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Low levels of process automation across client on-boarding and account opening in the Investment and Corporate banking space provides on-going challenges for banks and financial institutions in terms of revenue growth, client service and compliance management. So why has this space remained neglected for so long?
Well, in fairness it’s not so much negligence, but rather a lack of strategic holistic approach. The on-boarding discipline spans multiple business lines and various operational divisions, each with separate divisional responsibility and ownership. In general, process improvement and system investment tends to be focused within these operational divisions rather than across the end to end process. As each division campaigns for its share of annual budgets, a patchwork of disparate CRM extensions, BPM and other tools emerge, but the fundamental issues remain – lengthy on-boarding times for corporate clients, inadequate process visibility and metrics, high operational and compliance costs.
Recently, we have seen moves in the market to address the on-boarding issue. A number of leading institutions have initiated strategic projects which target revenue growth and relationship expansion, in addition to operational and client service improvements. Common to all are cross-divisional process owners and working groups who drive forward an end to end strategic vision. Of course such visions cannot be realised overnight, but with clear direction, staged investment toward medium term process improvement is possible.
Looking forward, evolving compliance demands and new competitive benchmarks inevitably raises the question “How long can banks and FIs afford to maintain a patchwork of disparate systems and tools across their core revenue generating processes?” The time for strategic investment is now.
Marc Murphy, CEO, Fenergo
There is something odd about change in organisations.
Everywhere markets are displaying the pressures for change, and companies are – also everywhere – seeking to engineer responses to those pressures. Re-structuring plans, creating new competitive strategies, process streamlining, cost savings programmes, these are everywhere you look.
And yet very few of these changes ever seem to ‘land’ successfully. In many cases not much actually does seem to change, for better or for worse. In other cases, there are the well documented change disasters; Sun Microsystems seeking to transition toward low cost / high volume production systems; General Motors re-structuring from stand-alone divisional groups to geographically centred functions.
The whole field of organisational change is littered with examples of failed or excruciatingly slow transition from current to desired competitive positions.
Why is this? Why do the majority of change initiatives fail to produce the desired results, often despite the enormous expenditure of resources; money, time, management focus, loss of customer focus? What’s missing?
In a nutshell, we think it’s the ‘I’ word. In our view most change efforts are over-focussed on the planning elements of change, and insufficient attention is given to the key issue of implementation.
Fig 1 below sets out what is supposed to happen and what a balanced change scorecard might look like…Fig 2 sets out what in our experience is the reality
Fig 1 Change: Balanced resourcing
Fig 2 Change: The Realities
The size of the bubble indicates the usual degree of resourcing and focus, as does the connection / disconnection between the bubbles.
We exaggerate to make a point of course, but many readers here will recognise the pattern. Organisations devote much focus to change planning, but give poor resourcing / attention to making something happen. Little attention is given to learning and avoiding previous mistakes and errors. Poor change realisation on the ground is the result.
Dr. Ed Young
Organisational Change & Development Practice, TORI Global
Establishing a Programme Management Office can significantly improve programme success. Projects are continually criticised for being single-minded in their pursuit of an objective and do not always consider whether decisions made align to the organisational strategy. A Project Manager may not consider this alignment part of their objectives and performance reviews are not dependent on it. A Programme Manager, on the other hand, has to ensure programmes are aligned to the organisational strategy – it’s a key part of their role.
The corporate world is seeing rapid change, whether it is due to changing global markets, competition, demand for time on the day-to-day operations, or keeping up with exponential IT growth – all these factors leave less time for management to keep track of every project deliverable. Programmes allow organisations to see at the macro-level, a group of related projects. In addition, programmes give structure, foster visibility through reporting and help consolidate metrics to monitor progress and, once implemented, increase benefits.
In these days of scarce resources and tight budgets, monies spent in the right areas leading to key benefits will save organisations the long-term head- and pocket-ache of break fixing what haphazard or pet projects implement.
However, before organisations start employing Programme Managers and defining what programmes are needed, it is key that the organisational strategy is defined – without this, good programme management practices will be futile.
Sanam Pervez
Programme Management Practice, TORI Global
As Retail Banking takes great strides towards front to back automation by effectively leveraging the latest in workflow tools and channel integration, one must raise the question:
Are the same efficiencies possible for more complex investment and corporate banking products?
Getting it right from the client perspective is an ongoing challenge for banks in these sectors. On the whole customers are frustrated with lengthy processing delays, poor feedback, and repeated requests for information. The perception is often that the right arm doesn’t know what the left is doing, and this is frequently the case.
In my experience, relatively few banks track the performance of their on-boarding processes, or have the capabilities to effectively monitor progress and provide adequate feedback to relationship managers and client facing teams.
Behind the scenes a large volume of paperwork and emails circulate across departments, reliant on knowledge workers to direct it correctly and efficiently to the next stage. Prioritisation is largely based on who shouts loudest, if front office teams can even track where the application sits at any one time! From a front office perspective there are effectively two stages, ‘In Progress’ and ‘Complete’, the in-between, it seems, is a complete blind-spot.
Daily I engage with banks implementing projects to improve transparency and streamline on-boarding processes. Key challenges are:
- One size doesn’t fit all – Every client is unique, and for corporate and institutional clients a standardised ‘one size fits all process’ is largely unrealistic. Workflow tools need to be flexible and support on the fly process adaption while still ensuring all critical compliance steps are complete.
- Paper, paper and more paper – On-boarding remains a heavily paper based process, and managing the paperwork effectively is key to driving efficiency. From managing the generation and approval of outbound client contracts, to inbound document classification and storage, systems need to support complex document associations and workflows, and ideally combine document access with access to core client data.
- Line of business on-boarding – Many banks opt for specialised teams to manage on-boarding for specific product lines. This, however, shouldn’t preclude effective data sharing across other organisational divisions and global centres. Banks should consider a centralised on-boarding system, which provides access to both centralised on-boarding functions and individual line of business teams.
- Implementing metrics – Performance improvement comes with in-depth process understanding. Seek to implement KPIs at each process stage and proactively track performance.
Fenergo
Fenergo was established in 2008 as a software product company focused specifically on Client on-boarding, Client Due Diligence and Account Opening in Financial Institutions.
Currently there are 26 customers live on the product.
Marc Murphy, CEO, Fenergo (TORI Alliance Partner)
Many organisations still seem to be fixated with centralised ‘top-down’ change programmes. There are several reasons for this:
- Current cost reduction pressures generate drives toward control and standardised procedures
- Top-down is an easy option, deceptively assumed to require limited resourcing
- Control and big ‘roll out’ change programmes act to legitimise the budgets and jobs of in-house HR Learning & Development groups. Top-down becomes a euphemism for cottage industry.
Yet despite the profusion of change project spreadsheets and corporate message emphasising the latest official virtues, outcomes are frequently disappointing. Structures change, but people remain dis-engaged. Discretionary effort lies un-tapped and everyone waits for the next change wave, the next set of PowerPoints and glossy posters. Over time, indifference and entrenched behaviours are reinforced.
How might we improve on these common outcomes?
One step here is to actively design change programmes to include a balance of top-down and bottom-up change initiatives. TORI Global’s approach is to establish broad strategic change objectives with senior leaders and then to seek to engage operational level change transformers in designing and delivering the local versions of those larger aims. The outcome of course is much greater buy-in and local commitment to change, not least because it is largely designed by the consumers of the new direction for themselves. Building energy for change, creating fast adaptation to local exigencies, tracking milestones set by participants, are the name of the (successful/faster/deliverable) game.
So ‘top-down’ and ‘bottom-up’ change initiatives are not mutual opposites. Effective delivery of change plans instead requires a careful blend of both.
See it like a piece of engaging music, or like Senge (1990), or as a recipe for a meal – you do need a strong, recurrent platform of basic notes, basic ingredients. But complementing this needs to be informally based improvisations, local adaptations of the central theme to accommodate for local conditions. Only by enhancing the latest change programmes ‘driven’ – or even ‘executed’ – by Corporate or HR; only by using again the energy and experience of employees can we generate momentum for change on-the-ground.
Dr Ed Young
TORI is seeing a shift in sourcing strategies as a result of major global economic factors. Instead of outsourcing services in their entirety, global financial organisations are seeking partnerships with Business Process Outsourcing (BPO) companies to reduce costs, share risks and retain control.
We’ve found that clients value the investment and expertise BPOs offer and these joint ventures can be an ideal solution for the long-term profitability of the business.
