posted 1 Sep 2000 in Volume 4 Issue 1
This month’s ‘Your Say’ provides an introductory discussion examining knowledge management in the financial sector. Simon Lelic talks to Christine Adcock, Tom Bird, Bill Ives, Sunil Sharma and Marcus Speh, and explores the key issues surrounding the growing KM needs facing the financial services industry.
Despite the critical importance of knowledge to the functionality of businesses in the financial sector, financial institutions have been slow to realise the full potential of knowledge management. Many retail financial operators, for example, have traditionally seen IT and HR functions as primarily a means to cut costs through automation and reorganisation, while, at the other end of the spectrum, the likes of investment banks and corporate finance departments, which rely extensively on knowledge networks for profitability, often fail to make best use of the knowledge assets at their disposal. (This is a theme Robert Taylor develops in his article, Profiting from knowledge? KM in the financial sector)
But all this does seem to be changing. According to Bill Ives, global director of Andersen Consulting’s Knowledge Management Practice: “The financial services industry is going through a series of dramatic changes, driven by changing technology, channel economics, and customer expectations. The market is moving to a buyer-driven focus and what buyers most value is the knowledge that financial services firms possess. The players that can effectively manage their knowledge capital, break down the communication silos within their organisation, and enable knowledge sharing will be the winners in the new economy.”
Indeed, in such a competitive sector, Tom Bird, UK country manager for iManage, emphasises the importance of ensuring that any implementation of knowledge management has a positive effect on the bottom-line of the business. “It’s often the speed of reaction and the ability to differentiate your service that is the competitive edge, and the ‘difference that makes the difference’,” says Bird. “The increased use of the web and the need to access much greater volumes of knowledge must go hand in hand with productivity improvements if it is not to become a waste of time. It is not enough for a company to implement a strategy that gives users the ability to have a glorified search engine.” With this in mind, and as Ives points out, it is possible to highlight a number of integrated solution capabilities that may be used to address the growing knowledge management needs facing businesses in the financial sector.
The first of these components, identified by Ives, is portal technology. “Portals provide the gateway and interface to financial services content of all types, pulled together from multiple internal and external sources,” says Ives. He suggests a portal may be focused on employees, customers, or businesses, to provide content and value for each. For example, a portal developed for use by employees may focus on learning, knowledge, and access to ‘experts’, as well as to financial news content, in order to drive human performance levels. A customer-focused portal may deliver learning and knowledge from financial experts, as well as financial products and services, and transaction information/support, with the intent of acquiring, retaining and developing profitable customer relationships. Finally, a business-focused portal could offer access to rates, procedures, best practices, and communication channels, thus enabling profitable business transactions and collaboration across an extended enterprise.
The second component noted by Ives is content management. “Through the structured planning, development, review and publication of financial content on the web, mobile and other devices,” he argues, “better decisions and operational efficiency can be achieved, and personalised and consistent content delivered.” And as Bird points out, in a competitive environment characterised by multi-party, highly complex transactions, “the key is a content management solution that orders all types of knowledge and indexes it in a consistent fashion, with the relevant security rights to ensure that the right information is always available to the right people at the right time. Users need to go to one place to find everything that is necessary for them to complete their task or assist them in decision making.”
According to Marcus Speh, knowledge and strategy manager at Shell Finance Services, content is indeed king. “The key to motivating finance people at Shell – and elsewhere – to participate in KM is content, content, content,” says Speh. “Our recent efforts with KM in Shell Finance Services have focused on giving finance managers a simple yet powerful tool that helps them maximise their contribution, while minimising the hassle with IT. Like all new developments in this area, it is a web-based application, using AdaptiveContent.” The strength of AdaptiveContent, says Speh, is that it allows users to focus on their own area of expertise – the content – rather than the technical details of the programme, achieved by separating content and context from the presentation aspects of the tool. It also allows a more flexible approach in creating and relating topics and content, an important consideration when people have their own unique ways of categorising information, depending on whether they want to post content or search for it.
Following from this, and according to Bird, the combination of content management with true web-based collaboration is set to be “the third wave of the Internet”, enabling the web to be used to solve higher value business issues. Ives concurs, suggesting that “synchronous and asynchronous collaboration supports the socialisation of ideas, information, and knowledge, enabling financial consultants, managers, business partners, and customers to work together, and make use of the knowledge in their heads”. He continues: “Collaborative systems are already in place in many financial service organisations, allowing, for example, financial consultants to pool their expertise to better service the needs of their clients, and current and potential clients to chat with experts. This type of knowledge sharing drives efficiency, innovation, and better decisions, and forms the basis for formalised content to be managed and provided through portals.”
