KMS Analysis: The National Bank of Elbonia - Case Study Example

Name of the institution Name Student Id Course code: Course title Name of the instructor Date Introduction Management of corporate tangible and intangible assets gives an organization competitive edge over others. Though emphasis has been previously put on managing tangible assets, organizations are beginning to appreciate the role of intangible resources, also called business intelligence or knowledge (Ali & Yusof, 2009). This shift has been necessitated by the emergence of knowledge era (Carlisle, 2002) which is radically changing corporate views on the centrality of knowledge in conducting business. Banks are following suit in acknowledging that knowledge management systems (KMS) are key to competitive advantage (Alsajjan & Denis, 2010). It is, therefore, important to gain understanding on how banks manage knowledge. This paper explores KMS in the banking industry with a view of gaining insight into a number of knowledge management dynamics. Using KMS expansion initiative at The National Bank of Elbonia as a case study, this discussion aims at exploring knowledge requirements for the initiative, elements of knowledge and information, and models for analyzing the proposed knowledge situations. To meet these objectives, the paper presents a background of the main events in the case followed by a discussion of methodology and analysis of the proposed KMS. Basically, the paper examines the bank’s initiative in terms of the 6Ws of knowledge: know what, who, where, when, how, and why. Finally, knowledge gaps that need to be addressed are identified. It is, however, outside the scope of this paper to suggest interventions for addressing the gaps. The National Bank of Elbonia (NBE’s) Initiative The NBE’s board of management has expressed intent of incorporating knowledge management (KM) in its e-Banking system in line with the bank’s vision to become a full-time virtual bank. The board finds KM’s components of capturing, retaining and transferring information relevant to the banks’ priorities in consolidating its competitive advantage. The restructuring process would substitute the traditional customer services with fully automated and digitalized systems such as mobile, internet, phone, and TV. The services to be offered through the new platform include consultations on financial investments, and reaching the customers with high value products. The model the bank intends to adopt is a system in which Subject Matter Experts from the Central Office (SMECO) reach branches and customers via online channels from which the users would access self-service. For e-banking to be operational, new technologies and competence-driven work practices are some necessities that would comprise KM. Physical structures will also be created in the branches to accommodate intimate and complex transactions. The overall goals for the NBE restructuring are to make a customer-centric model and to develop new business processes and competences. NBE KMS Conceptual Design Concepts important in analyzing NBE’s e-Banking initiative include knowledge, KM, KMS, Knowledge can be complex or even controversial in definition or interpretation. In literature and practice, ‘knowledge’ is interchangeably used with intangible assets, core competence, capabilities, or skills. Most definitions agree that knowledge is cumulative, social, and cognitive. Frost (2014), for example, views it as a “fluid mix of framed experiences, values, contextual information, and expert insight that provides a framework for evaluating and incorporating new experiences and information.” Three knowledge characteristics have been identified: It is connected, it is a catalyst, and it is applicable (Nazari, 2012). The definition and characteristics of knowledge given here will guide the KMS aspects of the e-Banking of NBE. Knowledge management (KM) has been closely associated with knowledge focus and knowledge creation because they all view knowledge as an activity rather than as an object (Lee, 2012). Warier (2009) simply defines KM as a process in which knowledge is created, captured, and used to enhance organizational performance. Other definitions characterize KM as multidisciplinary, tactical, strategic, collaborative and integrative (Kundus, 2013; Frost, 2012; Reddy, 2007). These perspectives of KM are important in understanding NBE’s KM initiative. Of particular interest to this discussion are the suggestions in which people and systems are involved in KM (Wilson, 2002). One way of KM is by fostering information exchange among employees through informal and formal training and networking. Secondly, access to information resources is provided by building intranets. Thirdly, indexes or yellow pages (meta-knowledge) are created to expertise KM. The last suggestion is encourage information sharing among the staff by creating newsgroups. At vibrant KM, therefore, provides precise tools, knowledge, structure, people, and culture that encourage learning (Hussain et al, 2004 ). Also relevant to this discussion are the objectives of KM. The first objective is to create systems for storing knowledge as well as information. In the case of NBE, the knowledge forms include external knowledge such as the banks competitive advantage over other banks in terms of the unique services, lower interest rates, high returns on savings, and other advantages. Internal and structured knowledge include the banking products, services and values. Tacit knowledge such as the interactive database that contains the ‘know how’ knowledge is also archived. The second objective of KM is to improve knowledge access and transfer. This objective reflects the connective nature of knowledge explained in the previous section. The connectivity facilitates access and transfer through technologies such as