NUST BUSINESS SCHOOL

EMBA2K18

CHANGE MANGEMENT
ASKARI BANK LIMITED
LOAN AUTOMATION PROCESS

SSubmitted to;
Dr. Saleemullah Khan
Submitted by;
Haroon Fareed

Date: 1st December 2019

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BACKGROUND OF THE COMPANY PROJECT
Askari Bank was incorporated in Pakistan on October 9, 1991, as a public limited company. It commenced operation on
April 1, 1992, and is principally engaged in the business of full-scale commercial banking. The Bank is listed on Pakistan
Stock Exchange. Since inception, the bank has concentrated on growth through improving service quality, investment in
technology and people, utilizing its extensive branch network which includes Islamic and agricultural banking. Corporate
Social Responsibility is an integral part of the way we do business. In order to fulfill our CSR objectives, we attempt to
promote public interest by encouraging community growth and development through sponsoring social service events,
supporting education, sports and environment and also contribute in socio-cultural activities.

In line with the overall strategy of the Bank to achieve growth through investing in technology and improving its service
quality to achieve competitive advantage, the Bank decide in 2018 to automate its loan origination process across the
Corporate and Investment Banking department.

Today, customers are more knowledgeable and more demanding than ever. They are aware of all the options available
to them and, if a lending organization is not able to process a loan application within a desirable time frame, they are
quick to switch to some other organization that can very well do so. Banks and financial institutions needed to realize
that to maintain loyalty, customers demand convenience apart from attractive interest rates.

CHANGE IMPELEMTED
Askari Bank was challenged by the manual processing of loans, creating:

 Spiraling labor costs

 Backlogs of files preventing loans from closing on schedule.
 Translating into loss of business to competition.

To overcome the above challenges, the Bank moved towards automating its entire Loan processing system which
resulted in following advantages for the bank:

 Reduction in processing time

 Optimal work distribution
 Immediate identification of bottlenecks and deviations
 Greater customer satisfaction through quicker response and new product offerings
 Efficient document management and tracking of status across the bank
 Improved performance monitoring using audit trails and ability to drill down to granular details
 Minimized manual entry of critical loan information
 Enhanced accuracy of data entered into the loan system
 Better compliance with regulatory requirements
 Reduced turnaround and processing times
 Easy handling of fluctuations in loan volume

STRATEGY USED & REASONS FOR SUCCESS:

The strategy used by the company was combined strategy that involved a mix of Economic strategy and Organizational
Development Strategy. The decision to automate the loan processing system was taken by the CEO, Mr. Majeedullah
Husaini himself and appointed a high-level task team to consult with different vendors available in the market including
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the systems being used by other banks do take a final decision of which software to be used and how to implement
change. This team consisted of senior executives from all important departments that are involved in loan processing
and approving exercise which included:

 Corporate & Investment Banking front office

 Corporate & Investment Banking Head office
 Risk Management & Credit Division
 President Office
 Credit Administration Department
 IT Department
 Finance Department

Since all the departments involved looked at the process through different angles, all departments had to be onboarded
for a successful implementation of automation process. This team hired the services of top consultants to give them
presentations on the softwares available in the market and being used by other banks who had already successfully
automated their loan processing systems.

The team upon completion of presentations by different vendors, chose Loan Origination Software which was oracle
based as their final decision after much deliberations. The vendor appointed their software engineer and a finance
officer to deal with the bank from thereon. While the task team from the bank also nominated middle managers from
their respective departments to coordinate on behest of their respective departments while monthly meetings were
held by the task teams to be updated on the status.

Since the software was not completely in line with the policies and procedures of Askari Bank, the software engineer had
to make alterations in the system as per Bank’s requirement which was ascertained through detailed feedback from
coordinators appointed from all respective departments of the Bank. The respective Task team conducted regular
sessions with their middle management who in turn communicated on daily basis with the lower management for,
firstly, communicating a compelling vision behind the change and also to take their input so that no detail was missed
out and all problems that are faced even at the lowest level in the loan processing exercise is addressed to the fullest.
This way, every department involved in the change process felt the ownership in the entire change exercise and felt
empowered. The transition was certainly not smooth at several stages’ things did not go as planned and had to be
reviewed accordingly.

