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Preparing for operational excellence: Scenarios to consider

Jul 19, 2021 / Consumer Banking

To remain in business over the past year, many companies had to adapt their operations to change with the needs of their consumers. Although many outward-facing aspects (such as their logos or levels of service) stayed the same, their internal operations, org chart and behind-the-scenes technology mix may look completely different.

This aspect of digital transformation also goes for financial services providers. Many customers have new expectations of their banks, digitally as well as in the branch. Banks and credit unions have been uniquely challenged to change how they conduct business since March 2020, and now they must strategically plan for operating models in the next chapter.

As banks get ready for what’s next, they must plan for a best case, a worst case, and a most likely case scenario that would fall somewhere between the extremes. Strategic planning often focuses on high-growth scenarios, but in recent years, many financial institutions have invested more in different channels and confronted uncomfortable questions around the scope of established branch networks.

Planning for this most likely case scenario around customers’ increasing preference for online services, the institutions already preparing for this likely endured fewer headaches over the past year and a half.

Focusing on the best-case scenario, businesses and consumers will need to prepare for the pent-up demand for human interaction in the post-pandemic environment. Some consumer behavior changes that occurred in the pandemic will be here for the long run, while others may not last.

Branch locations and customers within those communities will vary from institution to institution. This will have major implications for digital investment, branch network planning, staffing of call centers, and the build-out of artificial intelligence capabilities. Over the past year, banks have gone above and beyond providing constant service with innovative, quick response actions.

After considering each of the three planning scenarios – best case, worst case and most likely case – the challenge is to create behind-the-scenes processes that will help optimize new working models that will be adaptable for a long time.

Real-world use case for achieving operational excellence

A $5 billion U.S. bank recognized significant gaps in its technology strategy and technology roadmap in the middle of its efforts to modernize its technology and operations, and it faced a tight deadline to address them. To manage this, the bank completed a capability maturity assessment and a broader organizational review to support a response to the regulatory findings.

Upon project completion, the bank received a detailed, 63-page technology strategy and medium-term technology roadmap meeting regulatory requirements. It also received a bank-on-a-page diagram giving insight into the efficacy of how the bank is operationally structured today, including insight on internal hierarchies; a staff survey identifying how well staff connect to the corporate strategy and their understanding of its objectives; and an assessment of the line-of-sight to corporate strategy.

In addition to this, the bank also completed two capability maturity assessments across technology and the rest of the bank, which led to more than 50 tailored and prioritized initiatives that formed a roadmap for change to support the bank’s transformation journey.

And on top of that, the bank received targeted recommendations to improve other aspects of its overall strategy based on alignment, structure, incentive and visibility issues identified while reviewing more than 100 documents, 50 hours of workshops and interviews, and analysis of the survey results from 200 staff members.

By prioritizing this project, the bank reached compliance with regulatory requirements and greatly improved its strategy and operations. The institution demonstrated its commitment to dedicating significant time and resources to achieve operational excellence.

While we can only speculate on the longer-term impacts of COVID-19, banks that are preparing for best case, worst case, and most likely case scenarios can provide guidelines for operational planning in times of uncertainty. Now is the time to optimize operating processes, and banks that do this will be better positioned to remain competitive and relevant as they move into their next chapter.

Patrick Goodwin is president of Strategic Resource Management (SRM).