Turning the pyramid upside down: delivering operational excellence in a crisis

Banks are currently facing a tough challenge – how to preserve capital and reduce operational expenditure at a time of crisis. Markets are uncertain, margins are thinning and access to additional capital is harder to come by. Not to mention competition in the industry is fiercer now than ever, making customer experience pivotal in attracting and retaining business.

Operational excellence has the capability to both increase efficiency and create a better customer experience

For most, delivering operational excellence with a view to not just saving money but enabling growth is critical. Operational excellence has the capability to increase efficiency while simultaneously creating a better customer experience – one that is simple, effective and efficient. Simple, because it targets specific customers with specific content. Effective, as it enables banks to fulfil the needs of customers. And efficient, because it doesn’t require massive investment yet streamlines the entire organisation and dramatically improves operational efficiencies.

However, many banks are falling short of operational excellence as their operational models tend to form an inverted pyramid – resources are dedicated to a large number of “task junkies” or generalist staff manually driving processes/tools leading to siloed customer interactions and no “golden source” of data to make decisions on. To deliver operational excellence, and reap the rewards, this pyramid must be flipped. Data must form the foundation upon which the rest of the business is built upon.

How do banks begin along this journey? Is the destination worth it? Well, let’s see…

Achieving operational excellence “buy-in” from the board

The first step to achieving operational excellence is it to be both acknowledged and prioritised by the board. The common misconception is that operational excellence can happen in isolation – it’s the responsibility of the operational department. In actuality, operational excellence entails a transformation throughout the entire bank, touching everything from systems, to target customers, right through to the role of employees.

There’s no denying shortcuts, which reduce the top-line and boost the bottom line, exist, but banks must wake up to the long-term advantages of operational excellence. From increased revenue and cost-efficiency to a better customer experience and a motivated work force united by a clear and common goal, the results of operational excellence can only be experienced once it has been prioritised.

The way to achieve “buy-in” from the board is to frame operational excellence as solving problems for customers and as a driver of revenue. This prevents it from slipping down the priority list. Once the board buys in, it’s time to assess the current state of a bank’s data, customers, systems and people and then the bank is in a position to establish the operational excellence pyramid.

Data is the foundation

Data forms the foundation of the operational excellence pyramid – it’s the only way to understand the pain points customers experience and then make informed decisions on how the bank can alleviate them. Crucially, data must go beyond numbers and encompass everything a bank must know to make decisions about what customers need to drive the outcomes they want.

There’s a lot of hype around technology which streamlines manual processes, such as artificial intelligence (AI) and machine learning (ML). Yet, this technology is only as good as the data used to train those algorithms. Weak data results in inefficient technology and impacts both processes and people, meaning investment into gathering, analysing and processing data is crucial.

Creating a single customer view

Once the data is in place, the bank can begin to establish a single customer view, rather than customers being fragmented across hundreds of core systems. This makes focusing the bank’s products and services around customer needs much easier, as the data dictates what customers need and why.

The next step is then building products and services around this data. As the data reveals trends, or new pain points, banks can then adapt products and services to help customers overcome these new hurdles, which vastly improves the customer experience and ensures products evolve and grow with customers.

Making systems more than automation

Another misconception is that automating tasks automatically improves them. Wrong.

Systems are enablers of growth. As a bank moves away from manual processes to automated ways of working, the systems not only do the manual tasks formerly done by people but begin to provide desired outcomes. With the single customer view now established, the systems adapt and learn from the data revealing new problems and solutions.

Eliminating task junkies

Finally, at the apex of the pyramid is people. Task junkies no longer exist as systems move people away from doing generalist and repetitive tasks to managing specialised automated ones.

In addition, the pyramid empowers employees to drive growth and allows them to gain mastery in their field, which results in higher productivity and increased revenue. Once people are aligned to a clear objective and understand the impact their work has on progressing towards that objective, they are more motivated.

The impact

While a complete transformation of a bank seems daunting, another option is to implement operational excellence in different teams vertically. Taking one department at a time, re-structuring it and then moving onto the next is another way for banks to begin this journey towards operational excellence. Whether a bank initiates an entire transformation or starts off with individual teams, the benefits remain the same, it’s the scale that changes.

When considering if the destination of operational excellence is worth the journey, the answer is clear. Beyond boosting the top line while reducing the bottom line, achieving operational excellence means banks will improve the customer experience, become more efficient, and – a factor often overlooked which is becoming more important as talent becomes harder to find – boost employee morale and engagement. On balance, I’d say it’s worth it.