FS Edge

At the end of 2009, the Operations Council conducted an agenda poll, asking hundreds of Operations executives what their top strategic priorities would be for the coming year.  One survey finding that jumped out immediately was the low percentage of executives who saw improving agility as a top priority (just 8% of the sample—the only category that generated less interest was “Other”).

 This statistic surprised and confused us, especially when taken in the context of two other data points: one, that nearly 90% of executives across industries cite agility as a key competitive differentiator for 2010; and two, that 38% of Operations executives think they are performing below target on their agility goals (a higher percentage of below-target performers than any other category).  Putting the pieces together, the message we saw was this: Operations executives know agility is important, but for some reason they are failing to address it, and as a result, institutions’ performance in this area suffers.

 As we spoke to our members about the topic of agility, we started to understand why many financial services Operations functions were leaving the issue unaddressed.  A few consistent misconceptions came up in our conversations—urban myths, if you will, about operational agility.  One of the biggest myths is the belief that there is a tradeoff between agility and that most sacred of Operations’ goals: cost efficiency.  In the face of such a tradeoff, a majority of Operations executives, not surprisingly, chose efficiency.

 I can tell you the agility-cost efficiency tradeoff is a myth because the Council has collected the data to prove it.  As a part of our agility research initiative, we conducted a member survey, asking Operations executives to rate their effectiveness in several dimensions of operational agility, defining “agility” as “the ability to meet changing customer and business needs more quickly than one’s competitors”. 

 The survey data has enabled us to dispel a number of myths held by many Operations executives in the industry.  Learn more about the myths we have refuted around operational agility—and see how becoming agile is probably a lot easier than you think—by reading The Truth About Operational Agility: Six Myths About Operations Role in Developing an Agile Organization. 

We’re currently finalizing the design of a quantative project that will allow us to discern how good banks and insurance companies are, from an operational perspective, at responding to internal and external customer demands, as well as the impact that responsiveness (or operational agility) has on key success measures such as unit costs, operating margins and revenue growth.  The big argument on the team is whether in a Financial Services environment, Operations can have ANY impact on revenue growth through an avenue other than service fulfillment.  I say yes – not only CAN Operations impact revenue, they MUST enable revenue growth in order guarantee organizational success and protect efficiency gains.  Some of my colleagues say nay, that is not Operations’ job, leave that up to the revenue folks.  Let me tell you why I think they are wrong, and ask you to settle the argument for us.

Read More »

Over the December holidays, I was visiting family in India, and despite everything you read about rapid economic development and the expanding middle class, the poverty so many people experience there is still striking.  However, the poverty I saw this time looked very different than what I’ve seen in previous trips.  People still live in flimsy shacks, but now they have televisions in those shacks.  In the big cities, mobile phones are everywhere.  In the past, large populations of the “unbankable” seemed completely out of the reach of traditionally structured financial institutions.  These days, in countries like India, large bands of the population can be served through channels that were never an option before, like the mobile phone.   Read More »

Today’s post isn’t really Operations related.  In fact it’s not necessarily Financial Services related though it is related to finance…sort of.  It’s really about spending and consumer behavior.  My colleague, Elisa, alerted me to a recent article from Gallup, written by Dennis Jacobe.  The article talks about the “New Normal” when it comes to spending behaviors.

The article is a really interesting read – it’s well written and I enjoyed it a lot.  Also, it pairs nicely with the section on customer preferences in last month’s teleconference, Succeeding as a Head of Operations in 2010.

In the teleconference we mentioned that we’re seeing different generations impacted differently by the economic crisis.  For instance at this point in time of the crisis, Millennials, those born between 1982 and 2001 and are entering college or the workforce for the first time, are considered economically formative – they’re forming their spending habits.  Think about the impact that the last year or two has had on this group of young individuals as they’ve formed their spending habits and how the recovery will impact that.  It’s most likely to be different than baby boomers who long ago shaped their spending habits and have encountered multiple recessions.  Read More »

As many of you may have read in my bio, I grew up in a developing country, and recently visited my family there over the holidays. While I was there, I had the opportunity to make a pretty simple transaction at a banking institution, and was so annoyed by the time I left I was determined to make my next blog entry about the customer experience.

We’ve written about the customer experience before at the Operations Council. Some of the main conclusions I’ve personally derived from our research are that:

1) Factors critical to the customer experience with a financial institution are very different than factors that drive the experience in other industries we try to model ourselves after. Banks and insurance companies are not hotels!

2) The biggest loyalty gains (as defined by a customer’s intent to continue to do business with, give more business to, and recommend an institution) come from truly understanding customer expectations and meeting those expectations, rather than arbitrarily crafting a strategy to create “customer delight”.

3) The customer experience is about much more than customer service, and factors under Operations’ control, such as processes, forms and systems, just to name a few, have a big impact on that experience.

Read More »

I took a moment over the holidays to reflect on my conversations with members during the last few months of 2009.  It dawned on me that, inevitably, a majority of conversations turned to process improvement and often times, more specifically, Lean.  While I wasn’t all that surprised by the interest in the topic it did get me wondering (I should warn you “wondering” often gets me into trouble)…have we not come close to solving this whole process thing yet?  I know members have been working on it.  I know we at the Operations Council have been working on it.  What’s going on?

Read More »

I used to work as a Group Branch Manager for a small regional institution – the kind that still has queue problems at the branch.  We had a policy of having no closed teller windows – EVER – because it made customers angry to see that big old “Closed” sign when they were standing in a long line.  One of my biggest nightmares was when a teller called in sick, missed work unexpectedly or quit on short notice.  When things went wrong unexpectedly, we were usually not very quick at fixing them, so often times I found myself on the wrong end of a heated debate – to put it politely – with our General Manager (who I happened to report to), even though often times I had been unable to take action because he had not provided a decision quickly enough.

I’ve been thinking about agility a lot lately.  Not because I’m getting older and can’t move as fast as I used to but because it’s going to be a major area of focus for us in the first half of next year.  Up until now, we’ve worked under the assumption that the main goal of every Operations executive is to provide the best service at the lowest cost.  It’s been pretty clear to me in speaking to some of our more progressive members that while our industry has made great strides in creating efficiency – either because we were forced to by the global crisis or because we’ve been working at it for a long time – some of that efficiency has also led to rigidity, particularly at larger institutions.  We get so bogged down in the day-to-day, and our organizations have become so complex that it is difficult to predict what changes we’re likely to encounter, and even more difficult to decide on how to react to those potential changes once they become a certainty.

My task now and for the next few months will be to reconcile agility and efficiency, find a crystal ball that will allow my members to have a better sense for what lies in their future, and figure out how those same members can move the 800 pound gorilla that is most of their operations without spending a lot of money.

Any suggestions?

For those of you who have never blogged, I will let you in on a little secret. Writing your first blog post is not easy. The first post sets the tone. Should it be edgy?  Creative?  Funny?  Luckily, I stumbled across a blog where the author stated “Writing your first blog post is just like walking into a room full of people you’ve never met.” So, with that in mind, I will employ the advice of my mother and do the polite thing. I will start with an introduction.

FS Edge is a blog brought to you by The Business Banking Board (BBB), The Council on Financial Competition (CFC) and The Operations Council (OC.) For the uninitiated, BBB, CFC and OC are membership organizations for leading financial services executives. We provide resources to help these executives make confident decisions and gain global insights. If you want to read more about our organization and our “day jobs” you can check out our corporate website.

What makes us unique is our perspective, which is grounded in the constant and unprecedented contact we have with a global network of thousands of senior executives across the financial services industry.

We plan to use this blog for frequent and informal interaction, to share our personal observations about the industry, opine honestly, and engage in discussions. You can expect to find posts about emerging issues, what we are hearing from your peers and updates on our ongoing research. Sometimes you may agree with us, sometimes not. The objective is to engage in serious discussion about serious issue affecting the industry.  We will try to be edgy and thought provoking in our commentary.  By participating and regularly reviewing the blog you get an edge on the competition.  Edge.  Got it?  We want to hear from you.

Our posts can be sorted by category — Business Banking, Retail Banking or Operations (see it over there on the right?). Or, you can read them all by visiting “Home” at the top of the page.

We’re excited to begin the conversation and hope you’ll chime in with thoughts and comments along the way.  It is an exciting time to be in Financial Services.  Lots to do.  So let’s begin.