ambitions. Doing well will also enable SBI to do good for the nation,” he added.