Creating a new vehicle to provide services and run as a joint venture, takes the client’s value journey from cost arbitrage to transformation over a relatively short period of time. Financially this makes sense because staff costs and risks are shared and both parties have a vested interest in making the venture work. As these partnerships mature, what starts off as a way to ‘do it cheaper’ will progress to ‘do it better’ and by 24 months the partnerships ‘do it differently’ through transformation. Successful partnerships can start seeing a Return on Investment (ROI) after just 12 months.
But what’s so appealing to clients is that specialist BPOs are investing in their company with a long-term view to jointly develop the business to a point where innovative strategies take the service to a new level. Even more appealing is that the ‘outsourced’ service is under the client’s control and not outsourced totally.
It’s a win – win situation if you get it right!
Regards,
Yogi Patel
This will be my last formal bi-weekly TORI Global blog, so I wanted to reflect over the past couple years of highlights and lowlights. Two years ago we were wondering how we would recover from the banking-led collapse of the early Noughties. Now we are still wondering when we are going to recover.
Technology hype has moved on. When I started this blog, SOA was still seen as the answer, with all the vendors hitched to the SOA and SaaS bandwagons. Nowadays, these same solutions are branded Cloudy with a Chance of Meatballs, or some variant. Thirty years ago, when I was a naïve and geeky graddie, we offered a similar service to our customers – a large remote server farm offering SaaS, PaaS, IaaS, etc. Only we called it a mainframe bureau.
ITIL was seen as the saviour of poor service. However, most of us have found it devilishly difficult to implement, hampered by fuzziness between V2 & V3 and a set of manuals that Confucius must have written, full of gnomic utterings rather than practical advice.
The Outsourcing/Insourcing debate continues its Circle of Life as organisations try to replace a costly poor service with a poor costly one. People will at some stage realise that this is the wrong debate – if you get the processes right it won’t matter who does it, as you will get good service at the right price.
Worryingly, investment in people (training, mentoring, salary packages) seems to have dropped off the radar at the time when they matter most. Motivated, skilled staff will drive your organisation forward in any market condition. Screw with your workers and they will screw you.
IT programme and project management has failed to reach a professional engineering level of discipline. Neither PRINCE2 certification nor wall-sized MS project plans seem to be making a difference to the quality of management and delivery of business change. Finding someone with the right experience without the bad habits developed out of desperation is difficult.
Security has rightly re-asserted itself as a must have – thank’s Sony. Chief Security Officers have re-appeared but many boards still don’t get that the brand risk can outweigh any specific IT costs and inconvenience related to security.
Finally, I would like to thank TORI for two exciting and enjoyable years keeping true to their spirit: Trust, Openness, Respect and Integrity.
Regards
John ‘My Way’ Moe
You might think it was an obvious statement to say that in a world where there is a horror story, almost weekly, about an embarrassing high profile project failure costing millions and delivering nothing, sensible companies would have in place effective, metrics driven Project Portfolio Management (PPM) systems and processes. I’m sure you all have. No? Don’t worry you’re not alone.
Having been responsible for my fair share of cost- or time- ‘challenged’ projects (overrun has such an unfortunate connotation …), I am fully aware that knowing what is sensible and achieving sensibility are not common bedfellows. So why have I and my fellow Project Professionals (my PRINCE2 is more Machiavellian than yours) failed to keep a tight control on these black holes?
My first observation is that Project Management and PPM are different beasts, requiring different skills and experience. Using a PM to do PPM seems sensible, but there are an alarmingly large amount of ‘gotchas’. For instance, it is quite feasible to plan, design and manage a project using MS Project (yes, I know that real PMs use Artemis). However, trying to prioritise and schedule 50 business-critical projects using this software would be ambitious to say the least.
Secondly, project prioritisation requires interacting with some of the most powerful people in your organisation. Business projects are seen by their sponsors as a test of virility and woe betide anyone who doesn’t treat these symbols with the respect they feel they are due. Senior management are only interested in their pet projects being delivered immediately. They don’t give a damn for anyone else’s projects, and normally prefer everyone else’s projects to fail to make themselves look better …
So, giving a sponsor the reasons why their project is going to be delayed, while their rival’s goes ahead, might seem logical, captain, but you shouldn’t be surprised to suffer a verbal (and possibly physical) roasting, probably leading to a rapid and permanent posting to the Anchorage, Alaska office of your organisation.
But what about the PPM software the vendors are pushing? Surely, given it costs a fortune, it will solve these problems? I get too many icy postcards to believe that. PPM software saves some nifty Excel macros, but fundamentally only gives you one part of the answer – the depth. By this I mean the detailed metrics about the benefits, risks, costs and implications of the projects. These are very important, but you need two other pillars in place to succeed.
