The Increased Role of Project Managers in Banking
By PRABHU K. B., PMP
The banking and financial industry has witnessed exponential growth and transformational changes in the past two decades that have dramatically changed the way banks conduct business. These changes have brought in substantial benefits and ease of use to customers.
Customers today prefer ATM, Internet, and mobile banking over banking at the branch. Fund transfers happen by exchange of information through SWIFT and other messaging protocols. Customers, who were earlier considered customers of the branch, have become customers of the bank or customers of the banking system, with anywhere, anytime, 24*7*365 banking becoming a reality. Settlement cycles on securities have reduced thanks to a seamless system between financial institutions (FIs), broker/dealers, custodians, and depositories. Today, a mindboggling number of financial transactions are conducted across the globe every day.
While these developments have delighted customers, virtually removing all the maladies, it has increased the complexity and risk at the bank’s end. Since their core competency is banking, almost all the activities in the value chain are outsourced to strategic partners. Outsourcing introduces a gamut of stakeholders, namely datacenter vendors, network and infrastructure vendors, software vendors, and business and transaction processing vendors. The new-age business introduces challenges and risks that are unprecedented, namely transaction security/fraud prevention, data privacy/secrecy, regulatory and compliance, managing business continuity and failover systems, and government/political pressures against outsourcing.
Banks and FIs have extensively adopted project management principles and practices while delivering their products and services, with project managers playing a pivotal role. Let us take a sample project, say, mandatory changes to conduct transactions under SWIFT.
SWIFT makes changes to its messaging protocols every year that are mandatory to implement, and the dates are non-negotiable. After the change/cut-off window, only messages created in the new format are accepted between FIs. Messages in the old format are rejected, leading to communication breakdown between FIs. The impact is catastrophic.
The project scope in simple terms is “changing the application software to process the new message formats.” Project managers are allocated a budget and a project team is formed with stakeholders from all outsourcing partners, with a clear mandate of completing the project within scope and time, although cost can be compromised. The project manager prepares a detailed project plan, encompassing the project plan of the software vendors, testing plans, and cutover plans of strategic partners. Like in any other project, the project manager is responsible for scope sign off, preparation of detailed work breakdown structure (WBS), maintaining and updating a risk register, and tracking project progress. She constitutes a project working committee, conducts meetings, provides updates, and escalates issues and risks to the senior management.
Since banks accord the highest priority to risk management, any change in the production system is controlled through a well-defined change management process. This process involves the preparation of a detailed implementation plan, as listed below and obtaining approval from all the stakeholders, including the upstream and downstream applications, regardless of whether they are impacted by this project or not.
a. Business justification
b. Business impact, if change not implemented
c. Test results
d. Implementation window
e. Outage (if any)
f. Fallback & rollback plans
Once the changes are implemented in the production system, it is the project manager’s responsibility to conduct post production verification and obtain user sign off. In addition, the project manager is responsible for warranty support, which implies that she has to don the hat of a production support manager, at least temporarily.
Thus, any project in a bank is not just a project but a program involving and engaging multiple stakeholders with the project manager taking end-to-end ownership and accountability. She has to manage the complexity of dealing with multiple stakeholders apart from managing scope, time, cost, and budgets. Risk planning and mitigation is done exhaustively in banks and FIs. The project manager needs to be cognizant of these facts and also have a clear understanding of production support process and methodologies, since high availability and management of the service level agreement are core objectives of production support teams.
To conclude, technology and project management are the key drivers transforming the banking and financial industry. We cannot today visualize a banking world without these two elements that have been extensively adopted and institutionalized across the industry.
(A management graduate, Prabhu has around 20 years of experience in banking, investment banking, software development, project management, and support & service management.)