phone, mobile, internet, video conferencing systems. Information documents are converted to formats which are transferrable. Telecommunication and networking systems are central to achieving this objective. The third KM objective deals with establishing an environment that is conducive to creation, transfer, and use of knowledge. The objective is achieved first, by ensuring that the norms and values of the organization are in tandem with the knowledge in question. Secondly, the clients are engaged in awareness programmes as well as improving interpersonal relationships. Thirdly, providing rewards and incentives to the researchers involved in creating and structuring the bank’s knowledge base. Fourthly, the bank can use audit programmes to determine if and how the clients and employees are applying knowledge in key operations and decisions. Lastly, the bank can entrench cultural and structural systems in which KM thrives. The last objective is for the bank to treat knowledge as an asset that needs to be managed the same way tangible assets are. This means that KM should be mainstreamed at all levels of management and bank operations. Knowledge Management Systems (KMS) Most traditional definitions of KMS leans towards information technology (IT) or computerization of organization’s operations. Frost (2014), for instance, defines KMS as any IT system for storing and retrieving knowledge, improving collaboration, locating knowledge sources, data mining, capturing and using knowledge in a manner that enhances knowledge management process. Most KMS definitions concur that KMS is a data-driven process and that it aims at improving organizational performance, competitiveness, productivity, and business intelligence (Girard, 2013; Yukikaze, 2014; Frost, 2014) . KM scholars broadly categorize KMS into two perspectives: technological and non-technological. From technological perspective, KMS comprise tools that enable an organization to create, organize, store, transfer, and share knowledge (Gupta & Sharma, 2005). The tools support and enhance KM processing and application, and hence generate value from the knowledge and intellectual assets for the system users. In most cases, value is generated by sharing the knowledge assets among managers, departments, employees and partners so as to derive best practices. From this sense, KMS archive knowledge from diverse experts and professionals in a manner that allows easy access and sharing. Some of the technological KMS tools include the extranet and intranet, content management systems, data mining, data warehousing, decision support systems, document management systems, simulation tools, and artificial intelligence tools. Other tools include portals, databases, servers, profiles, blogs, knowledge bases, collaborative workspaces and search engines. The KMS aspects from the non-technological viewpoint comprise systems that are organizational and human centred (Young, 2013). This perspective emphasizes on equipping organizations and individuals on how best they can design and process knowledge. This perspective views KMS as purely human-centred which means that human force is required in capturing, processing, storing, and disseminating knowledge. Some of the strategies for achieving this include KM training and education, project teams, storytelling, brainstorming, mentorship, and meetings. In these contexts, real knowledge sharing occurs when, for instance, individuals gain understanding from the storyteller and recast the insight in their own working environment. Banking Information System (BIS) Initiating an e-Banking platform at NBE requires the establishment of BIS. This entails all business functions that characterize typical banking operations. The BIS are meant to facilitate internal operations and the manage bank procedures. Apart from improving efficiency and effectiveness of all the banking processes, BIS should modify, expand, and create products or functions that were inexistent before the system was initiated. BIS is important because, for a bank, the core products are information and trust (Alsajjan & Dennis, 2010). Customer trust emanates from the manner in which information is managed and disseminated at the time it is required. Methodology The discussion adopts the Knowledge Mapping - KM Bucket method to analyse NBE’s initiative. Through this methodology, the bank’s mission is explained; its key business processes are identified, and the knowledge required for these processes are identified. The KM bucket also describes how the knowledge is obtained as well as the source and form of knowledge. It also identifies who uses the knowledge to create value and the management controls applied in the process. Also assessed are the validity and reliability of the system. Lastly, it maps KMS in a table or a network diagram. Analysis NBE’s KMS is analysed following the steps outlined in the KM-Bucket method. This method allows in-depth scrutiny of the bank’s KMS NBE’s KM Mission As explained in the case, the bank mission is to embrace e-Banking as part of making its banking services fully virtual. KM process is considered an important asset of a fully virtual bank. Key business processes The NBE’s key business operations in line with the proposed e-Banking platform include front office services, deposits, loans, securities, guaranties, fixed transactions, frame limits, domestic payment systems, card activities, automated teller machines (ATMs), debt collections, money laundering prevention, fixed assets, annuity savings, payroll accounting, Forex, back office operations, internet banking, fixed assets, collateral instruments, and retail services. Knowledge requirements For the services mentioned above to be offered, knowledge is required on a number of issues. These include knowledge on the number of customers in each branch, the customer