Enhancing Banking Operations Through Knowledge Management Practices

Introduction

In the banking industry, knowledge management has become inseparable due to the rapid change in landscape of financial markets and the demand to maintain competitive advantages. Effective knowledge management has enabled banks to capture, share and apply any kind of critical information and expertise along with improving decision-making procedures, reducing operational risks enhancing customer service. The COVID-19 pandemic was a significant menace in the global economy, pushing businesses almost all sectors to rapidly adapt something innovative in their operations. One of the most significant impacts was observed in the banking industry, where digitization in business operations accelerated. With lockdowns and social distancing, people were forced to stay at home, yet had to pursue their banking functions. This enhanced digitization in the banking sector tremendously in order to continue remote working, virtual customer engagement and digital transactions. In Europe, the use of FinTech apps in banking industry has been raised to 72% in the lockdown period. According to the report by McKinsey, the pandemic has accelerated the digitization of banking industry, comparing with past three-four years statistics, along with shifting into digital channels, like mobile banking or online banking (McKinsey and Company, 2021). Volume of the global digital payments has grown to 10.2% in 2020, reaching $6 trillion (Am et al., 2020). Besides, survey reports published by Accenture revealed that 61% of customers prefer digital banking over traditional ones and 56% of the participants indicated that they would continue digital banking even after pandemic subsides (Accenture, 2020).

In order to thrive in such fast-paced and highly competitive business environment, knowledge management has become crucial by helping organizations to stay ahead. Effective knowledge management enables companies to capture, store, and share and apply critical information, insights and best practices. It helps companies to enhance their decision-making abilities, develop innovation, and improve customer satisfaction and increase productivity and efficiency. And this effective knowledge management can be done through innovation, both by business practices and employee perspectives (Forcadell and Guadamillas, 2002).

In order to understand how organizations should implement innovation and knowledge management in their business operations, Bank ABC London has been chosen as reference. Throughout this assignment, critical analysis of organization culture, knowledge management and an action plan following the critical analysis have been done. It is expected that this case study analysis will help in understanding how business operations can be enhanced through knowledge management and innovation.

Critical analysis

Organization structure: Bank ABC London is a subsidiary of the Arab Banking Corporation (ABC). Its headquarters is in Bahrain. The London office is responsible for providing a wide range of banking services to corporate as well as institutional clients (Bank ABC – Group Website). Moreover, this branch also offers private banking services to high net-worth individuals.

It has been observed that the organizational structure of Bank ABC London is the traditional hierarchical model, with a Board of Directors supervising the strategic direction of the bank. This Board has been created with experienced professionals from banking and finance industry, and they ensure that the banking operations are aligned with the regulatory requirements. Under this Board, there are several departments, Corporate Banking, Institutional Banking, Treasury, Private Banking, Investment Banking, and Risk Management. Each of these departments includes specialised professionals in specific areas of banking. As for example, the Corporate Banking team is responsible for loan and cash management services to corporate clients, the Treasury team is responsible for Bank ABC’s financial assets and liabilities, the investment banking department is responsible for offering advice and support to the clients who look for capital elevation, mergers and acquisitions and other strategic transactions. Bank ABC London has been observed to be critically focusing on risk management. The risk management department of the company provides serious attention towards examination, measurement, and mitigation of risks associated in business operations. Overall, Bank ABC London’s organizational structure has been designed to provide comprehensive financial services to clients along with efficient operations and effective risk management (Grais and Pellegrini, 2006).

Organization Process and Culture: Bank ABC London’s business process involves numerous key stages, starting from client acquisition and on-boarding, which includes conducting know-your-customer (KYC) and anti-money laundering (AML) checking just to make sure that the banking process compliance with regulations (Bank ABC- Group Website). Once the client is on-boarded, the bank provides a wide range of services tailored to the client’s needs, like corporate lending or trade finance or foreign exchange or investment advices. All these services are provided through help of various departments ensuring seamless outcomes. Throughout the process, Bank ABC London places a strong emphasis on risk management. With help of dedicated professionals monitoring and managing different types of risks, like credit risk or market risk or operational risk. The bank has also been found prioritizing customer service. A dedicated customer relationship management team is responsible for 24X7 seamless customer supports (Bank ABC, 2021).

