AWD Viewpoints: Doing More With Less - The challenges faced by lenders in today’s demanding business environment

We all now know the story. Living through the early 21^st century recession has demonstrated the far reaching effects of irresponsible practices in the financial services industry. Once proud banking institutions have had to hold out their begging bowls to the very people who are now in some cases suffering because of their actions. The tax payer now has considerably high involuntary stakes in established high street names such as Lloyds Banking Group and Northern Rock and, as a result, the banking profession now engenders a suspicious view from the public who feel the large bonus culture has rewarded incompetence and foolhardiness.

So as the world emerges from one of the worst ever global recessions and nervous property owners consider taking advantage of some of the lowest interest rates on record, how can lenders build long term stable books of business and profit from an ongoing demand for property finance?

There are a number of initiatives financial services organisations have been implementing for many years which are aimed at the holy grail of lowering costs without compromising or even improving customer service. While this can be a daunting proposition, there are some key first steps on the journey to delivering a less costly operation and ensuring that revenue is optimised, which will also provide high quality customer service and speed to market readiness for new product offerings.

Firstly, consider the efficiency of the organisational practices and business processes. Organisations that have evolved over many years often perform activities that, while once valid, add little or no value now. An example of this may be a document validation process that because of clearly defined criteria, can be automated using straightforward technology applications. Another may be a traditional authorisation step that results in process bottlenecks, when for the majority of cases, the decisions are made purely on consistent business rules and the requirement for human involvement in reality is minimal.

Secondly, understand the demographics of the market and utilising the right technologies to engage and manage the customer base. In 2006, 76% of the UK population owned a mobile phone, rising to 87% for those under 24. If SMS technology is used appropriately, the impact on the bottom line can be quite dramatic. A number of financial service organisations use SMS notifications as part of a business process to advise the customer, or other process participants about the progress of an activity or what they are expected to do next. This typically results in reducing the number of calls taken by the call centre and thus has an impact on the number of staff required to manage those enquiries and instructions.

Additionally, the term ‘Right Sourcing’ is becoming the mantra for organisations looking to optimise their operations by using the most appropriate locations and resources to process work. Gone are the days of wholesale ‘lift and shift’; approaches to redeploying complete sections of operation to locations where the cost is lower. We have all heard unusual and often amusing stories from off-shored call centres and back office operations. On example comes from a UK life insurer who has an underwriting operation in India. On one occasion, a second life applicant who had put her occupation as a ‘home maker’, was categorised as a builder. Amusing in its isolation, but it underlies bigger issues of language and culture when using off-shore companies to perform customer centric activities.

In order to make effective use of the options available, companies need a right sourcing model that balances the overall cost savings with performance, efficiency and customer service. This in itself brings challenges not only to organisational culture and tradition but also a greater reliance on technology to support the new way of operating.

A good example of how to operate a right sourced model is Kent Reliance Building Society (KRBS) whose astonishing growth since 2001 is not only attributed to the acquisition of additional books of business, such as Jersey Home Loans in 2002, but their ability to utilise combinations of off-shored and domestic operations to deliver quality customer service, with one of the lowest cost bases in the industry. In order to support this right sourced model, KRBS utilise DST Global Solutions’ AWD® Business Process Management (BPM) application to manage their business processes across the different regions. The daily post is scanned and imaged at their offices in Kent and automatically prioritised and routed to their processing operation in Bangalore, India. The majority of the routine work is then completed off-shore, but customer contact and exceptions processing is performed in the UK, using the prioritisation and work delivery capability of the AWD application. The solution’s sophisticated management information capability allows KRBS to monitor and track the progress of the work throughout the various parts of the operation. KRBS also uses the same approach for its third party operation (EasiOption) which provides administration capabilities for other savings, loan and conveyancing companies.

KRBS’ Chief Executive Mike Lazenby says that “by deploying the work to the appropriate locations, Kent Reliance can benefit from a flexible and cost effective resource model to enable the society to optimise operations without compromising customer service. AWD is essential to the whole mechanism and key to our ambitious growth plans for the future.”

In summary, organisations looking to thrive in the post recession era need to do more with less. Selecting a relevant right sourcing model supported by the right technology goes some way to achieving that aim.