Width. The only way to get protection from the wrath of individual sponsors is to organise the equivalent of a group hug, commonly known as a PPM steering committee. This needs to consist of the sponsors and preferably their bosses to publicly debate and agree relative groupings, priorities and resource allocation.
Height. Depending on your organisation, you will need the support of the main board or divisional head to protect you from unhappy executives. Or if you are built like Martin Johnson, you are probably safe already.
So there you are, PPM solved in three dimensions. Next week, how to make an ESB using origami …
Regards,
John Moe
In previous discussions on SOA and agile, most of the emphasis has been on speed of implementation. Business pressures dictate faster response to change, so naturally your IT team run around and burn through the shrinking IT budgets quicker than you can say scrum (and they often also resemble sixteen people with their heads between each other’s thighs with no idea where the ball is).
However, as the contrarian that I am rightly labelled, I want to convince you to step back and consider the measured approach to SOA, which I have amusingly called “Slow-A” (pronounced ‘slo –uh’ for whose who need the feeble pun explained to them).
I’m not going to harangue y’all about ‘less haste, more speed’, although I believe this to be a mostly true cliché. Many companies I have visited have rushed ahead with their SOA initiative and shot their wad, so to speak, on a shelf full of software that they couldn’t get to deliver any business benefit. To badly paraphrase Welsh rappers Goldie Lookin’ Chain, “Software doesn’t solve problems, people do”.
In these accelerating times there is something to be learnt from the Slow Food Movement. This was started by an Italian (no, really) to combat fast food culture. In fact I am going to use their 3 main tenets (Local, Fair and Quality) to illustrate my point:
Local means starting small with a departmental issue rather than aiming to solve the climate change sized Enterprise Architecture problem as a good way to start. Sure, it makes it more difficult to build a complete Service Oriented Infrastructure if you start piecemeal, but at least you can focus on a single problem and solve it before the world changes around you and the users lose interest.
Fair means considering the context in which you are developing an SOA solution. Very few problems can be solved with technology alone. In fact I and a million other consultants are kept well fed by the ongoing inability of most IT departments to see this. Involving pesky people and plodding processes slows things down, but helps to produce the balanced solution the users really need – sometimes with very little IT required.
Quality is often sacrificed at the altar of expediency because users want their solutions NOW, and will insist on timeliness over excellence – until they see the output and harangue you for the rubbish you have produced. Proper quality SOA needs to be designed and built on strong foundations, which may take longer to build, but will last longer, be easier to change and will be truly agile.
So take my advice and start small and slow, to become big and nimble. In my experience SOA leads to agile, not necessarily the other way around.
John ‘Chillin’ Moe
It seems that the rush towards a Cloud-based future (no I am not talking about the Rapture) has had some crowd control applied to it in recent weeks with a number of events that have reduced the need for kettling.
As the big boys spend billions on secretly building larger and larger data centres (or centers as they are mostly US-based) for the inevitable move to the Cloud for all our IT needs, a few spots of reality dripped down causing many of us to look up nervously.
First Amazon, then Google, had brownouts (like blackouts but smellier) of their online services. Couple this with Sony sharing millions of gamer details with even less savoury characters and you have the makings of a panic. Of course, Apple launching its iCloud offering can be seen as a sort of endorsement, but this is the usual Apple easy to use and limited functionality consumer offering.
This won’t come as a surprise to those old cynics like me who have learnt to steer clear of bleeding edge techology solutions for anything serious until at least three major disasters have happened. So does this mean it’s safe now? No one who has been in IT for any length of time would use the words ‘computing’ and ‘safe’ in a sentence without a ‘not’ between them. You can build reliable and logically flawless systems but, unfortunately at some stage people get involved and it all goes Pete Tong.
With Cloud this is not only true, but you also have a long piece of string between you and the data centre that workmen the world over are expertly looking to cut through with a well placed shovel. The ISPs, struggling to cater for the exponential traffic growth are gleefully throttling your pipes under ludicrous ‘fair play’ small print.
So my advice is to treat Cloud like any other IT service:
- Halve the claimed benefits
- Double the proposed costs
- Add six months to the delivery time
- Make sure plans B & C are in place
- Wash your hands afterwards
John “Hello clouds, hello sky” Moe
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