This article is an extract from Performance, Volume 5, Issue 3, August 2013. The full journal is available at
www.ey.com/performance
Excellence in
Operations:
helping
banks regain
customer trust
Opening a new account or transferring money
with minimal fuss should be easy for the
public, but banks often struggle to perform
these simple tasks — much to their customers’
dismay. The good news is that banks can
address the issue and build a loyal customer
base by concentrating on the basic services
that really matter most to clients.
30
Volume 5 │ Issue 3
This article is an extract from Performance, Volume 5, Issue 3, August 2013. The full journal is available at
www.ey.com/performance
Authors
Robert-Jan Hagens Partner
EMEIA Financial Services
EY, Netherlands
Armin Eiber Director
EMEIA Financial Services
EY, UK & Ireland
Ulrich Trinkaus Partner
EMEIA Financial Services
EY, Germany
31
This article is an extract from Performance, Volume 5, Issue 3, August 2013. The full journal is available at
www.ey.com/performance
Excellence in Operations: helping banks regain customer trust
Banks run the risk
of disenfranchizing
customers and
losing valuable
revenue streams.
I
n order to differentiate themselves,
banks have to focus first on the basic
services that customers expect. People
want new accounts opened quickly and
efficiently without complications when
making payment instructions. This is
according to recent EY research1 of 28,560
banking customers in 35 countries (see
Figure 1).
Excellence in Operations can only be
achieved when operations are linked with
the basic services customers expect. This
approach will address some of the basic
banking processes that matter most to
customers, creating a foundation for more
strategic improvements that will also allow
more innovative changes thereby achieving
greater benefits.
The following outlines what that actually
means in practice:
1. Cost and efficiency remain the main
focus but EY is arguing that a customer
focus helps to optimize benefits,
especially over a medium- to long-term
horizon. If banks do not consider the
critical customer interactions outlined
in Figure 1, when implementing cost
reduction initiatives or efficiency
improvements, they run the risk of
disenfranchizing their customers and
losing valuable revenue streams. These
interactions may seem trivial but it is
precisely these that cause customers to
complain and ultimately leave.
2. Banks need to look at true end-to-end
processes across organizational and
functional boundaries to achieve full
Excellence in Operations. This spans
across front and back office and
includes all channels used to interact
32
with customers. Prioritizing around
critical customer interactions will help
define end-to-end processes that really
matter to customers. Any automation,
streamlining and sourcing activities, as
well as regulatory changes, affecting
these processes will require technology
investments that can only achieve full
benefits if they help to reduce errors
and improve service levels. This means
business changes will drive technology
and not the other way round.
3. The following are just a few examples
of where focus on critical customer
interactions is
essential:
a. Changes to
fees and pricing
structure.
Pricing is critical
to customer
satisfaction,
however,
customers are
most dissatisfied
with changes
in fees and
pricing structure
that are not
transparent
Organizational layer
and not
communicated
appropriately.
This makes
it difficult to
compare the
overall price
of products
and services
Volume 5 │ Issue 3
and changes often come as a surprise.
Transparency over changes to fees and
charging structure is vital if banks are to
deliver something customers value. This
is one of the most complained about
areas. Leading banks, for example,
are proactively seeking feedback
about changes to fees and have a
formal annual plan as part of their
communications strategy. Some also
leverage new technology such as social
media to gather such feedback.
b. Account opening. Banks often have
different processes for different
products and channels. Nowadays,
Figure 1. Critical customer interactions
Account
opening
Account
closure
Account
switching
Changes
to fees and
charging
structure
Complaints
Critical
customer
interactions
Change of
account
details
Life
events
Setting
up a
payment
First time
in
collections
Lost or
stolen
cards
This article is an extract from Performance, Volume 5, Issue 3, August 2013. The full journal is available at
www.ey.com/performance
Banks should aim
to recruit their
satisfied customers
as advocates.
these are heavily impacted by
regulations such as FATCA, AML
and KYC2 requiring different change
programs to ensure regulatory
compliance. The end customer is
impacted several times over a relatively
short period of time and customers do
not “buy” the story from banks that
they have to do this for regulatory
compliance. Leading banks have a
full end-to-end view of this process
and coordinate any regulatory impact
carefully. In addition, they monitor
colleague effectiveness with regard
to account opening through robust
methods of assessment, focusing on the
whole customer relationship rather than
product silos.
c. First time in collections. Errors and
inappropriate collections processes are
likely to further distress the customer,
resulting in their leaving the bank.
It is critical to apply the appropriate
treatment especially when customers
trigger collections events for the first
time. Leading banks establish the facts
first as part of their pre-delinquency
across the entire relationship to ensure
customers do not receive a collections
call when they are entirely able to repay
the debt.
