CASE # 11
EUROPEAN BANK
A leading bank in
Europe is in the process of a multiyear transformation of its operating model.
Prior to this effort, a benchmarking analysis found that the bank was lagging
behind its peers in several aspects. Branch employees handled fewer customers and
sold fewer new products, and back-office processing times for new products were
slow. Customer feedback was poor, and rework rates were high, especially at the
interface between the front and back offices. Activities that could have been
managed centrally were handled at local levels, increasing complexity and cost.
Harmonization across borders—albeit a challenge given that the bank operates in
many countries—was limited. However, the benchmark also highlighted many
strengths that provided a basis for further improvement, such as common
platforms and efficient product-administration processes. To address the gaps,
the company set the design principles for a target operating model for its
operations and launched a lean program to get there. Using an end-to-end
process approach, all the bank’s activities were broken down into roughly 250
processes, covering everything that a customer could potentially experience.
Each process was then optimized from end to end using lean tools. This approach
breaks down silos and increases collaboration and transparency across both
functions and organization layers. Employees from different functions took an
active role in the process improvements, participating in employee workshops in
which they analyzed processes from the perspective of the customer. For a
mortgage, the process was broken down into discrete steps, from the moment the
customer walks into a branch or goes to the company website, until the house
has changed owners. In the front office, the system was improved to strengthen
management, including clear performance targets, preparation of branch managers
for coaching roles, and training in root-cause problem solving. This new way of
working and approaching problems has directly boosted both productivity and
morale. The bank is making sizable gains in performance as the program rolls
through the organization. For example, front-office processing time for a
mortgage has decreased by 33 percent and the bank can get a final answer to
customers 36 percent faster. The call centers had a significant increase in
first-call resolution. Even more important, customer satisfaction scores are
increasing, and rework rates have been halved. For each process the bank
revamps, it achieves a consistent 15 to 25 percent increase in productivity. And
the bank isn’t done yet. It is focusing on permanently embedding a change
mind-set into the organization so that continuous improvement becomes the norm.
This change capability will be essential as the bank continues on its
transformation journey.