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Today’s banks implementing software: Make change management a priority

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Mary Biery

By Mary Ellen Biery, Sageworks

The term “change management” is a popular one these days, though it may sound like consulting jargon.

It is an important concept for any financial institution considering implementing financial software – whether it’s software to book the right loans at the right prices more quickly,manage lending relationships and the portfolio or implement the new current expected credit loss standard (CECL). There’s a solution for everything, and more institutions across the board on entering into new relationships with various vendors, integrating with multiple technologies at once, and facing the challenges of effective implementation and successfully promoting adoption among employees.

Change management is an approach that incorporates strategies, people and tools in order to ensure that the changes being implemented achieve what they are intended to do.  So when it comes to implementing financial software, change management can make sure that the implementation accomplishes what your bank or credit union expects it to. Without change management, there’s no guarantee your bank will derive the value it paid for from a given technology – with change management, there’s a far better chance your project will produce or even exceed the outcomes your institution sought from the project.

Financial institutions are understandably wary about changing their systems and practices. After all, banks and credit unions are incredibly complex and heavily regulated, and they may face potential legal, regulatory and reputational risk if an alteration in a system or process results in a major problem. While banks have a history of being adverse to change, today’s banking environment and the pace of innovation in product and service offerings has demanded the industry to move toward flexibility and quick progress.

Mary Ellen Biery

Mary Ellen Biery

Despite the tendency to stick with legacy systems and processes in the industry, change is inevitable in all business, noted Chance Castellucio, a senior credit risk consultant at Sageworks. It seems to be increasing as technology advances and, in financial services, as competition heats up to create better borrower experiences and better manage risk and expenses.

“Since change is always happening, we will be better off if we are able to handle it more smoothly, and that’s where change management comes in,” he said.

Castellucio commented on the role of change management and how it affects a financial institution that is implementing financial software.

He said change management:

  • Reduces the risks associated with change, giving more confidence that the change will be successful
  • Helps the institution proactively plan for potential obstacles and develop mechanisms for overcoming them
  • Encourages the institution to develop a plan for increasing user adoption.

The first role or benefit of effective change management is that it will reduce the risks connected to the change, Castellucio said. This may be especially important for smaller institutions with less cushion to absorb any negative impact, such as a delay in service or a lost record.

A second benefit is that change management provides the institution with additional information that will help it identify in advance any potential hurdles to executing change. Examples of potential hurdles could include problems related to miscommunication or to employees who are resistant to changing from one process to a new one. “A good part of being able to reduce those risks is to proactively think about what obstacles can be faced,” Castellucio said. “A lot of that’s going to come from you at your institution. You know your culture, the potential issues or roadblocks you have run into in the past.” By looking at those issues and considering them from employees’ and users’ perspectives, you might be able to communicate more effectively to overcome those obstacles, he said.

A third role of change management is that it fosters development of plans to increase user adoption. Those plans could include communicating why the change is being made, Castellucio said. Or they could include training people to do an entirely new job process. In any case, part of the user adoption aspect of change management is getting people engaged. This often means having a structured rollout, being able to convince influential parties to increase adoption and other methods of engaging users. Above all, Castellucio said, it’s essential to provide high-quality communication about the importance of the change throughout the transition.

“People will better do something if they better understand the why,” he said.

Change management often occurs both inside and outside banks and other financial institutions. For example, a major influence on successful software implementation within a financial institution is the role of the software partner.Best-in-class partners help limit the change-management issues that can occur before, during and after implementation. Vendor partners’ background and experience, their approach to implementation and their approach to ongoing support are critical factors to consider. As banks realize the essential nature of training and implementation support to effectively overcome change, it will become commonplace for these institutions to pay as much attention to vetting their providers for consulting, integration and general support as they do to the technologies themselves.

Change isn’t easy, but with the right change management protocols in place, your employees and institution will be able to move through the process seamlessly and start seeing the returns you’re seeking quickly.

Mary Ellen Biery is a Research Specialist at Sageworks, a financial information company, where she produces content for the web. She is a veteran financial reporter whose work has appeared in the Wall Street Journal, Dow Jones Newswires, CNBC.com, Marketwatch.com, Forbes.com and others.

Banking

SoftBank reaches settlement with former WeWork CEO Neumann

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SoftBank reaches settlement with former WeWork CEO Neumann 1

(Reuters) – SoftBank Group Corp said on Friday it has reached a settlement with WeWork’s special committee and the company’s co-founder and former chief executive, Adam Neumann, putting to rest a legal battle dating back to 2019.

SoftBank, the new owner of the office-sharing firm, did not disclose terms of the settlement. Media reports earlier this week indicated the deal includes a nearly $500 million cut in Neumann’s payout from SoftBank.

The legal tussle between SoftBank and Neumann started in 2019, when SoftBank agreed to buy around $3 billion in WeWork stock belonging to Neumann as well as current and former WeWork employees. SoftBank later contested its obligation to purchase the shares.

Under the new settlement, SoftBank will purchase around half the shares it had originally agreed to buy, a source familiar with the talks had told Reuters on Monday.

The settlement is also expected to clear the decks for WeWork as it reportedly pursues a public listing by merging with a special purpose acquisition company (SPAC).

“This agreement is the result of all parties coming to the table for the sake of doing what is best for the future of WeWork,” said Marcelo Claure, executive chairman of WeWork and CEO of SoftBank Group International.

SoftBank, which poured more than $13.5 billion into WeWork, was pulled into the legal dispute with directors at WeWork after backing out of the $3 billion tender offer agreed when it bailed out the office-sharing firm following a flopped IPO attempt.

(Reporting by Shariq Khan in Bengaluru; Editing by Richard Pullin)

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Banks weigh up home working – the new normal or an aberration?

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Banks weigh up home working - the new normal or an aberration? 2

By Lawrence White, Iain Withers and Muvija M

LONDON (Reuters) – As the finance industry prepares for life post-pandemic, commercial banks are moving quickly to harness working from home to cut costs, while investment banks are keen to get traders and advisers back to the office.

HSBC and Lloyds are getting rid of as much as 40% of their office space as an easy way to make savings when bank profits have been crunched by the pandemic.

But there are concerns that remote working does not benefit everyone. Junior staff miss out on socialising and learning opportunities and there are also risks home working can entrench gender inequality.

At investment banks, where long hours in the office were the norm pre-pandemic, bosses say they want most people back where they can see them.

HSBC plans to almost halve office space globally, as it aims to squeeze more use out of the remaining space and increase the number of staff per desk from just over one to closer to two.

Britain’s biggest domestic lender Lloyds plans to shrink its office space by a fifth within three years. Standard Chartered will cut a third of its space within four years, while Metro Bank said it would cut some 40% and make more use of branches.

“We’ve had a period where flexible working has been tested in full, with about three quarters of people not based in offices as we used to call them, and the business has performed remarkably well,” Andy Halford, Standard Chartered CFO, said.

But major investment banks take a different view, with Goldman Sachs Chief Executive David Solomon pouring cold water on the potential of remote working.

“It’s not a new normal. It’s an aberration that we’re going to correct as soon as possible,” he told a Credit Suisse conference on Wednesday.

Barclays CEO Jes Staley, who last year said he thought the days of 7,000 employees trudging into its Canary Wharf headquarters were numbered, is also unwilling to commit for now to large office closures.

The Barclays boss has said the bank had “no plan” to make a major real estate move as Britain’s prolonged third lockdown had shown the strains of working from home.

Nick Fahy, CEO of online lender Cynergy Bank, said working over screens often could not compete. “You might have a disagreement on this, that or the other but actually over the coffee machine or over a glass of wine or a bit of lunch, issues can be resolved.”

UNINTENDED CONSEQUENCES

Some banks have acted quickly because they are used to flexing workforces in line with economic cycles, particularly in investment banks, Oliver Wyman principal Jessica Marlborough said.

But some are waiting on analysis of staff productivity changes before making final decisions, while others were mindful junior staff may still prefer going into offices, she said.

Banks are also concerned women may lose out from the shift to remote working.

“We thought the pandemic would be a big leveller for women. But actually what we’re starting to see is it’s extremely challenging to get women to move jobs in a pandemic,” Marlborough said.

“Banks were making progress in hiring a more balanced workforce in terms of gender and other metrics, but they’re actually struggling now (as banks are finding) they (women) are less likely to seek out a new job.”

Union leaders said part of the reason was that some women are juggling more childcare responsibilities during the pandemic.

Dominic Hook, national officer for UK union Unite, said banks must ensure working from home is voluntary, use of surveillance tools is limited, and employers respect staff hours so work does not spill into evenings and weekends.

“Our concern is that it won’t actually be a choice and that banks will pressure staff to work from home,” Hook said.

There are also concerns hybrid working will favour employees who visit the office more regularly, as they can spend more time in person with colleagues and managers, said Richard Benson, managing director at Accenture Interactive.

The staff most likely to go back to the office are traders, bank executives said, while back-office functions such as finance, risk management and IT will spend more time working remotely.

In Germany, Deutsche Bank said it had been challenging to adapt home office spaces for traders and expected many will want to return, but not all.

“We will pay more attention to the personal circumstances at home. Dealers also have children or parents in need of care. We have become more sensitive,” said Kristian Snellman, Deutsche Bank’s head of investment banking transformation for Germany and EMEA.

The trend to shed offices predated the pandemic as many banks made cuts after the 2007-09 financial crisis. Some have already made moves as a result of the pandemic, such as NatWest, which shut its tech hub in north London last summer.

Retained offices are being remodelled, with desks removed to make way for collaboration and break space such as coffee areas, gardens and libraries, property consultancy Arcadis said.

“It’s not just about adding a ping pong table and table football and hoping it will work, it’s about making sure people get downtime,” said Sarah-Jane Osborne, head of workscape at Arcadis.

David Duffy, CEO of Virgin Money, said the bank is among those planning to strip out office cubicles.

“The world of large-scale populations returning to a tall skyscraper building to come in and do their e-mail in the office doesn’t make any sense,” he said.

(Reporting By Lawrence White and Iain Withers in London and Muvija M in Bengaluru, Additional reporting by Patricia Uhlig in Frankfurt. Editing by Rachel Armstrong and Jane Merriman)

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Banking

Bank of England’s Haldane warns inflation “tiger” is prowling

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Bank of England's Haldane warns inflation "tiger" is prowling 3

By Andy Bruce

LONDON (Reuters) – Bank of England Chief Economist Andy Haldane warned on Friday that an inflationary “tiger” had woken up and could prove difficult to tame as the economy recovers from the COVID-19 pandemic, adding that central banks may need to respond.

In a clear break from other members of the Monetary Policy Committee who are more relaxed about the outlook for inflation, Haldane called inflation a “tiger (that) has been stirred by the extraordinary events and policy actions of the past 12 months”.

“People are right to caution about the risks of central banks acting too conservatively by tightening policy prematurely,” Haldane said in a speech published online.

“But, for me, the greater risk at present is of central bank complacency allowing the inflationary (big) cat out of the bag.”

Haldane’s comments prompted British government bond prices to fall and sterling to rise as he warned that investors may not be adequately positioned for the risk of higher inflation.

“There is a tangible risk inflation proves more difficult to tame, requiring monetary policymakers to act more assertively than is currently priced into financial markets,” Haldane said.

(Editing by David Milliken)

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