Page 19 - Banking Outlook 2014 - An Industry at a Pivot Point

Banking Outlook 2014: An Industry at a Pivot Point | 17

Business strategies in the banking industry are of necessity multifaceted affairs
right now: continue to meet ever-growing regulatory demands, continue to cut and
contain costs, continue to manage through a low interest-rate environment, and
with the other hand, so to speak, boost revenues by developing new products,
services and delivery channels, and by connecting more deeply with new and
existing customers. Technology can help shoulder the load, but unless banks
“industrialize” their processes—simplify, standardize and consolidate—to reduce
complexity, lesser errors, and break down the walls that separate one part of the
bank from another—they’ll have a hard time executing on these strategies.

Industrialize Internal

Processes

Organizations that are able to industrialize their processes are typically less rigid and more flexible than
their competitors, and so are better able to develop and market differentiated products appealing to a wider
range of customers. They can more easily scale up, or down, in response to market trends and client needs.
Among several of the examples outside the banking industry, a major automobile manufacturer embarked
on this path more than a decade ago when it announced in 2002 what it called a “revitalization” effort
aimed at standardizing and simplifying its technologies. The multiyear undertaking included upgrades to
Ford’s systems and processes, which reduced the company’s dependence on vertically aligned operations
and moved it toward a more flexible operating model that could focus on a differentiated product portfolio.
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That initiative has been credited, along with the company’s well-documented, balance-sheet overhaul, with
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helping Ford weather the last financial crisis better than most of its peers.
Industrializing processes isn’t easy; however, process change is every bit as challenging as installing a new
IT system. Banks must first identify best-practice processes and adapt them to their own circumstances,
then overcome employees’ natural resistance to change. Success depends to a large degree on instilling
a culture of change, one that is demonstrably supported by the executive team, from middle management
straight through to the C-suite.
Fortunately, the payoffs can be large and wide-ranging, including reduced costs, improved customer service,
and faster transaction processing. And with less time required for transactional activities, bank personnel
can spend more time on the high-value work that drives revenue growth.