The IT Edge in Financial Services - Banco Comercial Português

Banco Comercial Português went from start-up in 1986 to a market leader in Portugal by 2000, and continued to grow through a long wave of domestic acquisitions. By the mid-90s, however, competition was getting fierce. As the Professor of Business and Technology, Soumitra Dutta, and Distinguished Visiting Professor Paul Verdin explain, BCP's leading-edge technology and lack of legacy systems gave it an enviable technological agility that was leveraged well to gain a lead over its domestic rivals.

by Soumitra Dutta, Paul Verdin
Last Updated: 23 Jul 2013

Banco Comercial Português went from start-up in 1986 to a national market leader by 2000, becoming one of Europe's most admired banks in the process. As the Roland Berger Professor of Business and Technology Soumitra Dutta, and Distinguished Visiting Professor Paul Verdin explain, BCP's leading-edge technology and lack of legacy systems gave it an enviable technological agility that was leveraged well to gain a lead over its domestic competitors. By the mid-90s, however, the latter were increasingly sophisticated. The Portugese market had also opened operations to foreign banks, and spreads were dropping fast.

BCP had continued to grow through a long wave of domestic acquisitions. Technology was its main driver for rapidly integrating its acquisitions, and for servicing customers more fully and efficiently than its rivals, mainly through call centers and new internet services. But by 2003, this strategy could no longer be a primary engine for growth. If the bank could not match major foreign players in levels of technological investments, could it even hope to leverage technology in the interests of future growth, as in the past?

Dutta and Verdin describe the high-risk, but ultimately very fruitful strategy adopted by BCP in order to match the continent's far bigger competitors. It was essential for the bank to consolidate and strengthen its by now quite diverse acquisitons. But the most pressing challenge was that each of these came with its own legacy system. Integration would be very costly. Moreover, how could BCP lower the risk to the integrity of its own technological architecture as it continued to grow? And as increased productivity became harder to assure, was it not perhaps time for a major reconsideration of the strategic role of IT within the bank as a whole?

The case provides an excellent setting for examining the recent and ongoing development of IT as a core strategic vehicle in the European financial services sector. BCP has long shown itself to be a quick adopter of new technologies, purchasing available packages from vendors as much as possible, and only developing in-house when absolutely necessary.

The authors detail the bank's overall technology planning process. It endeavoured to ensure that the information system would be user-defined, rather than being dictated by BCP technicians. In the authors' words, the planing process was "business driven, fairly informal, and flexible". BCP proved itself very adept at exploiting the team-building lessons learned in its integration of smaller banks in previous years, with many of the latter having shockingly poor IT infrastructure.

The systems migration and integration processes had also offered invaluable lessons in fostering a collective culture between disparate personnel. BCP was also imaginative in its manager rotation, IT user/technical specialist interaction and application planning policies.

The case also details how BCP responded at the time to the remarkable transformation of customer attitudes towards banks in the past decade, having become far more demanding. This has required a far higher level of proactivity for banks and other financial service providers to not only meet, but also anticipate client needs. This challenge has been met in part by BCP through its multi-channel/multi-product distribution model, used to create new business units focussed on distribution, products and customer brands and segments.

INSEAD 2005

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