Lebogang Alaardt, Enterprise Content and Knowledge Management Consultant at NokusaEI, views the management of content, information and knowledge as a critical success factor for the South African banking sector.
This is based on the history of the South African banking sector stipulated below.
Over the past decade, South Africa has established a well-developed banking system which compares favourably with those in many developed countries and which sets South Africa apart from many other emerging market countries.
Our country found itself with a more mature banking sector, with a moderate level of private-sector indebtedness and a respectable and first-rate regulatory and legal framework. This is the statement made by the South African Governor Tito Mboweni in his review report of the South African banking sector at the end of 2004, 10 years after the first South African democratic elections.
At that time, South Africa had 38 registered banks; of which 15 were South African-controlled banks, six non-resident-controlled banks (subsidiaries), 15 local branches of international banks, and two mutual banks. In addition, 44 international banks had authorised representative offices in South Africa. The South African banking sector continues to be dominated by five major banks, ie Standard Bank Group, First Rand Group, Nedcor, Investec and Absa Group.
Solid as it is, over the past two years the South African banking sector has experienced an upheaval, caused by a variety of international and local factors.
Internationally, USA entered into a recession, oil prices increased rapidly, Basel II was introduced (regulatory framework designed to ensure capital adequacy for banks) while locally the introduction of National Credit Regulations, increasing interest rates and inflation, power shortages and load-shedding have created changing conditions.
The background provided above has given rise to two critical issues within the South African banking sector; firstly, increased competition and secondly, the impact of the external environment and economies on the banking sector.
The question to ask is: what are the critical measures required for the banking sector to ensure sustainability and to maintain competitive advantages?
In order to manage the competition element, the major banks have realised that competing on a product and service basis is no longer enough to give them the niche that they require. Developments within technology and innovation have neutralised the value of products- and services-based competition. According to Max Makhubalo, CEO of Bankseta, the "world around us continues to develop at a technology and a knowledge level. For organisations to maintain their position, they need to change at the same pace as their operating environment." The banking sector is not immune to this.
In order to counter this, most financial institutions have turned to customer-centric models as part of their strategy for attaining and maintaining competitive advantage. While customer centricity is a sound model to follow, Alaardt believes that "the key to success for any banking service provider is a proper integration of the three main information capability (ie, good information management, appropriate use of information technology to manage organisational information, and the right information behaviour and values). This is supported by Marchand, Kettinger, and Rollin (2001) stating that "companies that integrate the three information capabilities (ie, good information management, use information technology appropriately, have the right information behaviour and values) and scores high in all three will achieve superior business performance."
For Alaardt, management of information and knowledge resources' lifecycles must be seen as critical to the banks' operational success. Banking sector strategies, processes and policies must be created based on the banks' content, information and knowledge resources. This means that strategic decisions within the banking sector must always be made based on current, relevant and accurate content, information and knowledge resources.
What would the value of this approach be? According to Alaardt, the banking sector will be better equipped to deal with external changes that affect their business. Having access to relevant and accurate content, information and knowledge about the environment will assist the financial institutions in understanding their environment better, and enable them to predict possible future changes in the environment and the impact of these on their business.
This will enable them to influence the direction of those changes. The banking sector will then be able to effect organisational changes that will match the environmental future state.
Improved and more accurate access to content, information and knowledge about the country and about the community that the bank serves, will assist the banking sector in realising its customer-centric strategies and vision. This knowledge will also assist the bank in developing products and services that are relevant for that community. For the banking community, this will assist with the establishment of lasting relationships and increased loyalty that in turn will translate into a competitive advantage and increased market share.
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