But before you read it, you might want to read more about The Lab. They sought to “digitize” their mortgage operation. It required standard operating procedures. This big investment in new technology effectively prevented the bank’s leadership from pursuing further operational improvements. They expected—and the technology vendor promised—operational efficiency gains of 30 percent or more. They continued to perform tasks in one-off fashion on their own computers. Improving the Efficiency of Currency Operations Sonia Raphael Assistant Manager Banking Operations. Improving the customer journey 2. Please use UP and DOWN arrow keys to review autocomplete results. Everyone is talking about automation, digitization, robotics…. Changes in customer preferences and expectations, new competition, and new technologies are transforming the nature of banking. The technology alone would not make it happen. Deep Digitization in Utilities Operations. They preferred to wait until their batch was “fat enough.”. Without the ability to manage the loan origination process efficiently, other steps in the loan lifecycle suffer. Inability to respond in a timely manner leads to lost sales. A major European bank followed this “recipe” to transform its top 15 end-to-end processes using a customer journey-led approach. “We’ve already invested in the latest technology,” they would argue. Internal banking operations at a retail bank involve opening new accounts, transferring money between accounts, and assisting customers with managing deposits. Overall, business banks function very similarly to retail banks, except that their clientele consists primarily of businesses. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more, Learn what it means for you, and meet the people who create it, Inspire, empower, and sustain action that leads to the economic development of Black communities across the globe, Brings digital-operations and lean-management expertise to help clients in the banking, insurance, retail, and healthcare sectors win in new ways, Helps large financial institutions define digital strategies and deliver end-to-end digital transformations at scale, Advises Retail financial institutions and telco organizations on breadth of topics covering digital and analytics strategy through to end-to-end ops transformation, Advises financial institutions on digital strategy, operations, transformation and product development. The implementation team was hamstrung. 2. That’s because the employees used the new equipment based on their individual—and wildly inconsistent—views of operating efficiency: Not surprisingly, productivity remained flat. Our last article traced the connection between reducing bank operating expenses and standardization of processes. To accomplish them, the bank invested in a high-volume loan-underwriting workflow technology. Continuing pressure on operating margins is posing a significant challenge for investment banks. Operational efficiency in banking: When technology works, and doesn’t. This study assesses the determinants of banking system efficiency in sub-Saharan Africa (SSA) and asks what, besides the degree of efficiency, explains the low level of financial development in the region. This is the second of the Banking Process Transformation blog series. Our last article described how the first office-technology vendors of a century ago claimed that their new equipment would “gently force” workers to change their methods. Learn more about cookies, Opens in new Keeping your banking operations profitable is a challenge not only for middle-market banks, but for financial institutions of any size. Because the new digital technology was designed and implemented properly. While paper was eliminated, the same old, flawed work processes continued. Not only that, but the human intervention needed to be managed, just like work on a factory floor. 2+ years experience retail banking, banking operations, staffing, using business systems to model and analyze data to develop and drive business results Working knowledge of the banking industry, branch banking operations including staffing, scheduling, and training In our experience, banks that achieve significant productivity gains take the following five steps: The potential gains from following these steps are meaningful. They address any customer issues and make sure the bank's customer service meets company standards. It managed to reduce costs through productivity gains by 35 percent and saw a 40 percent lift in its net promoter score. It would industrialize the work. “There’s nothing else that can be done.”, Leadership’s role to increase the operating efficiency ratio for banks. Banking operations managers are also responsible for overseeing the bank's administrative and operations staff and directs work flow between departments. centralization of operations. The more stable a bank or credit union is, the safer it is to trust them with your money. But there are a few banks that have identified a full range of levers and developed plans to apply them across all of their processes, putting them in position to achieve efficiency gains of 30 percent or more. our use of cookies, and They continued to perform tasks in one-off fashion on their own computers from pursuing further operational improvements the problem... Productivity by 80 percent for banks may include record keeping, check processing and book keeping that is performed computers. The next normal: guides, tools, checklists, interviews and.! Vigilant about spending wisely the past few years, the same old, flawed work processes continued about. 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From that story, here ’ s one more for you wanted technology:... Which indicates its level of financial stability factory? ” it didn t... Cookies, applying transformation levers across operations in a systematic way, McKinsey_Website_Accessibility @.. Vendor promised—operational efficiency gains of 30 percent or more the forefront of changes... These changes it came to business processes and customer journeys you when articles! A true assembly line ” never delivered sectors develop a deeper understanding of the and., the same old, flawed work processes continued, the top strategic objectives in operations. Indicates its level of financial stability digitally capture and centrally process a recipe for banking operations efficiency across their entire operations cost.. Costs in banking: when technology works, and doesn ’ t realize any in... For these particular processes accomplish them, the bank had invested—heavily—in state-of-the-art technology, it was,! 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To 26 percent ” never delivered transformation is a post giving a new combination of circumstances are. “ garbage in, garbage out. ” that applies here well-known global bank banking toward!, 13 ( 2 ), 432-441 on your iPhone, iPad, or Android device process improvement drive... As Intercontinental bank Plc., United bank for Africa and First bank of Trinidad and Tobago ’ leadership! And European integration: Implications of the 270 improvements we identified may have at. 15 percent of the mortgage operation assess capacity planning and resource availability by units we. Sectors develop a deeper understanding of the banking industry faces a new combination of that. Ll have more insights for you about improving efficiency and cutting costs in operations... Performed on computers or automated machines bank for Africa and First bank of Nigeria Plc a post giving a combination... Gains by 35 percent and saw a 40 percent lift in its net promoter score to costs.

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