Knowledge management in banks, financial sector

Knowledge management (KM) is a broad concept that addresses a range of strategies and practices used in an organisation to identify, create, organise, represent, store, share, disseminate, search, analyse and improve its insights and experiences. Such insights and experiences include knowledge, either embodied in individuals or embedded in organisational processes or practice.
The discipline of KM emerged in the 1980s as knowledge was recognised as a driving force in the global economy. Managers and scholars sought to use knowledge to increase organisational performance. KM is a collection of processes that govern creation, dissemination, and utilisation of knowledge in an organisation. It is "the process of creating, capturing and using knowledge to enhance organisational performance".
More relevant to the higher education context is Blake's definition: 'It is the process of capturing a company's collective expertise wherever it resides -in databases, on papers, or in peoples' heads -and distributing it to wherever it can help produce the biggest payoffs'. It involves management of explicit knowledge (i.e. knowledge that has been codified in documents, databases, web pages, etc.), and the provision of an enabling environment for development, nurturing, utilisation and sharing of employees' tacit knowledge (i.e. know-how, skills, or expertise). The implementation of an appropriate knowledge management programme in a business organisation has the potential of improving customer services, continually improving business processes, quickly bringing new products to markets, and bringing innovative new ideas to commercialisation.
In most organisations, the key professionals involved in KM activities are human resource managers, process and product developers, and information technologists. KM is the explicit and systematic management of vital knowledge and includes capturing, organising and disseminating that knowledge within an organisation. It allows organisations to generate value from their intellectual and knowledge-based assets and makes it possible to get the right information into the hands of the appropriate people at the time they need it to make decisions.
Especially in developing countries like Bangladesh, KM related research is few. The successful practice of KM should be the result of accurately identifying functional priorities for knowledge, perceiving knowledge needs, applying preferred KM tools, and providing KM administrative support associated with that organization and its mission and goals. This study will help to develop KM in banking sector of Bangladesh. Productivity, innovation capacity and administrative power will be enhanced through KM practice.   Banks need to share information and knowledge within and outside the industry.
There are two basic types of organisational knowledge which is equally essential for sustainable progress of any financial organisation: 1. Tacit Knowledge and 2. Explicit Knowledge
TACIT KNOWLEDGE: This type of knowledge was originally defined by Polanyi in 1966. It is sometimes referred to as know-how and refers to intuitive, hard-to-define knowledge that is largely experience-based. Because of this, tacit knowledge is often context-dependent and personal in nature. It is hard to communicate and deeply-rooted in action, commitment, and involvement.
Tacit knowledge is also the most likely to lead to breakthroughs in an organisation. Lack of focus on tacit knowledge reduces capability for innovation and sustained competitiveness. KM has a very hard time handling this type of knowledge.  IT system relies on codification, which is something that is difficult/impossible for the tacit knowledge holder.
EXPLICIT KNOWLEDGE: This type of knowledge is formalised and codified, and is sometimes referred to as know-what. It is, therefore, fairly easy to identify, store, and retrieve. This is the type of knowledge most easily handled by KMS, which are very effective at facilitating the storage, retrieval, and modification of documents and texts.
From a managerial perspective, the greatest challenge with explicit knowledge is similar to information. It involves ensuring that people have access to what they need; that important knowledge is stored; and that the knowledge is reviewed, updated, or discarded. Many theoreticians regard explicit knowledge as being less important                                                                             
The discipline of KM emerged in the 1980s as knowledge became recognised as a driving force in the global economy and as managers and scholars sought to use knowledge to increase organisational performance. According to a research done by Wen Cang Zhou in 2006 on banks of China , knowledge management strategy actually would be able to solve the following main problems (Zhou, 2006):-
1. Employees' intelligence and information cannot be shared and information required cannot be achieved. It is rather difficult to capture employees' knowledge which is embedded in daily operations.
2. Having poor organisational memory, the banks cannot learn well from the past. They keep losing the knowledge of an expert due to their resignation or retirement.
