Banking: The power of knowledge management

Knowledge Management (KM) is one of the hottest topics today both in the industrial arena and information research world. KM was conceptualised in early 1990 as a process of knowledge creation, distribution and application. In the context of a firm or business, KM assets may include databases, documents, policies, procedures and previously un-captured expertise and experience of individual workers. The purpose of KM is to give value to the information in an organisation resulting in value addition to gain competitive advantage.
KM is becoming very important in almost all banks since it simplifies the delivery of timely and effective information. It helps managers in formulating strategic, tactical and operational activities in the best ways in order to achieve desired objectives. KM can lead to many organisational benefits like better solution to problems and decision-making, improved customer services, increasing profits, better stuff attraction, more innovation and greater creativity. The process becomes essential and banks assign specialised personnel to watch over and manage these critical processes of KM.
The most common fields of KM applications in a bank are risk management, marketing management, customer relationship management and performance measurement. However, most banks around the world do not use comprehensive KM systems. This is particularly true in the context of developing countries. The write-up is an effort to discuss about the conceptual issues of KM side by side with the KM practices in the banking sector of Bangladesh.
Nowadays modern banks investigate the importance of the value of KM in the banks' business practices. The knowledge covers the range from the bank's own internal intellectual capital to the wealth of data on customer transactions. The knowledge base managed as part of KM processes includes: explicit knowledge and implicit knowledge. Explicit knowledge can be transferred easily through books and reports. So, it is a tangible form of knowledge. Implicit knowledge is not explicitly captured, but can be simply reported explicitly in papers such as the working experience or an intangible form of knowledge or expertise. For a bank, the implicit knowledge is very important which is rarely recorded and transferred. The level of implicit knowledge depends upon several factors that include task knowledge, expertise knowledge, and level of training.
For assessing the status of KM of any banking system, several KM dimensions may be considered: knowledge creation and capturing, knowledge storing, knowledge dissemination, knowledge auditing, knowledge application, and knowledge development. Knowledge is created through continuous conversion among employees. Besides ordinary presentation tools, processes such as metaphors and story-telling may convert internal concepts and values into explicit knowledge. Documents, data, e-mails can be reconfigured, combined and integrated to generate new explicit knowledge. When employees leave a bank, the co-employees must have the capability to temporarily maintain the position. This is possible when there is an effective knowledge capturing arrangement.
Knowledge storing of a bank refers to organisational memory processes, where information and knowledge are formally stored, and values, norms and beliefs associated with organisational culture and structure are informally stored. Knowledge must be made available in a useful format to anyone in the organisation, who needs it, anywhere and anytime which is known as Knowledge Dissemination in a KM system.  Knowledge Auditing included assessment, review and examination of the knowledge base through interaction of the elements of human knowledge management, technology, procedures and means of modern working. Knowledge Application directly affects the organisation's ability to maintain its competitive advantage which links knowledge with the practice, and use in solving problems that a bank might face. Knowledge Development can be attained in a bank where the KM system reaches a certain level. In the presence of a KM system, knowledge initiates product innovation leading to better quality products and process innovation leading to lower cost products and/or production systems.
Banks in Bangladesh generally do not have any formal KM strategies or KM system. However, banks have some sort of arrangement for knowledge creation, storing, and dissemination. These KM functions are performed by the training institutions/centres of the banks. Bangladesh Bank Training Academy (BBTA), the training wing of the central bank of the country, has a reasonably good training infrastructure to facilitate training, workshops and seminars. To promote training facilities in banks, Bangladesh Bank has a guideline related to training infrastructure of banks. All banks in the country have training institutes/wing and have budget allocations for training purposes. Some banks have more than one. For example, Sonali Bank Ltd, the largest commercial bank of the country, has six training institutes all over the country to train over twelve hundred of its employees. A good number of banks have started using e-learning to train their employees for disseminating knowledge. Some banks also send their employees outside the country to obtain training. Though some of the training institutes of commercial banks are called Training and Research Centres, these generally are engaged in designing and facilitating training courses and workshops. Practices of capturing knowledge in the form of research activities are very limited.
The Bangladesh Institute of Bank Management (BIBM) has been performing a set of KM functions for the banking system of the country which is collectively owned by all banks. BIBM organises a number of in-campus Training Courses, Outreach Training Courses, Training Workshops (including E-workshops) and Research and Review Workshops as per the BIBM Academic Calendar which is prepared well ahead of the year in consultation with the member banks. Research-based workshops (Research Workshops and Review Workshops) are connected with knowledge creation and capturing of knowledge on banking activities and critical banking issues. However, to set up a comprehensive KM system in the banking sector of the country, a lot remains to be done. Especially the arrangement for knowledge creation, capturing, storing and application of banking experiences at the employee level is largely missing in banks.
It is well known that the KM system is receiving growing acceptability in the banking sectors of global economies. Formulating and enforcing a 'KM Strategy' by banks is a need of the time in the country for better banking services and improved operation. Capturing up-to-date knowledge, storing it and its application are crucial for handling new banking challenges. In the long run, it is the 'Knowledge Development' that would ultimately help create a sustainable banking sector of the country.   
The author is Director [Training] of Bangladesh Institute of Bank Management [BIBM], Mirpur, Dhaka. ahsan@bibm.org.b