Fentech Dynamics of banking technology adoption

Fentech is a banking industry microfinance financial institution. The principal operation of the organization is deposit taking and lending to small and medium-sized businesses. The corporation employs people in all of its regional offices across the state, with the bulk of them working in the money lending industry. The company’s business managers and personal bankers work with business enterprises’ financial management to discover the optimum financing alternative to fulfill the financial demands of small and medium-sized firms.

Global technological advances have had an impact on the banking business, with Fentech playing a role. The improvement in technology has seen changes in the banking industry with the bank’s customers having to embrace technology in its operation with the bank. (Chang, 2003). Fentech has to carry out a restructuring of its operations to stay afloat in the competitive financial industry. The company has to repackage its services to reach a broader base of clientele. The company plans to introduce a department that caters to the large business units as well as offer loans to individuals with employment being collateral.

The deep-rooted challenge of retaining and increasing the customers while at the same time remaining profitable has seen Fentech put in place a restructuring strategy. (Mishra, 2015). The company will cut on the jobs; reduce its regional presence to the most profitable branches. Fentech will also scale back on it’s out of state operations to concentrate on the home markets in which the company has sufficient knowledge to ensure the smooth running of operations. Additionally, Fentech will acquire Fanfare banking services limited, a leading financial institution in the region in the personal banking services which has been facing threats of bankruptcy as a result of a recent reduction of workers and thus a default on its existing personal loans. An acquisition of Fanfare will see the acquiring company, Fentech spreading its services to the personal banking financing to target the newly employed staff within the established industrial sector in the region. Fentech plans to eliminate the non-core business processes, a consolidation of related business functions and operations and a complete re-engineering of the existing banking processes. The strategy will involve the changing of the top management team in the lending sections of the bank to obtain a savvy group with hands-on experience in lending and excellence in handling customers to ensure customer loyalty. The introduction of new technology in the money lending process will similarly ensure Fentech’s suitability to compete in the banking industry. (Hawkins and Turner,1999).

The existing company’s CEO is about to retire, and one of the restructuring processes is the appointment of a new Chief Executive Officer with the necessary skills and know-how to handle the specific yet extended operations.

The restructuring of Fentech limited will enable the organisation to respond quickly and efficiently to new opportunities in the market and at the same time handle the pressures in the banking industry resulting from the dynamic nature of business in the sector. The reorganisation will additionally give Fentech a competitive advantage within the industry that is full of innovations and advancement due to the ever-changing technology. The competitive advantage is founded on the company’s ability to reorganise its business processes and ensure it is best placed to compete yet being able to build on the best practices and well-established internal procedures to propel it above its competitors. The reorganisation will make Fentech adapt and prepare for combating its competitors quickly. Further, the organisation’s will support the corporate strategy and enable it to take advantage of the existing business strategy.

The restructuring will equip the company with the necessary competencies to capture the business opportunities in its operating environment within the banking industry through leadership that focuses on value creation. The restructuring will put the company at a higher level of operating efficiency.

With increased operations as a result of the acquisition and the reduction in the workforce resulting from the reduction of operations to the regional centres, Fentech has to improve team effectiveness by creating well-defined team missions, plans, operating processes, and interpersonal and inter-team relationships.

A reorganisation of Fentech’s corporate operations enables the company to achieve higher levels of operating efficiencies. The managers of the company focus on recasting their organisational leadership, culture, reward systems and structure to ensure cost-effectiveness and competitiveness with the aim of providing optimum quality of services as demanded by consumers. The company’s new strategy to focus on particular market segments enables it to reduce the number of competitors while at the same time being able to meet the needs of their customers. The commitment to provide exceptional customers services as a result of restructuring will enable Fentech Company to maintain customer loyalty hence profitability. (Hoenig and Morris, 2014).

Restructuring is aimed mainly at the fundamental changes in the financial structure of the company and Fentech’s businesses to increase the value of the company. Financial restructuring will improve Fentech’s financial performance since such restructuring is focused on the financial aspect of the company. It is with this thought that Fentech has focused on leveraged and management buyouts. The company similarly, targets on a reorganisation of its portfolio with an objective on spin-offs due to its higher expected rate of returns and finally the sell-offs.

