In the current financial landscape, banks are no longer focusing on survival. The financial crisis has been a powerful catalyst for change with banks now focusing on how to thrive in a new environment of tighter oversight, lower leverage and higher capital costs.
The new landscape provides an opportunity for banks to target a new operating model, to match their core strengths with the business along with focusing on high volume, low risk activities based on facilitating client transactions.
In my experience there are 4 guiding transformation principles that that need to be followed to put in place a Next Generation Operating Model.
Transformation Principles
1. Align Operations with the Business
2. Industrialise and Strengthen Processing
3. Reinforce Control & Command
4. Differentiate Client Service
Principle 1 : Align Operations with the Business
| Principle | Directive |
| Align Operations with the Business | ·Create efficiencies to underwrite investment in high growth business |
| ·Expand the scope to include upstream activities | |
| ·Track and report metrics linked to strategic goals | |
| ·Guide the transformation of the business |
With the move to high volume, high frequency activities, models are becoming simple and more specialised. Coupled with lower profitability and increased competition, it is essential that operational process and effective and efficient.
Banks need to strive for a truly agile and cross product processing framework both across business silos and geographical regions. This can only be achieved by streamlining both upstream and downstream processes to facilitate automation. The weakest links in the chain have to be addressed, removing complexity to deliver economies of scale in an effective, efficient and scalable manner.
For the banks operations to be a source of competitive advantage, it is essential that the operating model continues to deliver tangible outcomes through the tracking and reporting of key metrics. These metrics need to be aligned to the business model and strategy, tracking to a number of defined objectives for the transformation, such as efficiency, innovation, risk management and client service.
The success of the transformation rests on the change enablers such as IT, Operations and Business Heads guiding the transformation of the business. Technology along with Operations should view themselves not as order takes but as a true business partners, shaping and driving the future direction of the business. Only then can operations and technology act as a catalyst to transform the business operating model.
In my next post I will look at Industrialised Processes and how to differentiate between fast lane and high touch processing.
IAN ALDERTON
Email : ian@IanAlderton.com
Tel : +44 (0) 7702 777770
