By: Amit Sethia, Head – BFS (GTM & Delivery)| Intelligent Automation (IAT) | Consulting, LTI

In the new age banking context, Operations is not merely a set of transactional processes – it plays a key part in revenue generation, customer experience, and enhancing bottom lines. With changing dynamics, Operations Transformation becomes the need of the hour for organizations that wish to take their processes to the next level. Through a series of blogs, we will draw upon our extensive experience in the BFS industry to share practical insights, uncover myths, and provide solutions on various aspects Process Transformation.

Let’s begin with why and how operations can be redefined.

Where should Banking Process transformation (BPT) be leveraged?
Modern banking operations are grappling with multiple challenges, such as reduced margins, increased competition, new regulations, and an ever-evolving business landscape. What is needed is a radical re-look at existing business and operation processes. To be effective, processes need to be nimble, agile and easily upgradable. Transformation involves more than incorporating automation, RPA, AI etc – the journey begins with a detailed assessment of operating models and processes.

Inefficient transformation
According to a recent Harvard business survey, of the USD 1.3 trillion spent on digital transformation last year, USD 900 billion did not yield desired benefits. Technologies such as RPA and ML may achieve short term cost targets, but if the Customer Value Proposition (CVP) and the underlying business processes are broken, these technologies will fail to deliver.

Putting together the dream team
BPT equips businesses to transform their processes, so they can differentiate from competitors by providing improved customer experience at optimized costs. Thus, a BPT initiative assumes significance and should be driven by a pool of seasoned domain and process consultants. Their experience should cut across Operations streams such as Account Servicing, Customer Onboarding, Credit Risk & Underwriting, and Financial Crime etc.

Knowledge of managing large-scale teams, launching banking entities/ products/ target operating models and delivering complex, multi-phased projects across geographies is a definite advantage. We strongly believe that the team should bring the differentiating capability of understanding the mindset of the C Suite as well as the hands-on experience of managing and transforming business processes that will be utilized to effectively partner with sponsors and deliver desired outcomes.

How to transform
BPT starts with a focus on the inherent business need and the supporting processes it fulfils, as against retrofitting the (tech) solution. It involves assessing the customer journey through five different lenses i.e. People, Process, Cost, Technology and Governance. This helps in preparing value stream maps to determine potential improvement areas and/ or NVAs (Non-value adding) activities, thereby recommending bespoke solutions based on customer preferences.

To improve, optimize and stabilize business processes, we can follow the established DMAIC (Define, Measure, Analyse, Improve and Control) methodology. This can be done in any of the following ways:

• Lean Implementation: Structured around simple (non-tech) but impactful solutions that will require anywhere between 3-6 months
• Rapid Response: Address medium complexity problems e.g. SLA/ Metric improvement etc and may/ may not require tech interventions
• E2E Process Re-engineering: A strategic change initiative involving complex processes and solution that would need tech intervention. Typically will require more than 9-12 months.

Let me share a quick glance at how we have helped some banking clients leverage BPT:

• Efficient Contact Center operations through Lean Implementation led to USD 1.8 million cost savings, and 25% CSAT improvement for a UK global bank
• Implementation of a Revenue Management solution for Retail Banking with annualized benefit of USD 4 million for one of a leading African Bank
• Straight Through Processing (STP) of Customer & Account onboarding led to revenue uplift of USD 3 million, and reduced onboarding TAT to 45 minutes for an African bank with presence in multiple geographies

How Banking Process Transformation provides the edge
Banks today operate in a stringent regulatory environment, impacting their cost of operations. Lack of clear product differentiators is also affecting revenue streams. In this scenario, off-the-shelf solutions will not work. To customize, it is important that we listen without pre-conceived ideas. BPT necessitates a holistic assessment of processes and provides recommendations best suited to their needs. By ensuring well-defined processes focussed at creating value for customers, supported by the right mix of technology, we can go a long way in creating success stories.

This is first of the Banking Process Transformation blog series. Keep a look out – we will be covering the following topics:

• Operational Efficiencies
• Customer Onboarding
• Process Optimization

Visit LTI’s Banking & Finance page to find out more about our capabilities in this vertical.