Improving business processes at your financial institution
Tom McBride | SVP, Group Executive, FIS
February 10, 2020
As technology-dependent organizations, banks must continually increase efficiency or lag further and further behind their peers. Tasks, technology and tools supporting a process can be redefined, or an entirely new process based on automation can be implemented. Business Process Improvement (BPI) actions, undertaken by subject experts, deliver the insight required to execute more efficiently, create value for customers or enhance revenue for the institution. Or provide all three.
High-performing financial institutions continuously challenge themselves to improve performance and customer experience. They seek out feedback from employees, partners and customers – listen carefully to what they have to say, evaluate their input, formulate improvements if needed, and most importantly, act. This open mindset extends toward every process and every task within the organization. Process improvement yields results, and continuous process improvement yields sustainable results.
The following seven steps describe a methodology banks can follow to improve their business processes.
Step 1 — Know your processes and priority for analysis
In this initial step, the bankers embarking on their improvement journey identify which processes need to be revamped or re-engineered. An assembled team should first inventory all processes. Once the inventory is complete, the 80-20 rule is applied to prioritize the order of process review for improvement.
The list to improve should be identified from an initial inventory of processes with the understanding that 80 percent of the impact of the improvement (the benefit) will come from 20 percent of the causes (the processes)--known as the Pareto Principle (also the 80-20 rule).
Step 2 – Identify improvement opportunities
In priority order, cross-functional team then maps out each of the inventoried processes, detailing the inputs, specific tasks, required decisions and expected outputs. They should also note relevant suppliers, bank staff and customers. This activity occurs for all the business processes targeted for improvement. While mapping the activities within a business process, the team should identify immediate improvement opportunities. These are typically “quick hits” which are easily communicated to process improvement participants and able to be fully implemented in less than 30 days.
Step 3 – Analyze and redesign the process
Two approaches are available when redesigning a business process. The first is an evolutionary approach leveraging the current-state mapping activity (performed in the previous step) to examine workflows and apply the optimal use of existing technology within the bank.
An alternative approach offers a more revolutionary option. This effort requires starting with a white board, or clean slate to remove any preconceived notions. New tools, apps and digital solutions are sought out and applied. It is the preferred approach to deployments of new systems, technologies, bots, artificial intelligence (AI) and future, yet-to-be identified tools and enablers.
Step 4 – Design performance measures
This step encompasses designing the metrics needed to evaluate the degree and amount of effort needed for a new process to attain and maintain optimum performance. Roles and accountability supporting the process are made clear, as well as how to obtain feedback on the performance of the process itself.
Step 5 – Plan and implement
Typically, banks cannot implement all the newly redesigned processes and changes they entail at once. The constraints of people, time and other resources must be factored into a timetable that accounts for the readiness of change for your staff and customers.
Process changes need prioritization based on any impact to your customer’s experience, the degree of the change itself and the time to implement them. Weighting of each of these considerations is used to reflect the perceived value of each in driving to the bank’s strategic plan.
Step 6 – Establish a control system
Steps 6 and 7 are taken to ensure the new process continually improves and delivers further value over time. Performance measures designed in Step 4 are reviewed for sustainability and applicability over time. Feedback loops from customers, both external and internal, are identified and used to gain further insight on the value of change.
To address any negative variance in expected performance, a corrective action plan gets established to identify:
- How to implement ongoing changes to the process
- Who should participate
- What escalations may be required to push a new change through the organization
Step 7 – Monitor performance
This last step covers establishing ongoing monitoring of new or changed processes through a control system that identifies and addresses any bottlenecks and performance shortfalls before they become issues. The control system uncovers whether a process is performing up to expectations and if not, what course correction may be needed. The monitoring can initially occur daily and then transition to weekly or monthly as a process matures. Monthly is the maximum length of time for performance monitoring of a process, as error detection and correction need to occur with at least that frequency.
Following these seven steps will help advance your bank on the road to continuous process improvement. For further information on the benefits banks can realize from process improvement efforts, consider the paper Why Improve Business Processes at Your Bank.