Technology is getting more advanced as the days go by. We have seen banking depend on white paper and manual transactions with even call based transactions (between offices and the head office) without any formal telephone call accountability, audit trails or proper security feasibility. This is how even a major bank worked once upon a time. The funny part is that we as employees saw the process as very progressive for its time when we were doing our work maintaining the modus operandi of its time. However now after the transitions that have occurred over time, we only laugh at the level of compliance we started off with. We did not comprehend how these progressions would be occurring at that time. We continued to be dependent more on the work force affiliated to the task. In other words, more people were assigned, to the same task, whether simple or complex.
More than that, the concept which was known as branch banking, was distributed and decentralized as each branch was segregated and separately working, which it still does. However, in those days the operations were completely separate and segregated. Due to this the physical location for running a branch was also critical especially since resource readiness as well as back-office manpower readiness had to be allotted everywhere and in the long run both the CAPEX as well as the OPEX was high. Even the need to manage such a branch required a senior person to take responsibility. Thus, the person had more individual authority. Each branch was like an individual kingdom
We also saw the transition occur where the back-office functionality became centralized with accountability and manageability with a central application managing the function leading to the reengineering from a decentralized process to a centralized procedure where costing drastically reduced in OPEX. Even the branch level overheads had reduced with more and more dependency on application based functions rather than manual functions. Many users took it as a threat to their position creating a form of resistance to change and due to this accommodation to change took longer than forecasted timelines planned. Even tasks became more and more individual module dependent rather than a central application managing all functionalities. Many vendors took each departmental requirement facets and developed expertise in those using individual modules. These included both front office, (in some cases mid office), and back office departmental requirements. Therefore, many banks started depending on a heterogeneous environment where multiple applications started to co-existed as a singular vendor was not the expert on all requirements facets.
Even banks started to develop focal points of business development on which they planned to target and develop expertise in. This helped to modify protocols in the type of service it was going to offer for that specific facet of business cum operations. The modus operandi and the optimization in manageability had also translated into the respective modules that was developed to service this specific requirement. This has been made possible as expert hands in that banking segment and respective technical (IT) experts blended their expertise and touched upon the existing need and requirement as well as they simulated possibilities of destination models which may become the ultimate scenario down the road. While addressing this they touched upon one specific area and that was a strong MIS (management information systems), built into the application to touch upon business intelligence to help assist in decision-makings. In addition, there were stronger controls for managing risk scenarios with appropriate checks and balances within the department as well as interdepartmental.
Now coming to the present, what technology has also been doing besides making life easier is that less competent people are being able to undertake more complex responsibilities as things have been facilitated for them unlike in the past. However since the challenges are becoming more and more data centric, more and more decision and analysis related responsibilities are also being undertaken in the banking arena at a lower level.
The understanding of the total procedure must be openly welcomed by appropriate decision makers to make such efforts feasible as well as open doors must be made available to reach the destination possible.
As the advantages exist it must be understood that half-baked cakes are also risky. If you are not fully automated, it is a risky situation too. There are plenty of loopholes that require to be rectified and conformity to requisite procedure must be embraced quickly. The primary thing is that everything must be interfaced. This may be challenging initially, however once the perfect environment is created the comfort zone is worthy of the efforts taken to do the needful. These are applicable to those who have not done so yet.
A slow transition is the preferred approach than a hasty change
There are also many drawbacks in this transition. One of the key things we look at is becoming incompetent. We have been used to getting our brains more emphasized upon and the utilization of it by wheeling and dealing, which unfortunately is getting less encouraged especially in the age of BI and AI. Sadly, due to this we live in a level of helplessness when technological readiness faces any form of downtime. It was never the case earlier on. Yes, there were issues with downtime however total dependency was never encouraged. Therefore, from understanding human behaviour it is better to involve the person than facilitating matter for him to the extent that the person barely has anything to do.
Maybe “anything to do” is an exaggeration especially for the younger generation as they will delve into addressing other matters relevant. However, for the seniors who already are in some form of framework or mental readiness these kind of sudden changes mean that they are either idle or may become useless unless they accommodate to the new framework which itself may become a greater challenge for them.
Another thing, which banking in a digital environment does in an underdeveloped market, besides the positive aspects, is that the reality may be a bit uncertain. A person may not have direct access to his actual physical deposits in the bank account because it has been made virtual accessible to him. Whereas the available fund is elsewhere. Therefore, sometimes it becomes a bit difficult to withdraw the funds in full because it may have been assigned somewhere else.
Not only that ! The new vibe is Digital Banking which itself is a different concept altogether. The modus operandi applicable to Digital Banking is quite a modified version of what the Banking, we practice is. Maybe from the front end it is looking very similar. However from the back end the process and procedures are more modified and refined and less dependent on manned procedures. All checks and balances exist however the procedures are more automated and less dependent on manned intervention as well as more features are provided to cater to a much broader spectrum. We also know that conceptually there is a misinterpretation in the market regarding the functionality of digital banking in Bangladesh. It may take some time for them to understand in order to create a perfect functional operational model, therefore we must do the learning exercise to educate ourselves regarding the parameters, procedures, segmentation of functionality as well as the expected output.
It is therefore suggested that a slow transition is the preferred approach than a hasty change which requires getting used to and has significant repercussions.
That way the consequences of each occurrence can be identified (pros and cons). It is recommended that down the road the middle ground is a preferred territory to step into as is the case of AI (artificial intelligence) where the likely probable situation show that there are risks that require addressing before mobilizing too fast. We still feel that a slow transition will occur as many wanting to go into the so called “Fintech” are themselves considering a half-baked cakes where the old systems is being modified slightly in the backend to cater to a fully digital frontline for the banking services. This is a compromised solution as it just goes to show that readiness is not an overnight approach but rather it requires accommodation as well which may become time consuming.
We expect the eventuality to be a very positive picture and for the betterment of all -- however, in the long run, patience is necessary too.
Waleed Morshed is a Consultant (Process Re-Engineering, HR, IT Presales, ESG, ERP, Finance, BFSI, Project Management, Audit, Academic & Career Counsellor), Institutional Advisor, cum Entrepreneur.