In summary, there are a number of bank
interactions that are particularly important
to customers. Banks should, therefore,
focus on operational improvements that are
1. Global consumer banking survey, EY, 2012.
2. Foreign Account Tax Compliance Act (FATCA ), Anti Money
Laundering (AML), know your customer (KYC).
3. European Retail Banking Survey, Economist Intelligence Unit
and EY, 2011.
targeted specifically at these processes so
that they can optimize the benefits of cost
reduction and efficiency improvements as
well as reduce customer complaints and
attrition and boost revenue. Banks that
recognize this will have a real competitive
advantage in the market.
Customers want a flexible
relationship with their bank
Failing to get the basics right will lead to
more complaints and loss of revenue from
customers who switch banks. Indeed, a
study by EY with the Economist Intelligence
Unit3 shows that nearly a quarter of
European banks lose over 10% of their
customers. Additional EY research reveals
that over 60% of customers in Europe, who
have switched their main bank recently,
quoted poor service quality as a reason.
This was far more of an issue than price.
Globally, the number of people looking to
change banks has increased from 7% to 12%
since 2011. People want more than a better
deal, they want their bank to provide basic
services correctly and consistently via all
chosen channels.
The challenge for banks is to retain
customers in a market filled with
alternatives. Regulation and new payment
platforms such as the Single Euro Payments
Area, which simplifies cross-border bank
transfers by allowing individuals and
businesses to make and receive card
payments across the Eurozone, will give
people even more banking options. The
upshot is that banks need to do more than
reduce costs and improve efficiency to
avoid losing customers to other banking
service providers. They need to ensure that
future revenue is guaranteed and address
both sides of profitability. Operations and
customer services should be linked and not
addressed in isolation. Only then can banks
address the key operational challenges they
currently face, as summarized in Figure 2.
To assist the banking industry, EY
has developed a framework and tools
that will help banks achieve Excellence
in Operations by addressing operational
challenges, customer needs and regulatory
impact, simultaneously.
Why should banks consider
Excellence in Operations?
The key benefits of applying Excellence in
Operations are:
1. The customer is at the center of
operations. EY research has shown
that customers are most upset
about poor service and operational
errors. Excellence in Operations puts
customers first by focusing on their
needs. Doing this, cuts the volume of
complaints and reduces the number of
people wishing to leave the bank. The
customer benefits also strengthen the
business case for operational change.
2. Regulatory changes and regulatory
compliance are considered
simultaneously with business
changes. This is an integral part of the
Excellence in Operations approach as
implementing regulatory changes is
often done separately, which is not only
more costly but, when not coordinated
properly, can lead to delays and
confused customers.
3. EY can help banks achieve Excellence
33
This article is an extract from Performance, Volume 5, Issue 3, August 2013. The full journal is available at
www.ey.com/performance
Excellence in Operations: helping banks regain customer trust
Figure 2. How to regain customers’ trust: the challenges
Customer service
Retail banks are struggling to get basic services right. Complaints are rising sharply and customers are already moving elsewhere due to poor service
quality or operational errors, e.g., delayed payments, errors in the account-switching process, frustration with interactive voice recognition (IVR)
technology applied at most contact centers.
Risk, tax and
regulatory
Banks often have separate projects to consider risk and regulatory compliance as well as tax implications. This is costly and frequently leads to delays of
related change programs and, in some cases, all of the operational benefits are eliminated by the huge tax impact. The challenge is to consider risk, tax
and compliance at the same time when changing operating models and related processes and considering customer service impacts.
Cost and
efficiency
Cost and efficiency is often addressed in a tactical fashion in a particular organizational unit. The challenge is to address cost and efficiency strategically
across the organization and prioritize those areas that are important to clients.
IT implementation
and enablement
IT implementation and enablement is very costly. The challenge is to implement cost-effective and efficient technology across the front and back end of
an organization, prioritizing relevant critical customer interactions so that the business can drive technology and not the other way around.
People and
change
Significant change across all or most of an organization impacts mainly the people and culture. The challenge is to create the
right environment and incentives to ensure that people will behave in the desired way and people and change issues are dealt
with effectively. Benefits are quickly eroded if employees are not behind the changes.
in Operations across the entire life
cycle of transformational changes via
specific tools and methods, ranging
from assessing a bank’s maturity
against critical customer interactions,
to designing and implementing a
new operating model, and applying
business process management tools to
optimize costs and similar. These can be
applied across the whole organization
or within a specific function such
as complaints, collections and
recoveries. Our approach is sufficiently
flexible to allow it to suit particular
business requirements.
Putting Excellence in
Operations into practice
Achieving Excellence in Operations is a
journey for most banks. It will involve
having to make changes to their current
operating model, streamlining processes,
considering control enhancements and
employing the latest technology. The key
is that all of this will have sub-optimal
benefits if the impact on the end customer
is not considered. EY has developed a tool
that allows banks to initially assess and
monitor their maturity against the critical
customer interactions. This way, cost and
efficiency benefits are measured against
customer benefits specifically relating to
improved service quality and operational
error reduction.
