Human resource management change in the context of digital banking transformation

Abstract

Human resource management (HRM) function plays a meaningful role in creating a sustainable and productive work environment for organisations. The main purpose of this research is to understand and contextualise the recent trends and HRM changes in shaping digital banking transformation in banking institutions. The research objective is to understand the forces of change affecting banking institutions, to understand the HRM changes and to develop a framework that facilitates the sustainability of HRM changes. In order to understand the HRM and digital banking transformation, this study focused on utilising the Institutional Theory, Contextual-based Human Resource Theory, Resource-based View Theory and Lewin’s Change Management Model. An interpretive paradigm with an inductive case-study design was employed. Two operating banking institutions in Malaysia (Bank CoA and Bank CoB) were selected to understand the extent of changes and their impact on the need for HRM functions to respond to the digital banking changes. Using purposeful sampling technique, 26 participants of different managerial grades within the organisations participated in the in-depth interviews which were conducted together with document analyses from both banks. Interview transcripts were coded with the aid of NVivo12 software. Structured thematic analysis with constant comparative method of data analysis and triangulation method were used to generate substantive findings based on saturated patterns. Seven (7) key themes were derived through analytic reflection of twenty-four (24) categories generated from the seventy (70) codes identified. The key study findings indicate that firstly, HRM functions at banking institutions are faced with key external and internal forces of change which induce the pressure for organisation changes. In responding to the dynamic shifts, secondly, the HRM functions are accelerating in aligning the function to meet their institutions’ digital transformation business requirements by focusing on driving various initiatives in strengthening their organisation culture, driving innovative HRM practices, building their organisation capability and capacity for business growth as well as strengthening their own HRM function effectiveness. In order to sustain the HRM changes, several enablers in the form of digital transformation management centre, fostering digital-related behavior practices, implementing digital related performance management system and top management commitment were identified. Therefore, a proposed integrated framework for sustainable HRM changes and guiding principles for adaptable HRM function were developed to deliver services to elevate their business impact that they can create for digital banking transformation. HRM practitioners should always explore sustainable HRM practices with the focus on long-term human resource development, renewal and regeneration objectives. The application of the integrated framework needs to be contextualized in an organization to meet the expectations of stakeholders in providing services that can improve business performance. As such, the ability to adapt will be the most critical factor that sets apart those who succeed from those who fail. In the post pandemic world, it is only the agile and adaptable who will survive.