Bank ABC London’s business culture is dedicated towards building long-term relationships with their clients through a promise to excellent service, professionalism and integrity (Code of Conduct, Bank ABC). The bank also places great emphasis on its reputation as a trusted financial institution and hunt toward highest standard of ethics and compliance. Bank ABC London’s culture also nurtures collaborative and inclusive work environment, where employees are always encouraged to share their opinions and ideas so that innovation is maintained simultaneously with organizational growth. Diversity and inclusion are two key values of Bank ABC London, which focus on equality and hospitable and supportive workplace (Bank ABC, Social Impact). In terms of business strategy, the bank has been observed to focus on delivering personalized solutions to meet the unique demands of its clients across various industries, from commercial and corporate banking to private banking and wealth management.

Knowledge management: knowledge management is referred to the process of identification, creation, sharing and utilization of knowledge within an organization. The first step of knowledge management is to identify knowledge that exists within the organization. Bank ABC London believes that knowledge is surrounded in the employees, processes and systems. The bank follows a system to identify and document the knowledge held by the employees. This process includes directing knowledge audit, surveys and interviews in order to understand the implicit knowledge of employees (Bank ABC, Client Statement of Business Continuity Preparedness).

Once the knowledge is being identified, Bank ABC London then forwards to capture it. The bank has been found to create a centralized knowledge repository with all the information and knowledge resources that employees would require in order to perform their roles effectively. The repository includes process manuals, policy documents, best practice guides and relevant materials. Bank employees can access the information through company’s own server, which is accessible anywhere from the world. In addition the knowledge repository, Bank ABC London has also encouraged its employees to capture their own knowledge. The bank has a system that allows the employees to create and share knowledge through various mediums. This system enables employees to contribute their unique perspectives, experiences and understandings to the collective knowledge of the organization (Vance, 2006).

Effective knowledge management also involves work culture where knowledge is being shared without any external force. Bank ABC London has understood the importance of knowledge management and implemented various initiatives to encourage its employees share knowledge among them. The bank has created communities of practice, which brings together all employees with similar perspectives or opinions and so that they can share and gain knowledge from someone like them.

Bank ABC London also encourages informal knowledge sharing through various networking events, like social gatherings or training programs. These vents have been found providing opportunities for employees to connect with each other and share knowledge in a comparatively informal relaxed environment. Training programs involve experienced employees with new recruitments to smooth knowledge transfer along with skill development.

Innovation is one essential component of knowledge management. The banking organization believes that innovation requires creativity, experimentation and risks. Bank ABC London has already introduced digital innovation in their knowledge management. From mobile banking to online banking, virtual assistance or contactless payment systems or personal financial management tools are already innovations in use. Implementation of these innovative technologies has encouraged the employees to collaboratively work and share knowledge to create further innovations mitigating business challenges.

Furthermore, Bank ABC London believes that knowledge management is an on-going process (Bank ABC, 2021). Thereafter investments in advanced technologies along with effective workforce, both are important for company’s success. These investments can be financial or time or necessary resources. The bank regularly evaluates areas where improvement is required. Innovation plays a crucial factor in these area identification and mitigation techniques. Bank ABC London also uses metrics like employee engagement, productivity and customer satisfaction to measure the effectiveness of the knowledge management initiatives (How companies can improve employee engagement right now, 2021).

Action plan

It is evident from the annual reports published by Bank ABC London that the banking organization acknowledges the need of improvement of innovation strategies in their business operations in order to maintain a competitive advantage in the post-COVID global banking industry. To achieve this, the bank has been trying to utilize their knowledge management, organizational learning and networking to optimum. This action plan aims to provide a potential framework for the banking organization to improve their current innovation capacity through social engagements, collaboration across diverse business, link media strategies, and innovation, information processing strategy and tech committees.

Social engagement: social engagement is an important factor for improvement of innovation capacity. The banking organization may engage in regular discussions with its customers, employees and stakeholders in order to find out what are their requirements, demands and pain points. The organization can utilize various social media platforms, like Facebook or Twitter, conduct surveys, both online and offline, create focus groups to gain insights into customer satisfaction and engagement. These data can be used in creating innovative solutions and products which will meet customers’ requirements (Siddiqui et al., 2019).

Collaboration across diverse business: collaboration across diverse business is another important factor for innovation improvement. Bank ABC London can collaborate with other businesses, like start-ups or fintech companies, to exchange knowledge, expertise and resources. It is expected that the collaboration would be able to lead the development of new ideas and products which would meet the changing demands of customers. The banking organization can also explore partnerships with universities or research centres to influence their research outcomes (Fenwick and Vermeulen, 2020).