Shell Finance Services, for example, envisages moving towards a devolved ‘network of experts’ model in the creation and re-use of knowledge. “The devolved network is the best structure for this; energy can freely flow where it is needed. It is a highly non-linear and complex process,” says Speh. “The trouble is, traditional company hierarchies do not work well with non-linearities. Rather, they are strongly linked to the ‘star-performer’ culture, where 90 per cent of the attention goes to one per cent of the staff. Self-organising networks are more like organisms, or ecologies. Knowledge management requires finance specialists to also be business generalists . We are moving from self-improvement to self-actualisation, and now to self-extension, where the knowledge network is more than a collection of knowledgeable individuals.”
To support this collaborative functionality, and the efficient retrieval of content, Ives also highlights the need for search and index capabilities. “The capabilities described,” says Ives, “rely on types of indexes for the categorisation, and the presentation and retrieval of related content; portals present classified or related content to deliver personalised solutions, content management and collaborative systems use indexes to relate and categorise content as well.” In fact, Ives suggests, all of these capabilities must be supported by and integrated through a scalable knowledge management infrastructure. “The technical infrastructure for knowledge management should be just one part of the overall infrastructure, also enabling commerce transactions and other core functions of the business,” he says.
Indeed, any approach to knowledge management in the financial services industry must go beyond a consideration of how various technological tools can best be utilised. In particular, and as Sunil Sharma, chief knowledge officer at Clarient, points out: “This industry, as far as knowledge management is concerned, is intriguing for the preponderance on trust, relationships and reputation. Without trust, it is impossible to build a relationship or a positive reputation. Relationships and reputations are easily destroyed by a betrayal of trust between parties. Trust is therefore a key factor in doing business that permeates the financial sector.”
What makes the financial sector so unique, says Christine Adcock, manager at American Century Investments, is that it trades almost exclusively in knowledge. Recently, she continues, the information gap between provider and consumer in the financial sector has narrowed: “The last five years have exponentially increased the speed of data and information access throughout the world. The rapid pace of technology development and the advent of the World Wide Web, the world’s largest free public library, have brought information to the consumer’s home. Consumers are now much more business literate.”
But competitive advantage does not derive from information alone, rather what can be done with it. “Although information is available to many – with its own problems of information overload – knowledge still resides with few,” says Sharma. “Given the short shelf life of information, its amount and its often unknown source, one of the most interesting issues is the level of trust people place on information and knowledge. Indeed, one could go so far as to postulate an equation: $=f(KT). The amount of business an organisation generates is a function of knowledge and trust. ‘Knowledge of...’ something – such as a sector, market, or industry – or ‘knowledge of...’ a client’s needs. This function in turn impacts the reputation and relationship built by the supplier.”
“If relationships are built on trust, then trusting the source of knowledge is the point at which individuals and organisations begin to leverage knowledge. In an environment where information is readily available and accessible, knowledge is still power and certainly will remain so,” says Sharma. “This ‘knowledge is power’ syndrome derives from understanding the client; their needs and wants. The knowledge of the client’s style, and how they want to conduct business, stays with, for example, the trader. So when a trader leaves, what they take with them is the relationship, and especially the trust, that has built up in understanding the client. It is this level of understanding that cannot be captured in any form of system. The impact is the major cost of re-building the relationship with the client, which in some cases is never rebuilt.”
While the financial sector has certainly been slow to embrace knowledge management, things do indeed appear to be changing. KM was formalised at Barclays, for example, more than eight years ago, and since then, its knowledge management programme has progressed with alacrity (a full case study appears in article Gateway to knowledge). Many of the technical issues discussed here have been adopted and developed within Barclays, and they are also elaborated upon in the article from Andersen Consulting (Knowledge Managed). Establishing the technical infrastructure for effective knowledge management is only the first step, however, and this is true not only in the financial sector. In fact, most, if not all, of the issues discussed thus far, and in the articles that follow, are pertinent to most organisations, regardless of industrial sector. KM
Christine Adcock is manager at American Century Investments.She can be contacted at:email@example.com
Tom Bird is UK country manager for iManage. He can be contacted at:firstname.lastname@example.org
Bill Ives is the global director, Knowledge Management Practice for Andersen Consulting. He can be contacted at:email@example.com
Sunil Sharma is chief knowledge officer at Clarient Inc. He can be contacted at:firstname.lastname@example.org
Marcus Speh is knowledge and strategy manager at Shell Finance Services. He can be contacted at:Marcus.M.Speh@SI.shell.com