Management
4.9 The Exploitation of Information Synergies
The accumulation and sharing of know-how is a key objective of learning organizations. According to Baron and Besanko (2001) the choice of or- ganizational structure and incentives can shape the intensity with which know-how is shared and thus affect the extent to which latent capabilities become mobilized to benefit the firm as a whole. The same considerations made for macro-organization choices can be applied to micro decisions re- garding the configuration of organization roles.
In the case of the corporate banker's role configuration, the search of in- formation synergies can be developed onto two levels: a) the ability to ex- ploit for commercial purposes the information acquired and processed for credit risk valuation and, vice versa, to exploit for credit risk valuation the information acquired for commercial purposes; b) the ability to create in- formation synergies with other distribution channels or bank product-units.
As for the first level, we have analyzed the perceived importance of such synergies and the main mode with which this information exchange is encouraged. While there is full concordance about the critical relevance of such synergies for all the Italian banks in our survey, methodologies to achieve such synergies vary quite significantly from bank to bank (Table 4.10).
Some banks rely on information systems specifically designed for this goal, probably (and hopefully) the evolutions of customer relationship management systems used in the retail area.
Other banks develop synergies by exploiting the concentration of com- mercial functions and credit investigation tasks into one figure, that of the corporate banker. This solution bears great potentialities if a critical aspect associated with the nature of the investigation tasks assigned to the corpo-
rate banker does not hamper them: if investigation tasks consist in merely collecting information without a direct and explicit interpretation of the corporate competitive and financial situation, the search for synergies be- comes more problematic.
The third solution is the most traditional (personal interaction between credit officers and relationship managers) but it can be re-interpreted in an innovative and effective way by increasing operators' logistic and organ- izational proximity through the scheme of working-teams.
Table 4.10. Information synergies between credit valuation and commercial activ- ity
R , The sharing of information acquired in sales/assistance/advisory activi- ties and in credit risk evaluation is achieved by:
A Focusing commercial and investigation roles in the corporate banker (though the credit risk analysis system is mainly mechanical)
B Focusing commercial and risk management functions in the corporate banker and team-work in corporate branches
C Team-work in corporate centers
D Assigning the corporate banker investigation and commercial roles E The presence of information systems designed for this goal
F Assigning the corporate banker commercial and investigation roles (though the credit risk analysis system is prevailingly mechanical) H Information systems designed for this goal and through intense ex-
changes between commercial relationship managers and credit managers
Also in the other European banks the ability to exploit for commercial purposes the information acquired and processed for credit risk valuation purposes and, vice versa, to exploit for credit risk valuation purposes the information acquired for commercial purposes is considered of crucial im- portance.
It is pursued by involving the corporate banker in investigations and in the formulation of credit proposals, as well as through the close interaction between credit officers and corporate bankers. In two banks it is pursued by involving figures with lending authority in the interaction with custom- ers.
As for the second level (i.e. the ability to create information synergies between the corporate banker and the other distribution channels or bank product-units), the quest of such synergies is considered important by all the Italian banks. The ability to interact with retail branches, where pay- ment and credit services are provided, is frequently mentioned.
It is also important to coordinate the activity of corporate and private bankers in relation to small and medium enterprises, whose entrepreneurs express important requirements as to the management of their personal wealth. In fact, one of the main limits of bank current divisionalization processes by market segment is the neat distinction in the management of customers who, on the contrary, often are entrepreneurs and well-off sav- ers.
There are two main organizational models to deal with product special- ists: in the first model the corporate banker must trigger those interlocu- tors; in the second model there is the Area managers' filter. Product-unit specialists, who are often independent agents, are usually oriented toward collaboration through incentive schemes based on the sharing of volumes and margins or on internal transfer prices.
In the other European banks the problem of information synergies be- tween the corporate banker and the other distribution channels of the bank is far less important. This is due to that, except for Bank Z, in all the other banks the corporate banker is the only distribution channel for customers.
Information synergies with product-units are mainly concentrated on
"product" aspects and are pursued by making specialists promptly avail- able.
Team-working is one of the specific skills of the corporate banker, as confirmed explicitly by all the surveyed banks, in Italy and abroad. Team- working is particularly intense in the quadrangle composed of the corpo- rate banker, the assistant, the credit manager and the product specialist. In the majority of banks, the first three figures work inside the corporate branches and, thus, structural decisions are clearly aimed at improving team-working. In various banks product specialists have been distributed over the territory, though with less capillarity than for the corporate banker.
As noted in the previous paragraph, the other European banks tend to maximize information sharing also in the management of non-performing loans, whereas Italian banks tend to increase the arm's length management of such loans transferring the responsibility from corporate bankers to spe- cialized units.