This strategy not only proved to be successful but in the process, Bank was also able to develop down the line leader
who contributed directly towards implementation of this big change across the organization.

KEY SITUATIONAL VARIABLES

 Stability of external environment: The overall banking environment has always been variable with changes in
banking policies and product innovation in the industry as a whole. However, with the advent of information
technology, Banking industry as a whole has revolutionized trough incorporation of most modern
communication systems thereby improving customer service quality and offering of better products. Thus in
order to remain competitive, it was of most importance for Askari Bank to also shift to automated loan
processing systems like top banks operating in the industry.

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  Urgency and stakes involved: Since a number of top banks in Pakistan had already shifted towards automation
across their entire organization, there was a general sense of urgency in Askari Bank as well to follow suit
otherwise, it was posing them a great risk of loosing business to competitor banks on the grounds of processing
a loan in a significantly larger amount of time that some of the most advanced banks operating in the industry.
 Level of support: Since the decision to automate loan processing was taken at the top of the organization, there
was a great level of support from the top management at all levels to successfully implement this change.
 Degree to which stakeholders trust those leading the change: Since a task team was formed by the CEO himself
which included senior most representatives from all departments involved and they in turn appointed middle
level manager as coordinators for their respective departments who worked round the clock with other
departments and the software vendor to resolve issue’s and cover all policy details in the new system, all
stakeholders interest were being looked after and hence, overall trust levels were high.
 Clarity of desired future state: There was crystal clarity when it came to achieving a desired future state. The
main goal was to make the system efficient by processing large amounts of loans in a much quicker time, make it
more transparent and along with it came a lot of other advantages that were already mentioned earlier.
 Extent to which change managers have access to all the information they need: When the level of support and
trust were already high with the team leading the change, all the relevant information that was required by the
team was readily available from all respective departments. Furthermore, since the Bank operates under SBP
guidelines and regulations, most of the thing already are documented. It was just a matter of extracting relevant
data from archives and policies that was required.
 Extent to which they have to rely on the commitment and energy of others: Naturally, a change project of such
magnitude cannot be dependent only on a selected few people, rather numerous levels of employees across the
organization had special roles for successful implementation of automated loan processing system. This often-
caused slight delays in timelines since not every one works with the same pace. However, it did not create any
big hurdles in the way of implanting change.
 Alignment of values: Askari Bank as a whole had a certain kind of culture as the Bank was sponsored by the
armed forces. Its was a mix of autocracy and employee welfare. These values certainly were evident across the
organization and hence worked positively while implementing change.
 Variations over time: The entire change project for automation was estimated for 12 months. However, it took
around 18 months to complete the same due to variation in the strategy over time. Not all the things go as
planned. When the software was purchased from the vendor, it was found the hardware support lacked certain
requirements and had to be upgraded. Issues like this cause the strategy shifts from time to time.
 Divisibility: This approach was used and at the start, the project was piloted only at the north regional corporate
& investment Banking and once that was successful, it was implemented in other regions.
 Need for coordination: As already iterated, due a diverse task team leading the change, coordination was not
met as something as a hindrance in the project at any stage.

Leadership: Since a mixed approach was used where CEO lead the initiative and handed it over to the task team from
there overlooking form the top on periodic performance review. So it was rather participative leadership across the
entire change project.

Focus: Here the focus was to change the process from manual to automation, however, like any combined strategy,
technical and social systems were catered simultaneously for implementation of change.

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Process: Here again a mixed approach was used. First the task team brain stormed and analyzed the project in totality
and an emergent process was developed but once developed and decisions regarding certain aspects were finalized, it
which was then implemented on a timeline to gauge performance.

Reward Systems: The main motivation driver for successful implementation of the project by the task team was
intrinsic, recognition, development and a step up in their respective fields. However, along the way, financial incentives
were also given such as adhoc bonuses etc.

Use of Consultants: Consultants were only used at the initial stage to help decide if an inhouse software development
would be viable to buying a software off the shelf would be better with some inhouse tailoring at the later stage.
However, the entire change project was mainly lead by banks own employees.

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