Revolution starts at the bottom: James Essinger on a different route to market for East European banks

AT A TIME when many of the West's largest management consultancies and legal firms are trumpeting their interest in Eastern Europe, a Geneva-based management consultancy formed by an ex-ICL and Midland Bank executive has been quietly assisting a substantial number of East European banks to modernise for operation in a market economy.

The consultancy - Innovation and Development in Organisation and Management (Idom) - was established in 1988 by Alex Dembitz, a Hungarian whose family came to Britain in 1956 after the Soviet invasion of their homeland.

A former MBA student at the business school Insead and a European Community scholar, Mr Dembitz originally formulated plans for a consultancy which would provide expertise on management issues to banks in the West.

However, the political and economic changes that swept Eastern Europe during the following two years convinced him that this region, not the West, was the proper sphere for his operation.

His first target was Hungary, where he won Idom's first clients with the help of his Hungarian mother tongue and an understanding of the need to build up considerable reserves of trust with potential customers before they could be expected to sign a contract.

From the outset, the central tenet of Idom's strategy in Eastern Europe was that traditional banking consultancy tactics, based on the consultant helping to define the bank's strategy and then force this down through the bank's infrastructure - the so-called 'top-down' approach - was futile when the infrastructure itself was completely outdated and inappropriate for market economy activity.

Instead, Idom advocated a 'bottom-upwards' approach. This begins by dealing with the bank's immediate needs in order to compete effectively within a market economy.

As Mr Dembitz says: 'Our clients do not need lengthy, verbose reports detailing complex strategic objectives. They need to create departments which can handle market economy banking functions such as treasury, loans, risk management and account administration.'

Gyorgy Ivanyi, executive chairman of the Inter-Europa Bank - one of Hungary's most dynamic commercial banks and an early Idom client - says: 'I first heard of Idom in 1988, at a time when Hungary was already set to convert to a market economy, even though the necessary new laws and procedures were not yet in place.

'At that time I was being visited by Western management consultancies eager to assist us with our imminent transition. These consultancies advocated basing our new information technology framework around a different new in-house system for each department.

'Alex Dembitz, however, convinced us that this was a hopelessly expensive and complex approach, and that what was needed was an externally developed banking package which could unify all the bank's technological resources into a single system,' Mr Ivanyi explained.

The packages usually specified by Idom are IBS, Ibis, Kapiti or Midas, although the consultancy prides itself on its objectivity in selecting systems.

Marie Marvanova, vice-chairwoman of the Czech Republic bank CSOB, for which Idom has been implementing a package, says: 'In a nutshell, we chose Idom because they understood where we were coming from and where we needed to go, and other consultancies did not.'

Idom now employs more than 150 consultants and has offices in Bratislava, Budapest, Geneva, London, New Jersey, Prague and Warsaw. Yet there is more to the consultancy's success than simply an insistence on understanding clients' needs.

Herbert Windsor, a senior Idom consultant based in Budapest and Warsaw, says: 'Overall, I think the reason Idom has done well in a relatively short time is that we identified and are determined to deal with the two major problems that face East European banks as they head for the opportunities of the market economy.'

East European banks lack a modern system that can effectively handle the volume and diversity of transactions they need if they are to survive, let alone compete. Moreover, there is a serious shortage in the region of bankers with the expertise needed to rectify this problem.

In addition to specifying and implementing the package, Idom consultants - who are almost invariably professional bankers rather than technologists - work with client bankers to pass on their knowledge of how the package can best be used in the marketplace.

As Mr Windsor explains: 'This is not simply a matter of organising training courses. Our aim is to have local bankers work side by side with us, so that by the time we have finished our work there is a qualified and expert team in place, which knows how to use the new system and procedures to best effect. This seems to me what creating a new infrastructure for East European banks really means.'

(Photograph omitted)

News
Alan Bennett criticised the lack of fairness in British society encapsulated by the private school system
peopleBut he does like Stewart Lee
Sport
David Moyes and Louis van Gaal
football
Arts and Entertainment
Sheridan Smith as Cilla Black and Ed Stoppard as her manager Brian Epstein
tvCilla Episode 2 review: Grit under the glamour in part two of biopic series starring Sheridan Smith
Life and Style
Alan Turing, who was convicted of gross indecency in 1952, was granted a royal pardon last year
life
PROMOTED VIDEO
Life and Style
life
Arts and Entertainment
Tennis player Andy Murray's mum Judy has been paired with Anton du Beke for Strictly Come Dancing. 'I'm absolutely delighted,' she said.
tvJudy Murray 'struggling' to let Anton Du Beke take control on Strictly
Life and Style
Vote with your wallet: the app can help shoppers feel more informed about items on sale
lifeNew app reveals political leanings of food companies
Arts and Entertainment
The cover of Dark Side of the Moon
musicCan 'The Endless River' carry on the tradition? See for yourself
Sport
New Zealand fly-half Aaron Cruden pictured in The Zookeeper's Son on a late-night drinking session
rugby
Arts and Entertainment
Worldwide ticket sales for The Lion King musical surpassed $6.2bn ($3.8bn) this summer
tvMusical is biggest grossing show or film in history
Voices
A new app has been launched that enables people to have a cuddle from a stranger
voicesMaybe the new app will make it more normal to reach out to strangers
Arts and Entertainment
Salmond told a Scottish television chat show in 2001that he would also sit in front of a mirror and say things like,
tvCelebrity Trekkies from Alex Salmond to Barack Obama
News
ebooksAn unforgettable anthology of contemporary reportage
News
i100
Life and Style
food + drink
News
Rob Merrick's Lobby Journalists were playing Ed Balls' Labour Party MPs. The match is an annual event which takes place ahead of the opening of the party conference
newsRob Merrick insistes 'Ed will be hurting much more than me'
News
A cabin crew member photographed the devastation after one flight
news
Life and Style
Carol O'Brien, whose son Rob suffered many years of depression
healthOne mother's story of how London charity Maytree helped her son with his depression
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Trainee / Experienced Recruitment Consultants

£20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

Trainee Recruitment Consultant - Soho

£20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

Trainee Recruitment Consultants - Banking & Finance

£20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

Quantitative Risk Manager

Up to £80000: Saxton Leigh: My client, a large commodities broker, is looking ...

Day In a Page

Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum
Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

Manolo Blahnik: Flats, Englishness, and Mary Beard

The shoe designer who has been dubbed 'the patron saint of the stiletto'
The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

Scrambled eggs and LSD

Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

'Normcore': Blending in is the new standing out

Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

New leading ladies of dance fight back

How female vocalists are now writing their own hits