For example, when acquiring or selling
off part of its operation, a bank needs to
develop transitional and target-operating
models. The right operating model is the
one that considers the customer and
34
prevents operational benefits from being
eroded by revenue losses. We can also
focus on specific operational areas, such
as complaints, collections and payments so
that they work correctly and efficiently to
make sure customer interaction continues
smoothly. For instance, the Mortgage
Market Review is due to take effect in April
2014 and many mortgage providers are
getting ready to change processes and
controls to meet with the new regulations,
when providing mortgage-related advice.
Banks need to consider not only
regulatory requirements but also the impact
changes may have on their customers,
especially from a mortgage servicing point
of view. Meeting the customers’ needs is
heavily dependent on operational capacity
and capabilities, and new processes and
Figure 3. What are the key
considerations when seeking
to achieve Excellence
in Operations?
Align your
operating model
with the overall
strategy
Use technology
tools to
automate
and manage
operational
capacity
Consider
cultural and
people change
aspects
Aim for
strategic cost
optimization
rather than
tactical cost
reduction
Consider the
real impact of
your business
and changes on
customers
Align your
organization
to the new
strategy
Apply business
process
management
tools to true
end-to-end
processes
Review and
adjust your
IT capability
alongside
your business
changes
Use PMOs
effectively and
align structure
when necessary
Volume 5 │ Issue 3
controls need to be implemented at the
front and back end of the operation. A
holistic end-to-end approach across all
relevant critical customer interactions is key
to achieving efficient processes, regulatory
compliance and customer satisfaction.
Figure 3 provides an overview of
considerations that banks need to go
through en route during the Excellence in
Operations journey. At the center is the
customer. It is essential that banks are able
to identify the best and worst aspects of
their products and services. This will help
to address any shortcomings. Carrying
out a maturity assessment using the new
MAP10 tool (see the final section of this
article) can help banks improve in the areas
that are most important to their customers.
This boosts confidence and reduces the
number of frustrated people who might
consider leaving.
At a time when people are giving short
shrift to financial institutes, banks simply
cannot afford to lose sight of the basics.
Get those right and they will be in a strong
position to not only retain customers, but
also attract new ones from other banks that
fail to deliver. 
This article is an extract from Performance, Volume 5, Issue 3, August 2013. The full journal is available at
www.ey.com/performance
Figure 4. Sample screen shots from MAP10 — the
assessment tool
Maturity assessment profile
Figure 5. Critical customer interaction assessment results
Operational strategy
4
3
2
Process
and policy
People and
organization
1
Performance
management
Technology and
data
Level 4
Level 3
Level 2
Level 1
Leading
Established
Basic
Underdeveloped
The organization
does not have
an adequate
plan to address
challenges.
Usually reactive
and on an ad hoc
basis only.
The organization
has a basic or
fundamental
approach to
addressing
the issues and
concerns in this
area.
The organization
has a formal plan
or approach to
deal with the
issues, problems
and risks in the
challenge area.
The organization
is a leader
among its peer
group in this area
and leverages
leading practices
to create value,
manage risks and
rationalize costs.
The MAP10 tool is unique in the market, as it assesses the maturity
of each of the 10 critical customer interactions across 5 key
operating model dimensions, i.e., strategy, people and organization,
performance management, policy and processes, technology
and data.
The tool allows banks to identify their current maturity against
the critical customer interactions and benchmark this to EY’s
leading practices from the industry. This will then help to determine
a target model and prioritize on areas that really matter to
their customers.
Figure 4 shows an online demo of the tool. The questions are
aligned to four different maturity levels, from underdeveloped
to leading. The levels are based on EY’s benchmarks and will be
updated as and when more up to date information is available.
The example shown in Figure 5 shows the assessment
results of a bank that had recently introduced a state-of-the-art
account opening system and aligned all relevant processes to
it. The initial assessment shown in the spider diagram clearly
shows the technology and data dimension as “leading” whereas
other dimensions have been assessed more as “basic” or
“underdeveloped.”
Based on this assessment, it became clear that more work
was required in setting transparent KPIs to measure and control
the performance of the business to drive the right behavior. Also,
staff needed to be reorganized and retrained to avoid errors
and duplications.
The MAP10 tool is essential for any major bank that is
embarking on significant changes across its organization. The tool
can be applied at the beginning and again at various checkpoints.
However, if a bank has already started its changes, it is never too
late to consider the customer impact. By using the tool, banks
will have a clear understanding of their maturity against relevant
critical customer interactions and this will help develop their change
strategy and prioritize as to what they need to address within the
business to maintain or improve customer satisfaction. 
35