L08 csf of pm in banking
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  • 1. IS5540- Project Management and Quality Assurance Critical success factors of Project Management in Banking Prof. Y.B. Yeung 19,21,23 Oct 2009
  • 2. Learning objectives
    • Understand the role of IT in banking
    • Understand different types of IT applications
    • Understand the characteristics of IT projects in banking
    • Understand the risk of a project failure
    • Understand the critical success factors of managing IT projects in banking
  • 3. Role of IT in banking
    • Banks cannot survive without IT
    • Information is power (market data, customer data, transaction history)
    • IT provides a competitive edge and a differentiator
    • Use IT as a business enabler (revenue) and defensive tool (cost reduction and risk mitigation)
  • 4. IT banking applications
    • Products
      • Deposits (savings, current acct, time dep)
      • Loans (mortgage, consumer loans)
      • Payments (remittances, clearing)
      • Foreign exchange
      • Securities services (trading, custody)
      • Trade finance
  • 5. IT banking applications(2)
    • Delivery channels
      • Branch banking
      • ATM
      • Telephone banking (VRS, manned)
      • Internet banking
  • 6. IT banking applications(3)
    • Internal systems
      • General ledger
      • Financial reporting (Basel 2, Sarbannes Oxley)
      • Human resources
      • Purchasing
      • Email
      • New data centre
  • 7. Characteristics of IT projects in banking
    • Use many technologies
    • Fast changing technologies
    • User requirements change all the time
    • Many systems have to work together
    • They want the project yesterday
    • Regulatory pressure
  • 8. Use many technologies
    • Banks have legacy systems developed 30 years ago(COBOL, mainframe)
    • Powerful front ends(servers, browser, Java)
    • The middle layer(network, routers, front end processors, firewall, ACD)
    • Needs high interoperability
  • 9. Use many technologies(2)
    • Internet 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
  • 10. Fast changing technologies
    • Don’t we love COBOL
    • Technologies become obsolete fast
    • 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 fads
  • 11. User requirements change all the time
    • Cut throat competition
    • Dynamic market conditions
    • Some users do not know what they want
    • The later the change, the more costly it is
    • Prototyping and browser technology help
  • 12. The modern day customer
    • Has more money to invest
    • Knows what he/she wants
    • Seeks better return on investment
    • Has sophisticated financial needs
    • Banking anywhere, anytime
    • “the next bank is only one click away”
  • 13. Many systems have to work together
    • Example: credit card system
    • Core system for card processing
    • Credit approval system for new cards
    • Authorisation system for approvals/decline
    • Fraud detection system for alerts
    • Collections system for bad loans
  • 14. Credit card system design Card system core Credit application processing Authorisation engine Fraud detection Automated collections
  • 15. They want the project yesterday
    • Typical project duration is 18-24 months
    • 1/3 is in requirements and design
    • 1/3 is in development
    • 1/3 is in testing
    • The business cannot wait
    • Need to find ways to have faster delivery
  • 16. Regulatory pressure
    • More and more projects are regulatory and 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
  • 17. Risks if a banking IT project fail
    • You lose your job
    • Impact customer service & confidence
    • Customer loyalty is very fragile
    • Reputation risk(eg. Fraud)
    • The bank cannot open its doors(eg. Y2K)
    • Financial loss(compensation, interest loss)
    • Regulators can withdraw banking license
  • 18. Critical success factors of a project manager in banking IT
    • Senior management support(sponsor)
    • Convey clear objectives
    • Have all the tools/process in place
    • Have a system development methodology
    • Knowledge of business and IT
    • Have a solid plan and stick to it
    • Avoid scope creep
    • Expect problems and fix it fast
    • Communicate and work with people
  • 19. Senior management support
    • Identify a project sponsor
      • Senior person to go to if in trouble
    • Form a project steering committee
    • Chaired by the project sponsor and attended by the stakeholders
  • 20. Convey clear objectives
    • All parties in the project must understand clearly the common objective of the project
    • This objective will be the focal point through the project
    • This is what we are trying to achieve. Do not lose sight of it.
  • 21. Have all the tools/process in place
    • Project plans
    • Tools to track progress
    • Tools to track cost and manpower
    • Change control process
    • Tools to report progress and cost
  • 22. Have a SDLC
    • Formalise a System Development Life Cycle
    • Identify major checkpoints and deliverables
    • Get the signoffs
    • Seek additional funding or decision to proceed or not at these checkpoints
  • 23. Knowledge of business and IT
    • Project manager must have a good knowledge of the business and IT
    • Be able to understand the linkage between business and IT during project planning and execution
    • A project manager has great influence on project direction(not just an administrator)
  • 24. Have a solid plan and stick to it
    • A well thought out plan will pay off at the end
    • Good execution requires dedicated effort
    • Plans do change. Consult the stakeholder and adjust. Make everyone aware of the change and its implications
  • 25. Avoid scope creep
    • Probably one of the biggest reasons for project failure
    scope time money
  • 26. Change control process
    • Absolutely essential to control scope
    • Formally document the process and adhere to it
    • Agreed this beforehand with users
    • No sympathy if project is late or over budget due to scope creep
    • The later the change, the more expensive it is
  • 27. Expect problems and fix it fast
    • Problems do occur
      • eg. Vendor delay, resignations, failed volume test
    • Expect more problems for bigger projects
    • Fix it quickly before it becomes a big problem
    • Be prepared to escalate if significant
  • 28. Communicate
    • Nothing replaces good communications in a project
    • Steering committee
    • Project progress meetings
    • Work groups
    • Have a Newsflash or Project corner on the intranet
  • 29. Work with people
    • People are the most important success factor of any project
    • Technology and process are important but it is the people that make it happen
  • 30. Summary
    • IT is critical to the banking industry
    • Service delivery is totally dependent on IT
    • Project failure can have grave impact to the bank
    • Good project management is crucial to ensure success in implementing banking IT projects
  • 31. References
    • Managing the information technology resource by Jerry Luftman Chapter 5