Still inspired by our last blog post? (That one took a surprisingly grounded approach to cost-cutting measures in banks, considering it was inspired by the high-flying realm of Star Trek. Read it here.) Prepare to be inspired again.
This is a case study, taken from the files of The Lab Consulting. This is not about academic concepts. It’s certainly not about technology-based solutions (we represent the very opposite of that here at The Lab). Rather, this is about the real-world experience of a major North American bank, the shortfalls they wanted to shore up, and the many ways (more than 500!) in which The Lab came to their rescue.
We tell this story not to brag. We share it with you so that you can learn from another’s experience. As we’ve prefaced many of these other case-study-based blogs, we invite you to think of your own bank and its productivity-improvement goals as you read over this true story.
How to improve productivity in banks: A lesson from Canada
This is the story of a top-five Canadian bank; in fact, they’re the largest supplier of credit-card services in all of the country.
Our story concerns their retail banking operations. And these are big: Their network spans more than 1,200 branches and 19,000 employees.
Yet when their Executive Vice President of Retail Operations approached The Lab, the problems were widespread and harmful:
- Costs were increasing.
- Revenue was decreasing.
- Despite its high-profile offerings which included banking, insurance, and investment products, most of the bank’s retail customers (73 percent, to be precise) purchased only one product from it. Clearly, its efforts at cross-selling and new-business generation had failed to gain traction.
And what did they hope to accomplish? Nothing short of:
- Process improvement.
- Revenue productivity gains.
- Improved service levels.
- Organization redesign.
These are not rare challenges for those seeking operational efficiency in the banking sector. If they sound familiar to you, then you’ll surely be interested in what The Lab discovered, working shoulder-to-shoulder with this bank’s internal team.
Ways to improve banking services by improving productivity
We wasted no time getting to work for this valuable client. Over the course of ten weeks, we scrutinized countless processes within their organization, gauging them against our banking operations templates.
As we’d hinted above, we identified more than 500 improvements in all areas of the bank. They were diverse. But they all had one thing in common: Not one of them required any new technology to implement it.
Here are some of our findings:
- Ways to improve banking services begins by eliminating over-service. That’s what we discovered in this bank’s retail branches, despite their sophisticated staffing model and numerous prior cost-improvement efforts. The bank was providing costly levels of service (such as zero wait-time) that customers didn’t value as highly. There was thus no competitive advantage achieved from these expensive ways of doing things.
Is your bank providing zero wait-time, even though small amounts of wait time go virtually unnoticed by your customers? In what other ways might you be providing more service than it’s worth?
- How to improve productivity in banks: Cross-selling. The bank’s leadership emphasized the importance of revenue-generation productivity in the branches. But minimal gains were realized. Efforts to improve lead generation yielded minimal results. The same could be said of the bank’s focused selling efforts. Even the introduction of new products barely improved sales.
Sound familiar? Are the non-technology solutions for problems like these in your bank hiding in plain sight?
- Operational efficiency in banking means minimal back-office rework. When The Lab scrutinized this bank’s back-office operations, the findings were eye-opening. In some areas, up to 30 percent of organizational capacity was being used (“wasted”? “drained”? “squandered”?) just to correct and complete inbound work products. In other words, things like loan applications, account openings, wire transfers, and inbound inquiries were flawed at the source.
What proportion of your bank’s back-office capacity is currently dedicated to fixing inbound errors? Before you even answer, wouldn’t you be able to improve banking services if you could eliminate those inbound errors in the first place?
- Improving the operating efficiency ratio for banks: Overlooked support groups. Fraud, Compliance, Marketing… these back-office support groups are often overlooked when it comes to finding new ways to improve productivity in banks. Yet huge opportunities invariably exist. In this bank, a significant proportion of the branches’ workload could be traced to back-office initiatives and unnecessary requirements.
When you think “operations efficiency in banking,” do you think “support groups such as Marketing”? Probably not. But you should. In our experience, this often represents enticingly low-hanging fruit.
Banking operations process improvement: It pays off
As you know by now, we like to save the best part of these blogs—the results—for last. Remember, all of the following was accomplished without spending a dime on new technology:
- Revenue increased seven percent.
- Operating costs were pared by 11 percent.
- Service and satisfaction levels increased ten percent.
- The entire engagement broke even in just five months.
- The 12-month ROI stood at four-to-one.
And the annual savings? We saved that for the very last. Because it came in at $10 million. Without any new technology.
Learn more about how we do this. The Lab employs a unique self-funding engagement model and irresistible money-back guarantee. Get more details right here.
For 2021: We have updated our bank client offering. Much of these findings and implementation results can be reviewed in the 3-part-series of “Big Rocks for Banks” below. Find out how to strategically lower costs, increase operating leverage, improve customer experience, and automate what previously wasn’t automatable in your bank.
Find them all here:
