Creating a Leaner Branch
While manufacturers are known for constantly searching to produce goods more efficiently and cost effectively, many of these same principles can be applied to banking. This so-called “lean” thinking centers around continuously improving to save money, reduce waste and create satisfied customers. And in today's banking environment, putting these methods in place for branches is becoming more important as margins narrow.
Lean isn't just about costs; many financial institutions are finding ways to apply these principles to better control cash and automate processes enabling branches to more quickly serve customers.
A recent report by PricewaterhouseCoopers said lean practices reduce non-value activities by 40%, creating employees who are more engaged and have the time to serve customers and cross-sell products.
ARCA has identified seven areas of waste in bank branches that are ripe for lean applications:
- Tellers standing idle
- Holding excess cash inventory
- Tellers leaving their stations
- Moving cash around the branch
- Auditing and balancing branch cash
- Double counting cash when handed out or taken in
- Customers waiting in line
PricewaterhouseCoopers identified five areas to review when beginning to implement lean practices: customer value, process efficiency, performance management, organizational capabilities, and behavior.
The first step is to look at the customer and make sure you're aligned with their needs and wants. Then begin reviewing processes to find areas that are wasteful or simply inefficient. Activities that don't add value should be eliminated.
For example, customers withdrawing money or making a deposit want these basic banking transactions to happen as quickly and efficiently as possible. If tellers have to leave their stations to get cash in the middle of a transaction, then double count the money before handing it to customers, it slows down the exchange. This loss of time likely leads to lines, especially during a branch's busiest hours.
A simple and lean solution is installing a cash recycler. This eliminates the need for a vault trip to grab cash and for a teller to double count the output. The machine accurately dispenses the money, giving the employee an opportunity to interact with the customer. It also reduces the time it takes to serve clients, moving everyone through the branch more quickly.
The key to implementing lean practices is understanding both the process and how it helps customers, PWC said. First, watch teams in action, paying attention to the most important steps in the process. Talk to employees and find out where they see the most waste or areas for improvement. Then make sure the process is aligned with what customers want and what your organization needs to be successful.
And you don't have to fix everything at once. Applying lean practices is a process of continuous improvement. Focus on the areas that will have the largest impact first, and then move to the next task. By keeping your customer top of mind, you'll ensure that your improvements are actually ridding your branch of waste, and creating great customer experience.