Organizational restructuring, on the other hand, is associated with challenges. Downsizing during the process may lead to the loss of highly skilled employees in the organization. Reassigning of duties to the remaining employees may come at an additional cost to the company associated with the training costs for the new roles that employees are expected to undertake. Additionally, the workers remaining after a complete restructuring often feel insecure about their jobs which lead to low morale and poor customer service. When restructuring involves the introduction of new technology, or changes to employee responsibilities, the levels of productivity in the company may deteriorate as employees are adapting to the new roles.

Organisational restructuring may also affect the company’s performance as a result of the investor’s lack of trust in the company’s future. The reorganisation will primarily affect the businesses in the small and medium category with a limited number of investors as they may lose the necessary funding if they fail to give reassurances to the limited number of investors. (Zoli, 2001).

Change has faced opposition from various stakeholders since the pre-industrialization periods. During these times, managers had little, or no experience at all regarding management of change and the significant change decisions were made in a top-down manner without taking any regards of the lower cadre of workers. The changes at this time were focused on a reduction of costs and an increase in a firm’s profitability. The labourers were at a disadvantage due to their inability to properly negotiate for their rights. Following this period, there was a need for a systematic approach to change management. Various theorists came up with the thought of change management. The rational scientific method aimed at obtaining the best way for the organisation of work. Frederick Taylor introduced the principles of management usable in running of organisations and proper change management. The theory suggested a systematic collection of knowledge regarding the work process, the overall reduction of control of what workers do, and finally laying down the standard procedures and establishing the proper times for carrying out each of the established job procedures. Henri Fayol’s approach on the issue was the establishment of top to down organisational education and philosophies for managers. Fayol established principles of management which included organising, commanding, controlling, and forecasting and planning. Theorist Max Weber introduced the theory of bureaucracy where he discussed three forms of authority being the legal, traditional and charismatic authority types. These authority types were based on the assumption of a legal code that respected members, an administration that governed by rules and all the people were expected to be obedient to the laws.

Fentech limited takes the emergent approach to change management approach to change management in its restructuring efforts. The approach is an open-ended process necessitated by the changes in the company’s operating environment, the circumstances of which are unpredictable. The operation cannot, therefore, be pre-planned since the restructuring presents a learning process to the company with non-existent universal rules to be followed. The approach is appropriate due to its sensitivity to the local emergencies in the operational environment. It also provides the company with a learning opportunity, manageability and comprehensibility with likelihood to ensure satisfaction in the company’s autonomy, swift implementation of the change procedure, and the ability to exploit the existing knowledge with feedback results for better control during process implementation.

To effectively manage change, Fentech limited has to appoint a capable leadership project team. The team members to be appointed should be influential in status, expertise, a reputation with an existing experience in project management will be an added advantage to the team. The members chosen to this group must be dedicated time to lead the restructure. The project team and the top management of Fentech limited must define and communicate the company’s restructure vision for success to all the company employees. Clear communication of the restructure vision will help the stakeholders come to term with the process. The proper channels of communication established must be able to communicate with clarity the reasons for the change. The various players need to understand the reason for the restructure as well as the laid down procedure to be followed in change implementation. (Thirumalaisamy,2014).

Proper communication occurs by word and deeds.Sufficient support to the managers for them to succeed in the implementation of the company’s reorganisation is essential. Managers should be trained, coached and briefed to enable them to reinforce the formal communication within the organisation. The project management team must consult widely with the Fentech’s employees throughout the organisational restructure. A genuine and open consultation will lead to creative solutions and the establishment of an atmosphere of collaboration and trust. Training of employee representatives will help in the creation of boundaries regarding negotiation and consultation. It will enable the employees of Fentech limited to understand their roles in the restructuring process, therefore, improving communication channels with their fellow staff and consequently raising employee engagement in the restructuring process.

