As banks hurriedly play catch-up with their rapidly globalizing customers, they are finding themselves challenged by how to manage the tremendous technology change involved.
The banking industry has done a creditable job of responding to global imperatives in recent years. Many banks have learned how to make great offshore deals where labor is cheaper. Many have been responsive in forming banking partnerships in countries where their customers establish operations.
Banks have also cultivated specialized skills for managing massive technology change at home. Integrations that used to take years now take months. Installations and conversions that used to be plagued with cost and time overruns can be executed expertly and professionally today. In many information-technology-focused disciplines, like vendor management or project/portfolio management, the banking industry is a pacesetter.
So it is with some surprise that at the nexus of these two areas — globalization and IT change — many banks are encountering obstacles.
For example, some banks are seeing their best domestic customers choose other partners for their international forays. It is not unusual for a bank with a strong track record of integrating in-country acquisitions to find its international purchases difficult to absorb on planned timelines at predicted savings. Vast differences across the globe have hobbled banks' abilities to establish a presence in one country after another using repeatable processes.
Despite the industry's record of finding domestic time and cost savings through project management efficiencies and best practices, such benefits can prove elusive abroad. Four perspectives, however, could smooth the way.
• Globalization strategies that presume a "flat" world often anticipate more standardization and scalability than proves feasible.
Disparate systems, rules, languages and conventions, country by country, push against the highly structured management disciplines that banks have perfected. A globalizing bank must scrupulously adhere to a global framework for managing operations and compliance risks. But it should be a framework and not a detailed doctrine that hopes to cover all the possible permutations that will arise worldwide.
When IT conditions in a new country arise as an issue, it is time to ask: Is this a regulatory issue on which we have no give or an issue that we can possibly accommodate by revisiting IT-related policies? What risks do these different conditions create for us, and how can IT mitigate them? In this way, IT can be a force for accelerating solutions and getting customers to market faster, rather than being tied to what works domestically.
• When customers decide to initiate commerce on the global stage, they are not in the market for new banking products but for a global partner to ease the change involved. Their initial request might well be pure product, but the relationship's future will quickly come to depend on the bank's ability to anticipate, facilitate and remediate the customer's subsequent challenges.
Shifting to a broader business outlook can open up potential for the bank. If that one customer is going global, what other customers are likely to do the same, and how can we get proactive with them before they find a different global partner? If it takes this much expense and effort to globalize this line of bank business, why not leverage it across several lines? Even when the initial international impetus is reactive and tactical, global IT strategies are at their most effective when they involve thinking broadly, planning strategically and moving proactively.
• There is no substitute for building a seriously multicultural team to manage the IT change. Not just a team of multinationals managed out of a domestic tradition but a team with a full-fledged ability to bring strong and varied international perspectives to the business problem and the IT solution. Banks need to be open to importing talent, not just exporting it.
This does not mean sacrificing the bank's enterprise mission and strategy. These teams have ample room for people who cut their teeth on the bank's domestic expansion. It is just that domestic banking expertise tends not to travel alone all that well.
If cultural differences between adjacent U.S. states are taken seriously in domestic mergers (they are and should be), the gulf is that much wider between continents.
Globalizing companies are learning that, if they are willing to sacrifice traditional project hierarchies and some measure of tidiness for authentic multiculturalism, they probably will not have to. What may look like difficulties to be overcome can turn out to be sources of value.
• For all the novelty of these challenges, the market is not cutting banks any slack on speed-to-market. Speed remains a powerful competitive advantage, especially since barriers to corporate globalization are falling faster than barriers to banking globalization. Being slow to globalize is already jeopardizing customer relationships. It is too late to slow down global IT transformations to a traditional, prudent pace.
The key to risk-averse but rapid execution is assembling teams from experts already on the ground in each country. Whether the bank assembles them as employees or partners, they should be indigenous and expert in their particular subject matter and in their country's banking culture and rules, as well as skilled in managing and carrying out large-scale, mission-critical business/IT projects.
The lesson here is that IT transformation for the globalizing bank is more than adding complexity. In certain key features, it calls for radically different approaches.