Evolving to survive: how technology can bring retail banks closer to their customers

By David Tryon, Director of Client Management at DST Systems

Competition between banks is fiercer than ever and success is now strongly correlated with three key factors: customer engagement, responsiveness and transparency. The retail banking industry is on a mission to modernise and get closer to its customers, aiming to position themselves as fairer, more secure and efficient, with the customer at the centre of their operations. With this objective to transform the customer experience, one would naturally expect the banking industry to focus their attentions on improving their main touchpoints with account holders. Despite efforts in other areas however, retail bank branch operations remain largely unreformed, with a surprising dependence on paper processing. This article will explore the digital strategies banks need to consider in order to modernise their branch operations and transform their customers’ experience

The sheer weight of day-to-day processing within the retail banking industry is the reason that branches tend to experience operational challenges. With customer expectations and demands ever increasing, and heightened competition between banks, the effect of operational inefficiencies can be costly. Those may originate from within a bank’s back and front office teams – in particular, how banking teams communicate with, and pass work between, each other, usually as a result of customer interactions with retail branch staff. Adopting a structured and more disciplined approach to processing work which better utilises technology can have a massive impact on both efficiency and customer satisfaction.

Branch operations handle a wide range of processes, such as account opening, customer change of circumstance and complaints. Daily activity within a high street bank typically encompasses a cumbersome load of planned and unplanned work. All of this needs to be processed and routed efficiently to ensure a seamless flow of information and activity and achieve both customer and employee satisfaction. This workload, from delivering day-to-day customer transactions to identifying and managing process exceptions, amounts to a significant volume of activity which if managed poorly will dramatically increase the bank’s cost-to-serve.

Some organisations have concentrated this work in specialised processing centres in order to achieve efficiency and consistency via partial or full automation. However, many prominent high street banks remain dependent on paper-based, manual processes which underpin their day-to-day branch operations. Their reluctance to overhaul outdated paper based work is generally due to their belief that this change will cause disruption and threaten the continuity of their operations. However, in many years of working with retail banks I have become convinced that the cost of customer dissatisfaction and inefficient work distribution far outweigh these risks.

To truly understand the hurdles the retail banking industry presently faces, it is important to capture the context and internal dynamics of the sector itself.

Current scenario

A typical retail bank branch’s day-to-day operations are usually a mixture of partially automated, partially manual processes provided by centralised and in-branch teams. When an exception occurs, it is often necessary to re-contact the customer to complete or correct information previously provided. This initiates an entirely new process that is normally directed from the back office to the front-line team: either within the branch network or the appropriate outbound calling centre. Many banks route this process in a simple, unstructured way – such as one department sending an email to another department as the ‘exception’ is, by definition, outside the scope of their standard business process applications. For a sizeable bank, hundreds of exceptions of different types can occur each day, meaning that a significant volume of instructions, pending actions and data will be ‘in flight’ at any time. This is further complicated by the fact that these issues usually take several days to be resolved and concluded. 

When I talk to my contacts in the retail banks a number of common themes tend to recur in this area including:

• Unclear back office requests which may cause the front office team to do the wrong thing, so wasting time for both teams and the customer
• An unstructured response from the front office which might not be validated, which can mean incorrect information being provided to the back office
• Tasks passed to the front office cannot easily be tracked, so there is a lack of accountability or tracking and no easy escalation mechanism for overdue tasks
• Resentment and divisions between teams are common, e.g. the front office feels that work is ‘dropped’ on them which is not part of their job, whilst the back office feels ‘at the mercy’ of front office teams who do not prioritise their requests
• A lack of management information and transparency. For example, it is not easy to identify which processes, teams or individuals in the back office are generating the most exceptions, or which front office teams or individuals are most responsive and effective
• Limited visibility of the front office team’s workload, and of the effectiveness of the back office team

Back and front office teams are integral parts of the operational structure of any bank – but they are not the same as each other. They work in different ways, require varying competencies, and are subject to contrasting demands and pressures – in addition to which, systems for measuring performance are often not common to each department. The unification and coordination of these crucial facets of a bank’s operations offers a number of very clear benefits.

Looking ahead

There is an obvious need for banks to better support their back and front office operational teams in the handling of customer related issues. This has traditionally been a significant challenge, due to the complex mixture of task types, data and information. Managing employees of varying skill levels via different, non-integrated communication or processing platforms causes additional challenges. However, over recent years specialist technology has emerged which facilitates and provides everything that is required to optimise branch task management. Intelligent business process solutions can provide the necessary discipline, consistency, information trails, measurement tools, and audibility which branch operations are currently lacking.

A system that handles branch workflow through intelligent business process management technology is not only the best way to navigate such challenging scenarios, but it can also be the best route to success. The strategic use of a centralised orchestration tool will coordinate information flows and ascertain the most appropriate team member to assign work to. Such a solution can seamlessly deliver all necessary documentation via a secure, paperless portal.

Banks who have embraced these solutions have empowered their businesses, achieving significant gains in efficiency and customer satisfaction. These banks are more compliant to FCA regulations and also benefit from improvements in job satisfaction and inter-departmental employee relationships.

A Bank’s in-branch teams have a hugely important role to play in the overall success of the organisation. It is therefore essential that structural and operational issues must be effective, efficient and robust. It is not surprising that there is a positive correlation between front office banking operations which use automated work distributions and their ability to achieve high levels of customer satisfaction. In this age of the empowered customer, those banks which embrace the latest digital strategies will ultimately be the ones who deliver most benefits to their account holders, reaping the benefits of their investments.