/ BANK TECH /
busy, but not efficient
Does that describe your bank? Knowing the causes helps you to know what to change By Eric Weikart, Cornerstone Advisors 3. 60% of financial institutions still use a paper-based new-accounts process. 4. Over 70% of statements are mailed. These results are symptomatic of the problems the banking industry faces. They will need to be tackled head on by implementing a culture of accountability—curing the diseases that cause inefficiency. Cornerstone has identified four key diseases that all banks should avoid (infographic, below). These diseases create many of the inefficiencies that lead to poor performance and create busy work that adds no value. Let’s tie these diseases to the four statistics that were discussed earlier on:
1. Bankers spend 75% of the time during the new customer/account process on the computer, versus building relationships. CAUSES:
H
ow did we arrive at a point where it takes over 30 minutes to open a new account, and where paper and manual processes litter our banks? Short answer: We didn’t need to be that efficient in the past, so we didn’t focus on it. Interest margins were strong, regulators were relatively passive about process, and there really weren’t any
outside competitors vying for a slice of the pie. Well, that world has changed, and banks need to stop the bleeding. Here are four statistics that will blow your mind: 1. 75% of time spent with new customers involves computer input, versus building relationships through a conversation. 2. Over 50% of banks still originate commercial loans manually.
“Control patrol” disease
“Frankenstein” disease
Symptom
Symptom
• Numerous verifications, checklists, sign-offs • Checkers checking checkers • Cost of controls > cost of abuse
• Complex processes • Lengthy procedure guides • Forms, forms, forms
Cause
Cause
• Process fragmentation
• Bolt-ons • One-size-fits-all process design
Cure • Reduce the number of hands touching the work • Implement aggregate or deferred controls
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• Double double data disease. The biggest reason for spending so much time on the computer is related to a lack of system integration. Systems like chexsystems, check order, credit reports, debit card, and online banking enrollment require reentry at many banks, because vendors haven’t made clients aware of integration or banks don’t feel they should pay for it. By going cheap or getting lazy, bankers oftentimes subject
BANKING EXCHANGE
December 2015/January 2016
Cure • Return to the simple for 90% • Separate processes for the 10% exceptions