Ten Ways to Remove Friction from Bank Operations

Small operational inefficiencies can have an outsized impact when repeated across a bank. Manual reports, duplicate reviews and unnecessary steps consume employee time, complicate processes and can negatively affect the customer experience. As technology evolves and banks look to make the most of their resources, identifying and removing that friction is an important opportunity to improve performance.

To identify opportunities for greater efficiency, Jen Megee, Director of Performance Enhancement at PRI, suggests banks start by examining common sources of operational friction. From there, she offers the following ten strategies that banks can use to remove these barriers:

1. Get more from the systems you already have

Before investing in another technology solution, understand whether you are fully utilizing what you already own.  

“Utilizing the full capabilities of the systems already in place and new technology can dramatically reduce duplication of effort and systems, allowing you to do more with less,” Megee points out.

Banks may have system capabilities, modules, interfaces or automation tools that are underutilized or never implemented. Some banks fall victim to chasing the shiny new object when current systems can provide what is needed.  By reviewing current technology against the processes employees perform manually, you may find that a solution already exists within your existing tech stack.

2. Eliminate duplicate work

Multiple employees reviewing the same fields, documents or transactions can create considerable operational drag.

Examine where work is being checked two or three times and ask why. Appropriate system controls and a strong quality assurance process can often provide oversight without requiring employees to repeat the same work.

3. Examine handoffs between departments

Some of the biggest inefficiencies occur when work moves from one department to another.

Does information have to be re-entered? Does the next employee have everything needed to continue? Is an approval adding value or simply creating another stop? Is every step necessary?  Following a process from beginning to end can expose friction that is difficult to see from within a single department.

“Departments often build processes around their own responsibilities without seeing how those processes affect the next person in line,” Megee notes. “Looking at the entire workflow can reveal unnecessary handoffs, repeated work and gaps in ownership that no single department can see on its own.”

4. Replace manual spreadsheets and logs

Spreadsheets can be useful, but they can also become workarounds for capabilities available elsewhere.

If employees routinely extract information, enter it into a spreadsheet and manipulate it to create a report or log, determine whether the process can be automated. System-generated reporting can save time while reducing opportunities for manual errors.

5. Simplify regulatory processes where appropriate

Compliance requirements should be understood clearly before processes are built around them.

Over time, additional checks, approvals and documentation can become part of a process even when they extend beyond what is required. Periodically evaluate whether each process still addresses the underlying regulatory requirement effectively without creating unnecessary work.

6. Review policies and procedures for unnecessary complexity

Similar friction can develop when policies are designed to avoid every conceivable risk rather than manage risk appropriately.

Review policies alongside the processes they create and consider whether each step has a clear purpose. Strong risk management and operational efficiency should support one another rather than compete. The Federal Reserve takes a similar risk-based approach, noting that compliance risk-management programs should be appropriately tailored to an organization’s risk profile, scope and complexity.

7. Empower frontline employees to resolve more issues

An issue that could be resolved during the first customer interaction becomes more expensive and frustrating when it is unnecessarily escalated.

Give frontline employees the training, information and appropriate authority to resolve more customer needs at first contact. “When frontline employees have the training and authority to resolve an issue, the customer gets a faster answer and an enhanced experience,” Megee explains. “Plus, operations teams can stay focused on work that truly requires their expertise.”

8. Get more from vendor relationships

Technology vendors continually add functionality, integrations and automation capabilities, but banks do not always revisit what becomes available after implementation.

Make those conversations part of regular vendor management. Ask about new functionality, interfaces, APIs, workflow capabilities and modules you may already own before adding another system to your technology stack.

Review vendor relationships with all lines of business to identify overlap in system functionality between vendors.  

9. Reduce unnecessary printing, scanning and paper-based processes

Paper can be an obvious sign that a process has not kept pace with available technology.

Reports that are printed for review, manually notated, scanned and then stored electronically create multiple steps around information that was already digital. Look for places where reviews, approvals and recordkeeping can remain digital from beginning to end.

10. Apply AI and automation strategically

AI and automation create new opportunities to reduce repetitive work, process information and support employees, but technology should follow the business need rather than lead it.

As the FDIC and others point out, banks are already using AI and machine learning to improve operational efficiency in areas including fraud detection, AML/CFT processes and credit underwriting.

Start by identifying where employees spend unnecessary time and which tasks could be simplified or automated. Then determine whether the right solution is an existing system capability, traditional automation or AI. Whatever the technology, banks should also account for appropriate oversight and risks involving areas such as data quality, privacy and cybersecurity.

The Bottom Line

Operational efficiency is about making sure processes serve a purpose and employees have the right tools, information and authority to work effectively. Removing unnecessary friction can free employees to spend more time on work that requires expertise, judgment and customer interaction.

“It also helps us make employees’ jobs easier and better,” Megee said. “By eliminating or automating redundant and mundane practices, we ensure that they’re working on higher-level items and adding maximum value to the organization.”

Technology will continue to change how banking gets done, but the fundamental approach to operational improvement remains the same: understand the process, identify what is getting in the way and determine the most effective way to improve it.

Our Experts

PRI’s Director of Performance Enhancement Jen Megee brings more than 30 years of banking experience with deep expertise in retail banking and deposit operations. She helps financial institutions streamline processes, improve system utilization and identify practical opportunities to operate more efficiently.

Resources

Maximizing System Utilization: Understanding Parameters and Capabilities – PRI 

Leading the Way Inspired by Efficiency – PRI 

Innovation At The Speed Of Markets: How Regulators Keep Pace With Technology – FDIC

Supervisory Policy and Guidance: Corporate Compliance – Federal Reserve 

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.