denotes premium content | Dec 5 2008 Feature
posted 1 Sep 2000 in Volume 4 Issue 1
‘Your
Say’
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:christine.adcock@americancentury.com
Tom
Bird is UK country manager for iManage. He can be contacted at:tbird@imanage.com
Bill Ives is the global
director, Knowledge Management Practice for Andersen Consulting. He can be
contacted at:s.william.ives@ac.com
Sunil Sharma is
chief knowledge officer at Clarient Inc. He can be contacted at:sunil.sharma@clarientmail.com
Marcus
Speh is knowledge and strategy manager at Shell Finance Services. He can be
contacted at:Marcus.M.Speh@SI.shell.com
