A Winning Combination: Strategy, Culture and Process Improvement

As financial leaders scan the horizon to determine what is in the future for community banking, they are examining every organizational area that can be improved. They are asking, “Where do we need to get better in order to succeed?” and “What is the winning combination?” PRI Head of Client Engagement Brett Rawls says the answers lie in marrying process improvement with strong strategy and cultures of efficiency within the bank.

Don’t Discount the Power of the Strategic Plan

A key component to a financial institution’s winning combination must be the strategic direction of the bank, which is articulated through the strategic plan. Because regulators require financial institutions to have a strategic plan, it is common practice for banks to create one as a “check the box” activity and stick it on a shelf. Instead, they should be leveraging it to drive organizational success. Rawls says that the strategic plan should in fact be a living, breathing document that guides the decisions and direction of the bank for at least the next three years.

“It should serve as a roadmap to accomplishing the institution’s aspirational goals, and it should be flexible enough to change with the current financial circumstances and climate,” he said. “Dream big, and don’t get stuck in the past. You can learn from the past and respect those lessons but always keep your organization moving forward. Your working strategic plan should be fluid and adaptable as well as measurable.”

Some specific goals associated with the overall aspirational goal of continuous process improvement that banks are implementing include: 

• Streamlining processes
• Improving ROA
• Increasing profitability
• Unifying the customer experience

Customer Relevancy as an Aspirational Strategic Goal

Rawls said he would add another aspirational goal in addressing continuous process improvement: Strengthening customer relevancy. Banks should be striving to impress their customers so much that they talk about them to others and would feel disappointed if they couldn’t bank with the institution any longer.

Chris Nichols of SouthState agrees that customer relevancy is a vital metric to track, optimize and improve to ensure future bank success.

“Too often, banks focus on operational efficiency, digital interfaces or regulatory compliance while overlooking one of the most critical measures: how much customers truly value the bank’s relationship and services.” – SouthState

By posing questions to customers like, “How would you feel if you could no longer bank with us?” and understanding why their most loyal customers love them and what prevents others from feeling the same, banks begin the process of focusing on the best customers with the best products. Rawls said that while most banks can’t be everything to everyone, they can be an even better choice for their most loyal and profitable customers by focusing on process improvement.

While remaining relevant as a community bank moving forward is the goal, there are steps to ensure the organization is meeting their customers’ desired expectations and experiences.

“Customer journey mapping is a great technique banks can employ to put themselves in the customer’s shoes,” Rawls said. “In this exercise, a leader in the bank goes through the actual process of a customer experience such as opening a new account. It’s not just writing down the steps based on what you believe the process to be but actually sitting in the branch and having a human interaction with a universal banker or teller just as the customer would.”

In customer journey mapping, the bank should ask thoughtful questions at the conclusion of each process they are examining. Examples of questions include:

• How seamless is the process? What takes too long?
• Is there too much paperwork and too many signatures required?
• Did the team ask questions to show they care about my financial health and customize my account to meet my specific needs?

By living the experience from the customer’s point of view, the bank will almost always uncover ways to improve the process, make it more efficient and ultimately be even more relevant to its customers in the future.

Creating a Culture of Efficiency

According to the Jack Henry & Associates 2024 Strategy Benchmark survey, increasing operational efficiency is a significant focus for banks and credit unions, coming in close behind “growing deposits” as a top strategic priority. This aim lines up nicely with a broader industry focus on modernization and efficiency to remain competitive and effectively manage operational costs, particularly through automation and the use of AI.

Why do we care so much about efficiency? Because improved efficiency delivers:

• Reduced costs and higher profitability
• Enhanced customer experience
• Improved employee involvement

Rawls said the first two are often the most focused on, but he advises organizations not to forget the third. A focus on improved employee engagement requires an intentional “living out” of the institution’s stated values and pursuit of the aspirational vision they set in their strategic planning session.Creating a culture of efficiency requires strong, effective communication that flows up and down the organizational structures.

“It’s important for employees to understand the ‘why’ behind changes made at the institution,” Rawls said. “Cross-education enhances the team’s understanding of what other groups do and how their jobs impact others and how it all ties together.”

The winning combination for the success of community banks consists of setting aspirational strategic goals that include process improvement and creating a culture of efficiency that leverages clear, effective communication as its north star. Making sure you know why your most loyal customers (and employees!) love you and understanding how to fill the gaps through automation and process improvement with others will propel your organization into its future success. 

Resources:

The 5 Most Common Mistakes in Strategic Planning – Profit Resources, Inc.

The Power of Curiosity in Process Improvement Strategy – Profit Resources, Inc.

Measuring Relevance for a Sustainable High-Performance Bank – SouthState Correspondent Division

2024 Strategy Benchmark Survey – Jack Henry & Associates

How Journey Mapping Improves Customer Experience  – Profit Resources, Inc.

PRI specializes in identifying profitability improvement areas for financial institutions through revenue growth, cost control, streamlining processes, and effective use of technology. Contact us to learn more about our personalized approach to propel growth and improve profitability.