l08 csf of pm in banking

© Y.B. Yeung – all rights reserved by the author

IS5540- Project Management andIS5540- Project Management and Quality Assurance Quality Assurance

Critical success factors of Project Critical success factors of Project Management in BankingManagement in Banking

Prof. Y.B. YeungProf. Y.B. Yeung

19,21,23 Oct 200919,21,23 Oct 2009

IS5540: CSF of PM in banking 2© Y.B. Yeung – all rights reserved by the author

Learning objectivesLearning objectives

Understand the role of IT in bankingUnderstand the role of IT in banking Understand different types of IT applicationsUnderstand different types of IT applications Understand the characteristics of IT projects in Understand the characteristics of IT projects in

bankingbanking Understand the risk of a project failureUnderstand the risk of a project failure Understand the critical success factors of Understand the critical success factors of

managing IT projects in bankingmanaging IT projects in banking


Role of IT in bankingRole of IT in banking

Banks cannot survive without ITBanks cannot survive without IT Information is power (market data, customer Information is power (market data, customer

data, transaction history)data, transaction history) IT provides a competitive edge and a IT provides a competitive edge and a

differentiatordifferentiator Use IT as a business enabler (revenue) and Use IT as a business enabler (revenue) and

defensive tool (cost reduction and risk defensive tool (cost reduction and risk mitigation)mitigation)


IT banking applicationsIT banking applications

ProductsProducts Deposits (savings, current acct, time dep) Loans (mortgage, consumer loans) Payments (remittances, clearing) Foreign exchange Securities services (trading, custody) Trade finance


IT banking applications(2)IT banking applications(2)

Delivery channelsDelivery channels Branch banking ATM Telephone banking (VRS, manned) Internet banking


IT banking applications(3)IT banking applications(3)

Internal systemsInternal systems General ledger Financial reporting (Basel 2, Sarbannes Oxley) Human resources Purchasing Email New data centre


Characteristics of IT projects in bankingCharacteristics of IT projects in banking

Use many technologiesUse many technologies Fast changing technologiesFast changing technologies User requirements change all the timeUser requirements change all the time Many systems have to work togetherMany systems have to work together They want the project yesterdayThey want the project yesterday Regulatory pressureRegulatory pressure


Use many technologiesUse many technologies

Banks have legacy systems developed 30 Banks have legacy systems developed 30 years ago(COBOL, mainframe)years ago(COBOL, mainframe)

Powerful front ends(servers, browser, Java)Powerful front ends(servers, browser, Java) The middle layer(network, routers, front end The middle layer(network, routers, front end

processors, firewall, ACD)processors, firewall, ACD) Needs high interoperabilityNeeds high interoperability


Use many technologies(2)Use many technologies(2)

Internet banking is a technology nightmareInternet banking is a technology nightmare Many technologies have to work together

• Mainframe; web servers, AIX servers; firewall; telecommunications

Volume is unpredictable and difficult to benchmark Cyber attacks everyday Servers more fragile than mainframe Staff and customers have to be security conscious Severe reputation damage if system is down


Fast changing technologiesFast changing technologies

Don’t we love COBOLDon’t we love COBOL Technologies become obsolete fastTechnologies become obsolete fast Tough to keep up the pace because:Tough to keep up the pace because:

Capitol investment in hardware/software Takes time to write procedures and train staff Customer education takes time

Have to identify fadsHave to identify fads


User requirements change all the timeUser requirements change all the time

Cut throat competitionCut throat competition Dynamic market conditionsDynamic market conditions Some users do not know what they wantSome users do not know what they want The later the change, the more costly it isThe later the change, the more costly it is Prototyping and browser technology helpPrototyping and browser technology help


The modern day customerThe modern day customer

Has more money to investHas more money to invest Knows what he/she wantsKnows what he/she wants Seeks better return on investmentSeeks better return on investment Has sophisticated financial needsHas sophisticated financial needs Banking anywhere, anytimeBanking anywhere, anytime ““the next bank is only one click away”the next bank is only one click away”


Many systems have to work togetherMany systems have to work together

Example: credit card systemExample: credit card system Core system for card processingCore system for card processing Credit approval system for new cardsCredit approval system for new cards Authorisation system for approvals/declineAuthorisation system for approvals/decline Fraud detection system for alertsFraud detection system for alerts Collections system for bad loansCollections system for bad loans


Credit card system designCredit card system design

Card system core

Credit applicationprocessing

Authorisation engine

Fraud detection Automated collections


They want the project yesterdayThey want the project yesterday

Typical project duration is 18-24 monthsTypical project duration is 18-24 months 1/3 is in requirements and design1/3 is in requirements and design 1/3 is in development1/3 is in development 1/3 is in testing1/3 is in testing The business cannot waitThe business cannot wait Need to find ways to have faster deliveryNeed to find ways to have faster delivery


