Challenges of the implementation of the centralized credit process at KCB Ltd
Strategy is a set of decisions and actions that result in the formulation and implementation of plans designed to achieve a company‟s objectives. It is a very important tool in moving a firm forward in a turbulent environment. Strategy implementation is as important as strategy formulation. KCB Ltd is East Africa‟s largest bank with an asset base of Kshs. 223B as at 31st December 2010. The bank‟s loan book also grew to Kshs.148B during the same period. The bank has a branch network of over 220 branches with a presence in all East Africa countries. Over the past decade KCB Ltd has embarked on various turnaround processes to enable it to become the Good bank it is today. Having pursued and virtually achieved the vision “To be the best bank in the Region” KCB Ltd adopted a pan-African vision to take the bank into the future, “To be the preferred financial solutions provider in Africa with a global reach.” Moving into the new decade, the bank embarked on a transformation journey which the Board instituted early 2011, with the aim of improving KCB from a Good to a Great bank. The process was specifically targeted towards the processes and strategy the bank employs to achieve its vision and mission. The Goal of Transformation is to deliver business growth, increase productivity, drive efficiency, rationalize costs, enhance stakeholder value and launch KCB Ltd to the next level thus transforming the bank from Good to Great. Under the credit division, the key initiatives were around the reduction of turnaround time in loan processing and decision-making, monitoring and recovery of non-performing debts and a clear definition of the bank‟s risk appetite for various customer segments as well as a focus on compliance and governance. The researcher used case study design since the design is descriptive in nature. Both the primary and secondary sources of data were used to obtain information for the study. One key informant was used, the Head Business Process Re-engineering & Quality Assurance and. The interview guide was administered through a face to face interview. The researcher used Content Analysis to analyze the data. This is because content analysis involves observation and detailed description of objects, or things, and the errors which occur during the study are easily detected and corrected. The research findings show that KCB Ltd took a strategic step to change its credit process from a decentralized to a centralized one. The main functionalities that were affected in the shift were credit decisions, security perfection and documentation, disbursements and the general oversight of the whole credit portfolio. The implementation of the centralized credit process has benefited the bank in various ways: the quality of credit decisions has greatly improved; there is proper documentation of securities and the bank‟s interest is now being noted in all securities offered; disbursements are now much faster and has led to „clean‟ data; the general performance of the portfolio has greatly improved with the portfolio at risk drastically reduced due to prompt advising of employers and real time tracking of any issues which might necessitate remedial action; customer satisfaction has greatly improved due to improved turn-around-time and the fact that there is more objectivity in the credit decisions than ever. Various challenges were faced by the bank in the implementation of the centralized credit process: resistance to change; resource problems ranging from staffing, office space and work stations; technological problems and system shortcomings; the presence of wide skill gaps and the lack of piloting of the whole process.