Technology and Change Mgmt in Banks

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