Organizational culture shapes the overall performance of a company. During the reorganisation process, Fentech limited will shape the future of its culture by celebrating, tolerating or rewarding behaviours. The performance management system, career progression, reward policies, and competencies will be crafted in such a manner to create and support an excellent management culture. Organizational culture is an essential aspect since a strong link exists between outstanding company performance in an organisation and its operating culture. (Delaney and Huselid, 1996). An excellent group is biased towards action, establishes close ties with its customers, boasts of entrepreneurship and autonomy, and ensures productivity through its employees. Similarly, the reorganisation of Fentech’s staff is founded on the concept of a simple form based on the lean team. An entrepreneurial model supports restructuring as a way of finding synergies, a way to open boundaries to form international alliances and the creation of new ventures to encourage innovation. Fentech adopts the strategy limited to obtain a competing edge within the banking sector. Organizations are in a continuous state of change. As such, they have to adapt to the changing world of work. The current dynamics in the operating environments for businesses have seen a continuous improvement in the future organisations are expected to be knowledge-based and run by a few smart people while being populated by machines.

The existing approaches to organisational change have been explained by the culture excellence approach which advocates for organisational change for a period. The proposal, however, does not demonstrate how the change is achieved. The Japanese approach views change as the sharing of collective organisational visions, and the proposed changes are aimed at the achievement of the company goals through incremental changes. The corporate learning approach, on the other hand, advocates for continuous organisational learning aimed at the reinvention of organisations. Fentech limited combines the three strategies in the management of organisational change to achieve the most optimum results out of the restructuring being undertaken by the company.

Fentech limited is founded on the role and task cultures. The role culture is defined by the rules, hierarchical points and power, and the predictability and security of the company’s operations. The task culture ensures that the job gets done. In its operations, Fentech limited combines the two categories of culture to maintain profitability while at the same time holding a competitive advantage in the banking sector.

Difficult decisions have to be made by Fentech’s management during the restructuring process. These decisions revolve around the politics among the existing employees, the existing agreements with the various trade unions within which Fentech’s employees exist and the compensation cases in the case of the previous restructuring of the company. The company’s management will be in the forefront in addressing these obstacles to a proper organisational restructuring. Failure to address the challenges during the process may lead to the disillusionment of employees, slowing down the process.

Company reorganisation is best achieved by keeping the right people for the jobs while at the same time ensuring excellent cost-cutting. Selection of the employees to be retained in the company is dependent on the organization’s forward-thinking focus. Fentech will use the various assessment tools to ensure that the right employees are kept for the available jobs that will provide an optimum profitability for the company. Assessment centres and competency-based interviews will be helpful in the determination of the right people to be left in the company during reorganisation. Retention of the right people is a critical aspect of ensuring that Fentech gets back on its feet immediately after the restructure. The Company’s management will focus its attention on the restructuring process to ensure that the desired results of the restructuring process are achieved. The effects of the organisational restructuring may take time. The company will, therefore, assign the specific responsibility of change management to the project management team for a follow-up and control during change implementation. (Bowman and Singh, 1993).

References

Bowman, E.H. and Singh, H., 1993. Corporate restructuring: Reconfiguring the firm. Strategic Management Journal, 14(S1), pp.5-14.

Chang, Y.T., 2003. Dynamics of banking technology adoption: An application to Internet banking.

Delaney, J.T. and Huselid, M.A., 1996. The impact of human resource management practices on perceptions of organizational performance. Academy of Management journal, 39(4), pp.949-969.

Hawkins, J. and Turner, P., 1999. Bank restructuring in practice: an overview. BIS Policy Paper, 6.

Hoenig, T.M. and Morris, C.S., 2014. Restructuring the banking system to improve safety and soundness. In The Social Value of the Financial Sector: Too Big to Fail or Just Too Big? (pp. 401-425).

Mishra, S.K., 2015. Banking sector: emerging challenges and opportunities. The Business & Management Review, 5(4), p.17.

Thirumalaisamy, R., 2014. Change Management in Financial Efficacy of Banks: Evidence from Oman. Current Research Journal of Social Sciences, 6(1), pp.21-27.

Zoli, E., 2001. Cost and effectiveness of banking sector restructuring in transition economies.