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Stop trying so hard at your job

Banks must think more like “Scotty”

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  • Written by  Bill Heitman, The Lab Consulting
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  • Comments:   DISQUS_COMMENTS
UNconventional Wisdom is a periodic guest blog where the conventional wisdom is held up for fresh inspection, often with divergent recommendations. If you have some "UNconventional Wisdom" to share, email scocheo@sbpub.com. UNconventional Wisdom is a periodic guest blog where the conventional wisdom is held up for fresh inspection, often with divergent recommendations. If you have some "UNconventional Wisdom" to share, email scocheo@sbpub.com.

When commanders of sci-fi spacecraft give the order to accelerate to light speed they can expect to hear this response from their crews: “Need more power!”

And when senior executives in banking press their organizations to improve operational productivity, they can expect to hear: “Need more technology!”

Yet the sci-fi crews always manage to improvise with their existing technology. The typical bank’s improvement team would do well to do the same.

Tech isn’t always the only solution. In fact, sometimes it’s the task or the banker’s approach that’s the anti-solution, and changing that task or behavior will save you the trouble and cost without adding any tech.

Potential improvements all around you

The vast majority of potential productivity improvements in banks don’t involve technology. They don’t require new software or hardware.

Yet, based on our analysis of more than 100,000 job positions and 150 business processes at more than 60 banks ranging from global giants to large regionals, only a small fraction of these improvements are ever discovered, and even fewer are implemented. 

Fortunately, non-technology productivity improvements abound in a typical bank, outnumbering technology-based improvements by three to one. These opportunities are hidden in every job position—from the teller line through the back office and into support groups such as Finance and Marketing.

Low-value tasks that can be reduced or eliminated consume 30% or more of employees’ time.

Hiding in plain sight

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Unfortunately, these tasks aren’t obvious. In fact, they masquerade as useful, even valuable work. And so they hide in plain sight. Consequently, improvement teams must learn to see work in a different way.

This is tougher than it seems for banks. Tasks that workers typically think of as helping customers and the business often turn out, upon rigorous scrutiny, to be wasteful.

For example, customer service reps believe that correcting errors on loan applications helps the sales staff generate revenue. They see this as vital, even virtuous work. But their efforts are wasted. The problems they are solving can be nearly eliminated at the source by simplifying application forms and error-proofing the procedures, so mistakes don’t arise in the first place.

Similar wasted effort occurs in sales, where almost any prospecting effort, no matter how hopeless, can be seen as virtuous activity. Consider these elements of the problem:

• Tellers receive incentive payments to introduce prospects to lending officers. It doesn’t matter if their accounts are frequently overdrawn, apparently.

• Officers spend valuable time explaining products to any and all prospects, only to subsequently learn that some candidates cannot qualify or have already been sold—by a competitor.

At least 25% of selling tasks can be eliminated without reducing revenue, our analyses repeatedly show.

In a factory, this method of identifying improvement—seeking out and eliminating low-value work tasks—is known as “lean improvement.” But lean improvement can be just as effective in banks where all employees are “knowledge workers”— employees whose tools are their minds.

New places to find improvements

We assume that all knowledge workers are using creative thinking to solve non-routine problems. Some are, but detailed scrutiny of work tasks reveals that this isn’t always true. If improvement teams were to shift their focus to what knowledge workers are actually doing, they would find an astonishing amount of wasted effort.

For example, commercial lending officers are expected to establish new customer relationships and sell more of the bank’s products and services into existing accounts. That’s the creative thinking we would expect from knowledge workers.

However, many of these products and services come with vague instructions, loosely defined terms, and poorly documented procedures. They are user-unfriendly, both for customers and bank employees.

The result?

Lending officers perform a combination of tasks that have little to do with building a relationship and lots to do with learning about the products through painful trial and error. They end up acting as ad hoc customer service reps as they struggle to iron out the kinks and close a sale.

Consequently, up to 60% of the officer’s skills are wasted on mundane administrative activities such as obtaining signatures, generating presentations, and retrieving loan files.

Standardization would eliminate more than half of these tasks, but no one is assigned to look for standardization opportunities.

Additional administrative support would help too, but it is often not allowed due to cost-saving guidelines.

Let’s take the branch system, another rich source of potential improvement.

The retail branch network is typically viewed as the most highly monitored, tightly run part of a bank. It is rarely the first priority of improvement teams.

However, we have found that it is the single largest source of non-technology improvements—at least 40% of the total. Bank executives, for example, take pride in ensuring that their customers experience no wait time at the teller counter. But surveys show that customers don’t appreciate this over-service. They are usually indifferent to wait times of up to 60 seconds. This can often represent a chance to reduce branch overstaffing and achieve savings of 20%.

And when tellers have a question, they often prefer to take the easy way out and call the customer contact center rather than refer to a difficult manual or a confusing intranet directory. Making these non-human tools useful is the real solution.

Meantime, reps in the call center believe they are being helpful when they assist a teller—but they’re keeping their own customers waiting.

Starship commanders couldn’t stop and buy new technology every time they needed warp speed to navigate a wormhole. Their crews had to be creative with what they had.

In the real world, banking executives can resist the siren song of technology and find all the propulsion they need in the way their knowledge workers work.

About the author

William Heitman is managing director of The Lab Consulting, which advises companies on non-technology business improvement efforts.  You can reach him at wheitman@thelabconsulting.com. 

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