Link media strategies: link media strategies can help Bank ABC London in enhancing its innovation capacity by influencing the power of the media. The banking organization can use different media platforms like, newspaper, magazines, radio of televisions to showcase its innovation and creativity in the products and services (Sama, 2019). In addition, these media platforms can be used to create awareness about the latest trends or innovations in the banking industry. These can help the banking organization to position itself as a thoughtful leader in the industry, which will enhance its brand value and reputation in future.

Innovation or engagement: innovation or engagement is a key to success, irrespective of the industry and size of the organization. Bank ABC London can create an innovation based culture within the organization through encouraging the employees towards creativity and innovative ideas (Radtke, 2022). In addition, the banking organization can also engage the employees by providing them an open platform where they can exchange their ideas and expertise. Team work approaches would be able to increase employee engagement along with opportunities of innovation. In order to facilitate innovation or engagement, Bank ABC London can create innovation labs and hackathons, where employees would join together and brainstorm innovative ideas (Lindner, 2020). Hackathons can offer an important solution to specific questions like online banking or cashless payment process.

Information processing strategy: information processing strategy can help Bank ABC London to enhance its innovation capacity by leveraging data and analytics. Here, five simple steps have been discussed, which are expected to function positively for the banking organizations (Gluck, Kaufman and Walleck, 2022).

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  Determining objective and strategic approach to the innovation
  
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  Knowing the market- customers as well as competitors
  
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  Defining company’s value proposition
  
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  Assessing and developing core capabilities of the company, and lastly
  
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  Implementation of innovation techniques and system
  

Besides these techniques, Bank ABC London can use data analytics to find out existing opportunities and challenges in the global finance market. This will help the company to prioritise their product or service innovation.

Tech communities: tech communities can help Bank ABC London to enhance its innovation capacity through leveraging technology (Brodsky and Oakes, 2017). The organization can create tech communities, which can be responsible for recognising latest technologies and trends in the financial industry. In addition, there tech communities would be responsible for evaluating the viability and potential of new technologies. These tech communities can look into sections like open-banking APIs, or block chain or artificial intelligence or mobile banking or digital payment or micro services (Indriasari et al., 2022). However, it would not be necessary that these tech communities will be only customer-centric, these can be of organization’s internal process development focused or marketing focused.

Innovation development approaches	Action steps
Social engagement	Creating social media platform where customers would share feedback, suggestions, and ideas for innovation. Organising events for employees to build connection and knowledge sharing. Developing customer-focused culture where customer feedback would be aligned with innovation development process.
Collaboration across diverse business	Identifying potential partners for collaborations. Establishing partnerships with organizations from different industries. Creating cross-functional teams within organization.
Link media strategies	Developing official websites where organization, products, services information would be provided for all. Building network and making connections through different social media platforms. Establishing digital marketing strategy, including content marketing, email marketing, search engine optimization to increase company’s visibility. Connecting with the world through media platforms, like newspaper, radio, televisions etc.
Innovation or engagement	Creating innovation team within organization for developing new products and services. Encouraging employees for ideas exchange and suggestions for innovation through innovation management system. Connecting with customers and other stakeholders to collect insights for innovation.
Information processing strategy	Implementation of data analytics tool to collect customer behaviours, market trends and competition. Developing data management system within organization. Training employees to use data analytics tools and data interpretation for decision making.
Tech committees	Establishing technology committee within organization involving employees from various departments. Identifying potential technologies which would bring value to the organization along with evaluating their viability. Implementation of new technologies.

Conclusion

This case study analysis discusses the significance of knowledge management as well as innovation development strategies of Bank ABC London, particularly in the context of COVID 19 pandemic. The pandemic has accelerated the digitization process in banking operations, and thus knowledge management has become more crucial for the bank to gain competitive advantages in the fast paced highly competing business environment. The case study analysis of Bank ABC London has highlighted the facts how banking organizations should implement innovation development strategies and knowledge management in their business operations. The critical analysis segment involves organizational structure, business process and culture, and knowledge management practices, which highlights that the organization follows hierarchical model, with a strong focus towards risk management and customer service. Following the critical analysis, an action plan has been developed with an aim to focus on innovation capacity development. It is expected that this case study analysis will help in understanding Bank ABC London’s effective knowledge management for improving decision-making processes along with reducing business operational risks and enhancing customer service.

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