Technology and Change Mgmt in Banks

Introducing technology advancements in banks is not about implementing software modules. It's about managing change and perceptions amongst key stakeholders

Monday, January 01, 2007

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Technology and processes are going through a phase of radical change in Indian banks. Its relevance and prioritization has gone beyond the nascent stage of mechanization that started after the recommendation of Narashimam Committee to computerize all banks to improve the accounting system and transparency. The days ahead will pose major challenges before Indian banks to keep pace with technology advancements across the globe in tandem with people, product and process change management scenarios. This change management exercise must be implemented in a strategic and scientific manner in order to get the desired results and minimize conflicts.

Minimize conflicts
The four major sets of people who are usually affected by IT change, and hence contribute to conflicting scenarios are the employees, IT Managers, business managers and IT consultants.

1. Employees: As the banking industry is a major service-performance-profit oriented sector, it poses a major threat before new technology implementations. To start with the subject, it is pertinent to acknowledge the primary role holders of process-technology change. First, the most important role of employees is to make the change management exercise complete and successful. It has been observed that many nationalized banks have undergone difficulties in implementing advanced process or technology models due to perceived threat of understanding and suspicion amongst employees.

Second, any service sector stands on the shoulders of its delivery personnel. In case of Indian Banks, the focus lies on the employees. Despite the advent of alternate channels like Automated Teller Machines (ATMs), Internet Banking, Tele-banking etc, the relationship between a bank and its customer starts with one-to-one interaction with the employee. Let us take the example of the very first banking relationship, account opening. Although many banks have outsourced this activity to agents, the customers must be approached in any case to fulfill the Know-Your-Customer (KYC) norms.

Implementation of IT solutions needs a clear and concise role modeling. There are multiple linkages amongst business manager, IT manager and IT consultant

2. IT Manager: One of the main reasons of prolonged delay in implementation of IT projects is the conflict between IT and business managers. Therefore, the bank's IT manager plays the crucial role the change agent. He has to act like a 'quick-fix' between employees and business managers throughout the change management exercise. Indian Banks follow a modular banking structure supported by functional support managers like IT, Human Resource, Planning, etc. The transition (process stabilization) period would essentially retard business growth during the settlement period.

Therefore, on one hand, business managers need to be visionaries in the overall organizational outlook instead of focusing on achieving short-term goals. On the other hand, IT managers, in an attempt to cross the numbers games, do not synchronize the pace of branch migration to the changed system. This causes serious problems in stabilization as the forward and backward linkages to migration activity do not get proper attention.

There are also conflicts observed in the line of command as a business manager has direct command over branches compared to a functional support of IT Manager. To cite an example, business managers do not accept branch migration at the beginning or end of the month as these periods are perceived to be busy days due to large inflow of pensioners and salaried employees. The IT Manager is always given the mid period to migrate all branches, which itself create hindrances in resource mobilization

3. Business Manager: This group takes the real heat of change management. I've observed a paradox in the employees' attitude during (and after) the branch migration. Before the transition, the branch heads typically attribute non-achievement of business goals to negative market forces; and after the implementation, they attribute non-performance to shortcomings of the new process. In fact, it was observed that performance assessment meetings used to only discuss stabilization issues. This behavior directly refers to the theory of Fundamental Attribution Error. Failures of self refer to external factors whereas those of others are attributed to their internal factors.

4. IT Consultant: One of the key areas of success or failure of implementation is attributed to the understanding and articulation of system and procedures by the IT consultant. The major conflict between IT managers and consultants lies in matching of expectations. Both are interested in the project's success but have different perception of the issues.

Most IT managers go for a total solution that takes a longer time to develop modules and linkages and becomes a source of conflict. It is therefore, essential to settle the time line of implementation along with the stages of module completion.

Role clarity
As evident from the role-gram diagram, there are multiple linkages amongst the roles of business manager, IT manager and IT consultant. Let's analyze the roles of the three key players in terms of preparing a migration plan. The plan has to be in consultation and agreement of the key role holders so as to have a continuous and effective action planning, keeping in view business processes of the organization and IT strategy. IT consultants require appraising the other role holders about development of business modules and their critical implementation time with the available resources.

It is necessary for the key role holders to obtain feedback from employees on a regular basis to change and augment their strategies. It is observed that structured feedback models fail to surface key impediments as these are filtered at various levels. Therefore, all managers should have their informal and unstructured feedback system to gather relevant information.

Next month, we'll be back with more on the subject. We'll cover activity prioritization, and the way ahead.

Debasish Mishra, a banker, is presently researching on Technology and BPR at the London School of Economics

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