Customer relationships and new models for innovation have taken center stage across the financial services landscape. As quickly as the pandemic spread, the focus shifted towards digitization and the ability to deliver a superior customer experience as consumer behaviors swayed with the uncertainty that has beleaguered the market. In some instances, collaborations with the fintech community helped accelerate the path to digital transformation. In others, operations teams were forced to simply adapt or die. After all, it’s clear that the way customers bank has changed. Channels have shifted from physical to digital. Cash is king no more as health and safety concerns have made contactless the preferred payment method. Banks have offered customers flexibility as they manage through a financial shock. Meanwhile, as the industry and its customers grapple with change, cyber security threats undermine progress and have reached levels never before seen.
Meeting these significant changes has been a learning experience and challenge to say the least. Executives of the world’s leading financial institution have been committed to thrive in the face of adversity. But how can one possibly achieve success in the face of such dramatic change? Operational Excellence has proven to be one approach that allows corporations to maximize efficiency, adapt to a shifting industry, and maintain competitive advantage.
Operational Excellence might seem like a fairly generic term, but at its crux it refers to the practice of embracing efficient, effective, continuous improvement. This improvement might manifest itself in revised processes and functions, improved infrastructure, or enhanced operations. Ultimately, Operational Excellence leverages constant improvement to add customer value and create competitive advantage. But first, Operational Excellence begins with a paradigm shift in approach - prioritizing innovative problem-solving, an intensively collaborative environment, and commitment to top-line growth.
While the process of continuous improvement has yielded successful incremental improvements in the performance of financial institutions over the years, Operational Excellence enables these firms to embark on a journey destined to strengthen customer experiences, increase sales performance, enhance organizational efficiency, and improve end-to-end employee productivity. Thus, Operational Excellence requires a holistic roadmap with the proper balance across people, process, and technology. Figure 1 below highlights the primary attributes of Operational Excellence:
Figure 1
Building and Sustaining a Culture of Operational Excellence
All journeys towards Operational Excellence begin with a focus on corporate culture. The most sustainable cultures exist in organizations that best align their Operational Excellence programs with their corporate strategic goals and ensure the full support of the Board of Directors [3]. Leadership teams can realize sustainable growth by communicating a clear strategy and by providing training that will help employees take operational excellence into their own hands. Employees must then be empowered to make the necessary changes – working collaboratively across organizations. A team of leaders and workforce that embraces this approach as a core value will achieve competitive advantage. In practice, change starts at the top with leadership and if positive behaviors are consistently modelled then the rest of the organization will follow. Over time, teams must be held accountable and employees must be motivated through rewards and recognition to continue to drive the adoption as they manage the flow of information, evaluate risks, and identify gaps to ensure the future state reaches a high level of achievement.
Operational Excellence Through Process Excellence
With unprecedented times have come equally unprecedented shifts in our financial landscape, ranging from how people work to how firms operate. As large-scale business transformations are now well underway, many financial institutions are actively exploring new approaches to facilitate collaboration, enhance operational reporting, and automate “everything” in an effort to eliminate repetitive and manual efforts. With this newfound focus on process improvements, firms are well positioned to establish a disciplined Process Excellence structure and implement guiding principles that are aligned to their overall strategy.
Process Excellence is concerned with making the processes more efficient and effective through design and testing. The three most effective process excellence methodologies that firms can adopt are Lean, Six Sigma and Kaizen. Where Lean is about eliminating waste, Six Sigma and Kaizen, focus on business process improvement and continuous improvement, respectively. Implementing a bend of these methodologies, along with ability to measure improvements through effective performance driven metrics, will allow financial institutions to positively impact processes and their customers.
Operational Excellence Through Automation
The last stop in our journey towards Operational Excellence is automation. With the use of RPA (Robotics Process Automation), mundane tasks can be eliminated and the most important data can be filtered through for decision making and free up resources to focus on other key areas for growth. In short, automation increases efficiencies and boosts accuracy in day-to-day operations complimenting the wider Operational Excellence framework.
While every company is unique and will have a tailored approach towards their individual Operational Excellence journey, it is important to be mindful of the primary attributes as each will facilitate a successful outcome. While the benefits of Operational Excellence are numerous, a firm’s continued maturity will support a culture that is quick to adapt to customer and market changes. Leadership will be able to serve in more of a support in managing daily operations with more focus on revenue generation; and products and wasteful processes will get cut out with focus on standardization and continuous improvement to facilitate organizational growth. Even though you might hit roadblocks on your path, keep moving as the struggle and motivation will eventually lead to reeducation in capital and operating expenses and increase in operating income for Financial Institutions.
About Monticello
Monticello Consulting Group is a management consulting firm supporting the financial services industry through deep knowledge and expertise in digital transformation, change management, and financial services advisory. Our understanding of the competitive forces reshaping business models in capital markets and digital banking are proven enablers that help our clients remain in compliance with regulations, innovate to be more competitive, and gain market share in new and existing businesses. By leveraging our Change Management services, Monticello will help transform your business operations and cultural mindset to one where excellence takes center stage
[1] https://www.bpminstitute.org/resources/articles/dealing-cultural-challenges-operational-excellence
[2] https://hbr.org/2013/03/operational-excellence-meet-cu