needs, the number and type of transactions at any given time, and the limitations of the bank in terms of resources and personnel. Knowledge on the available banking information systems (BIS) is also necessary. Also important for competitive advantage is the knowledge of what other banks in the region and beyond are doing on the e-Banking platform. In essence, the knowledge requirements comprise both data and information. How knowledge is obtained It is important to establish how the creators of the required knowledge will obtain it. Data on the customer base and transactions will be obtained from the bank records and the database. Research will be used to find out customer needs, available BIS, and systems competitors use on the e-Banking process. The source and form of knowledge Knowledge creators for NBE include IT experts, bank managers, departmental heads, researchers and customers. The knowledge forms as discussed in the conceptual framework are technological and non-technological. Knowledge forms can also be understood in terms of information and data. Ackoff (1989) states that data comprise raw facts, numbers or symbols while information refers to processed data (answers the questions who, what, when and where). Knowledge results from applying data and information to make them useful. When data is understood, it becomes information and the use of information and data is found, they become knowledge (Cooper, 2014). Data and information in NBE’s databank will be processed and analyzed for use in KMS. Users of knowledge According to NBE’s mission, the end users of the knowledge are the customers in all the branches. But the intermediate users of the knowledge are the staff and the management. It has also been noted that BIS can be used by the bank management and staff to fast track response to customer needs, enable the bank to assess its relationship with the clients, process bank products, and manage cash flow, staff information, and credit and risk. Management controls NBE board of management is responsible for knowledge creation, organization, storage and transfer. It, therefore exercises control in terms of quality assurance that exceed the customers’ expectations, and in terms of content to be shared or restricted at each level. Controls will also involve data and system security against intruders and hackers. Validity and reliability Test and retest of the KMS systems is one way of ensuring validity of the KMS the bank undertakes. Before the system is universally rolled out, a pilot study has been suggested by the board so as to make the system reliable. The e-Banking products will be launched in one of the branches in order to ascertain its efficiency and effectiveness. Necessary system adjustments will follow on the basis of its efficacy and user feedback. Knowledge map Fig 1.0: Knowledge map for NBE KMS This knowledge map comprises five central functions that are incorporate the 6Ws of knowledge. 1. The first function identifies what knowledge on the banking system is needed (banking processes/customer data), who has it or needs it (management/staff/customers), how can it be identified (research/data mining), where (databank), when (at the inception/during piloting), where (internally/externally) and why (to realize NBE’s e-Banking vision). 2. The second function involves creating what (the e-Banking knowledge), by whom (the IT experts), how (converting the data to become user-friendly via internet, phone, video), where (creating a database), when (continuously) and why (for easy access and sharing) 3. The third function deals with the IT experts securely storing the banking services knowledge in servers or computer hard discs by encrypting them in formats that can be retrieved by users. 4. The fourth function involves sharing the banking processes knowledge with users through websites, blogs, phone data, videos, TVs and other online outlets. This allows instant self, front and back office services 5. The last function focuses on the use of the knowledge by customers, staff, and management to access services and critical information anytime, from any convenient location. These five functions are sandwiched between the knowledge creators and users who constantly provide and demand efficiency respectively. Knowledge Gaps The bank needs to set benchmarks for its KMS success. Without evaluation criteria, it is difficult monitor and measure success. The board gives a timeline of six months but fails identify milestones to be achieved progressively. Another gap identified is lack of budgetary allocation for developing KMS that supports its e-Banking initiative. As noted in the introduction, intangible assets like KM are just as important as tangible assets. As such, it is important for the bank board to approve a budget for the same. Both technological and non-technological aspects of KMS require a budget. Lastly, the proposed KMS initiative is limited to serving existing customers. It does not envisage growth of customer base. Systems that attract and maintain new customers are important if the bank is to have a competitive edge. Conclusion In analyzing the KMS infrastructure that would support NBE’s e-Banking plans, this paper has used the KM-Bucket method to audit the system. The proposed KMS satisfy all the provisions in the model but it fails to define the criteria upon which the reliability and validity of the system will be measured. Nevertheless, the initiative is properly conceived and if it is well implemented, it will help the bank to progress towards being fully virtual as well as giving it competitive advantage. This is because a vibrant KMS improves productivity and efficiency. References Ali, H. & Yusof, Z. (2009). Knowledge-Based Banking: the Bankers’Experience on OKS (Online Knowledge Sharing). 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