How BPM helped Australia’s largest customer-owned bank originate an extra $12 million annually
Although it’s only a bank of 815 staff, Heritage Bank has made strong savings and increased sales by developing a BPM capability.
David Johnston, Business Process Manager at Heritage Bank, explains to me that by pursuing BPM and rolling out a process architecture, the organisation has been given a strong competitive advantage.
"We’re only a year in, but BPM has already made a strong impact on several of our major processes. An increase of approximately $12 million worth of total personal lending and credit card origination is expected annually, as a result of an improvement project in these core lending processes," he says.
"Importantly, the time to fund a loan has already decreased by half so far, with further improvements expected. In addition, these changes allow frontline staff to focus more on building meaningful relationships with our customers, which is fundamental to our People First ethos, instead of undertaking processing tasks."
On top of these projects, Heritage’s BPM team has been critical in driving smaller process improvements across the organisation. During the first year, these smaller changes have delivered a financial saving of almost $300,000, plus efficiency and most importantly, customer service improvements.
There are several challenges being felt, however, with the Bank being a functionally-based organisation. The combination of multiple disparate data sources and business units means embedding a process culture hasn’t been smooth sailing. David explains:
"Our HR team is a celebrated mainstay at the Bank, especially for our employee engagement and workforce culture. But it’s also completely self-reliant as a business unit.
"For a BPM practitioner, we need them to collaborate with other departments and come to us for help. They have an incredible amount of small processes, which suit smaller, continuous improvements rather than the major improvement projects of the core lending processes."
The ideal approach, he tells me, would be for BPM teams to take on large process improvement projects. However, whilst there are departments, like HR or Banking
Operations which remain ripe with opportunities for smaller process improvements, it’s up to the Bank’s team to encourage a culture of improvement.
Metrics and culture
Additionally, visualising KPIs has proved to be a tough ask because of the initial reporting methods employed:
"When we started this journey a year ago, our management reporting through scorecards related mostly towards financial measures. There were some project measures, capability measures and people measures, but no process measures whatsoever.
"We could tell you exactly how many personal loans were issued as well as the dollar value of the total loan portfolio, but we couldn’t tell you how long the average personal loan took to fulfill," David remarks.
To eliminate this gap, a measurement principle has been embedded into the process culture design to encourage awareness on monitoring and tracking core processes. Several management dashboards have been developed – in conjunction with an in-house business intelligence team – to address process cycle times and capture the appropriate data.
"Process culture nurtures and sustains each business process and continuously aligns it to the overall organisational goals," David notes.
Entrenching such a culture in financial services organisations isn’t a cake walk by any means, but neither is it an overly intricate or near-impossible task. Heritage Bank’s case reflects several key questions which need to be addressed at the start of this journey:
- Are you driving up the revenue in the organisation or driving down the costs?
- Are you driving process monitoring and optimisation?
- Are you driving standardisation across geographies, product units?
- Are you re-vamping your organisation to the new market dynamics and changes?