Regulatory pressureRegulatory pressure

More and more projects are regulatory and More and more projects are regulatory and compliance related, eg.compliance related, eg. Basel 2 accord – operational and credit risk

mitigation Sarbanes Oxley Act – ensure accurate financial

reporting Two factor authentication – imposed by HKMA to

protect e-banking customers


Risks if a banking IT project failRisks if a banking IT project fail

You lose your jobYou lose your job Impact customer service & confidenceImpact customer service & confidence Customer loyalty is very fragileCustomer loyalty is very fragile Reputation risk(eg. Fraud)Reputation risk(eg. Fraud) The bank cannot open its doors(eg. Y2K)The bank cannot open its doors(eg. Y2K) Financial loss(compensation, interest loss)Financial loss(compensation, interest loss) Regulators can withdraw banking licenseRegulators can withdraw banking license


Critical success factors of a project manager in Critical success factors of a project manager in banking ITbanking IT

Senior management support(sponsor)Senior management support(sponsor) Convey clear objectivesConvey clear objectives Have all the tools/process in placeHave all the tools/process in place Have a system development methodologyHave a system development methodology Knowledge of business and ITKnowledge of business and IT Have a solid plan and stick to itHave a solid plan and stick to it Avoid scope creepAvoid scope creep Expect problems and fix it fastExpect problems and fix it fast Communicate and work with peopleCommunicate and work with people


Senior management supportSenior management support

Identify a project sponsorIdentify a project sponsor Senior person to go to if in trouble

Form a project steering committeeForm a project steering committee Chaired by the project sponsor and attended Chaired by the project sponsor and attended

by the stakeholdersby the stakeholders


Convey clear objectivesConvey clear objectives

All parties in the project must understand All parties in the project must understand clearly the common objective of the projectclearly the common objective of the project

This objective will be the focal point through This objective will be the focal point through the projectthe project

This is what we are trying to achieve. Do not This is what we are trying to achieve. Do not lose sight of it.lose sight of it.


Have all the tools/process in placeHave all the tools/process in place

Project plansProject plans Tools to track progressTools to track progress Tools to track cost and manpowerTools to track cost and manpower Change control processChange control process Tools to report progress and costTools to report progress and cost


Have a SDLCHave a SDLC

Formalise a System Development Life CycleFormalise a System Development Life Cycle Identify major checkpoints and deliverablesIdentify major checkpoints and deliverables Get the signoffsGet the signoffs Seek additional funding or decision to proceed Seek additional funding or decision to proceed

or not at these checkpointsor not at these checkpoints


Knowledge of business and ITKnowledge of business and IT

Project manager must have a good knowledge Project manager must have a good knowledge of the business and ITof the business and IT

Be able to understand the linkage between Be able to understand the linkage between business and IT during project planning and business and IT during project planning and executionexecution

A project manager has great influence on A project manager has great influence on project direction(not just an administrator)project direction(not just an administrator)


Have a solid plan and stick to itHave a solid plan and stick to it

A well thought out plan will pay off at the endA well thought out plan will pay off at the end Good execution requires dedicated effortGood execution requires dedicated effort Plans do change. Consult the stakeholder and Plans do change. Consult the stakeholder and

adjust. Make everyone aware of the change adjust. Make everyone aware of the change and its implicationsand its implications


Avoid scope creepAvoid scope creep

Probably one of the biggest reasons for project Probably one of the biggest reasons for project failurefailure

scope

time money


Change control processChange control process

Absolutely essential to control scopeAbsolutely essential to control scope Formally document the process and adhere to Formally document the process and adhere to

itit Agreed this beforehand with usersAgreed this beforehand with users No sympathy if project is late or over budget No sympathy if project is late or over budget

due to scope creepdue to scope creep The later the change, the more expensive it isThe later the change, the more expensive it is


Expect problems and fix it fastExpect problems and fix it fast

Problems do occurProblems do occur eg. Vendor delay, resignations, failed volume test

Expect more problems for bigger projectsExpect more problems for bigger projects Fix it quickly before it becomes a big problemFix it quickly before it becomes a big problem Be prepared to escalate if significantBe prepared to escalate if significant


CommunicateCommunicate

Nothing replaces good communications in a Nothing replaces good communications in a projectproject

Steering committeeSteering committee Project progress meetingsProject progress meetings Work groupsWork groups Have a Newsflash or Project corner on the Have a Newsflash or Project corner on the

intranetintranet


Work with peopleWork with people

People are the most important success factor People are the most important success factor of any projectof any project

Technology and process are important but it is Technology and process are important but it is the people that make it happenthe people that make it happen


SummarySummary

IT is critical to the banking industryIT is critical to the banking industry Service delivery is totally dependent on ITService delivery is totally dependent on IT Project failure can have grave impact to the Project failure can have grave impact to the

bankbank Good project management is crucial to ensure Good project management is crucial to ensure

success in implementing banking IT projectssuccess in implementing banking IT projects


ReferencesReferences

Managing the information technology resource Managing the information technology resource by Jerry Luftman Chapter 5by Jerry Luftman Chapter 5

l08 csf of pm in banking

Documents

convey clear

senior management

avoid scope

critical success

user requirements

change control

fast changing

project management