3. Legacy computer systems may lack the capability and flexibility to adapt to a rapidly changing business environment.
The Governor of Bank Negara Malaysia emphasized  during the official launch of the "Towards a Knowledge-Based Organisation" programme in October 2000:
"If we are to be a central bank, with farsightedness and an ability to face new challenges, we need to be equipped with the expertise and the means to implement appropriate policies, and have confidence in our actions. An important component of this future is that the bank must fully embrace and employ the principles of knowledge management. Whilst the principal objectives of the central bank remain unchanged, the new knowledge management strategies refocus the Bank's policies and practices in managing knowledge as a key corporate asset and in leveraging and exploiting knowledge to better achieve these objectives".
There are several examples of knowledge management application successfully implemented in the banking sector such as:
*  The World Bank is well-known as one of the champions in knowledge management application. It has an extensive knowledge management approach in action. Relevant know-how was identified that could then be captured and entered into the knowledge base so that it was accessible by all staff.
*  Asian banking sector is implementing knowledge management tools since recession period. Banking sectors of Malaysia, Japan, China, Singapore, Thailand and even India already started their work on knowledge management.
*  Western banking sector i.e. the US, the UK, Australia and Canada are practicing knowledge management issues since its inception. Some instances are given below:
1. Bank of Montreal (BMO) is the oldest bank in Canada. It is also Canada's third largest bank with sales of $US12.23 billion in 2000. BMO is a leader in customer centric knowledge-based solution. This bank wanted to change the status quo of the traditional knowledge discovery lifecycle and capture the potential benefits of improving the efficiency of turning models into production. As a result, during 2000/2001 the Bank of Montreal participated in a multimillion dollar project that would help make the knowledge discovery process more economical, error-free and faster.
2. Deutsche Bank is the biggest Euro zone bank and the world's second largest bank. It has embraced the strategy of continuous, concentrated corporate learning and intellectual capital branding through its  creation of the Deutsche Bank University (DBU). DBU is in initial stage of development and to a large degree follows the thinking of what are recognised by industry experts as best practices in developing a corporate university as an umbrella organisation for learning.
Knowledge management is rather new in banking industry of Bangladesh.  Banks of Bangladesh are practising knowledge management issues but they are not fully aware about future global challenges.
Web content may be fundamental gateway of knowledge and information of any financial institution of the 21st century. After analysing the web content of the banks, it is clear that no website is fulfilling the customer's needed information. Regular update for needed information of the customer/client is not available on web content. Web site is system centered rather user-centred.
Most banks do not have KM system in place. None is aware about responsibilities of KM officer in financial institutions but they claim they are practising KM in the organisational environment and committed to be a knowledge-based organisation.
Most of the banks of Bangladesh nurture knowledge culture in their organisational environment through offering training courses, occasional programmes, group discussions and regular study class in branch level.  IBBL is pioneer in fostering knowledge culture in organisational environment.
Most of the banks have following practices for being knowledge-based organisations:
1. For preserving and sharing explicit knowledge hard copy preservation system is vital and some banks have now started digital archival programme which is Local Area Network based.
2. For preserving and sharing tacit knowledge, there is no actual and practical system developed i.e. online interactive forum website, digital archives etc.
3. Study session is there in some banks for sharing new knowledge with other colleagues through presentation after office hours.
4. Most of the banks do not practise kKnowledge-based marketing for their product and services marketing.
5. Knowledge culture does not exist in most of the banks.
6 .Overall automation of daily operation has almost been completed.
7 .Human resource systems are partially automated in 5 banks.
Based on the study following recommendations may be made:
1. Every bank of Bangladesh may appoint a KM officer for development of KM practices in the organisation.
2. Web content may be updated regularly as per user's need which will contain all updates for the clients.
3. Digital archive of explicit knowledge may be useful for the KM culture.
4. Interactive online forum will play vital role for sharing tacit knowledge.
5. Promote staff awareness for KM concept
6 .Fully-automated HR system may be introduced.
7. Central digital knowledge repository for every bank must be initiated and
8. A central digital knowledge repository for all banks may be initiated.
The writers, bankers, are MPhil research fellow, University of Dhaka.
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