Three interesting OpEx trends in financial services

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Craig Sharp

Ahead of next week's Operational Excellence in Financial Services in New York, we decided to take a look at the financial sector sample from our PEX survey in isolation to discover if anything particularly interesting was going on in the world of OpEx financial services.

Given the on-going legislative upheaval within financial services, it’s no wonder that there’s a lot of noise surrounding Operational Excellence. The question on our lips though is this: Is it just noise, or are there real moves towards achieving the excellence the industry says it aspires to?

The annual PEX Report, which is now available for free download here, is our annual opportunity to take the pulse of the process excellence movement and gauge where industries are and hope to be in the coming years.

Take a long term view of operational excellence

Read on to learn what we’ve found in the financial sector sample…

1. Function first – an overwhelming majority are looking to work smarter, not harder.

The first discovery we made when trawling through the hundreds of response we’ve received was that the bulk of OpEx projects tackled within financial services are functionality based.

When asked ‘Which best describes the type of process improvement project your company tackles?’ an overwhelming majority (55%) answered ‘Functionally-based - improvements typically focus on optimizing work within one business unit/functional silo.

There could be a number of causes for this, one primary factor according to our research is that the financial pinch is still being felt in all quarters, and with decreased budgets, departments are expected to do more with less – which puts work process optimization at the top of a very long to-do list.

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Interestingly, 17.5% of respondents say their companies favour a quick win - smaller and less ambitious projects with a faster turnaround.

Unsurprisingly, of all of the respondents who selected this option, not a single one worked at a company who’d had a process excellence team for longer than 2 years. It’s an undisputed truth that OpEx projects live and die with executive buy-in, and those early, formative days are laden with a large amount of pressure to provide deliverables, perhaps making the low hanging fruit seem more tempting early on?

2. There is too much focus on short term gains

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The second interesting finding to come out of our research pertains to challenges in the year ahead and worryingly, the runaway winner of the poll was ‘Overcoming too much short-term focus’.

Given the sheer volume of new regulatory requirements coming soon to a financial institution near you, this perceived lack of long-term vision is quite alarming and can have an adverse effect on new processes being adopted and sustained over the long term.

We’ve spoken previously of how the likes of Basel III and Solvency II won’t just add new layers of bureaucracy; they’ll virtually transform the internal mechanisms through which you do business. This isn’t a quick win or yet more low-hanging fruit, these are sustained, institutional changes that are required not just for your business to stay competitive, but to stay legally compliant and solvent.

Brush away the science and analysis for one moment and process excellence is a habit making and breaking business. Depending on who you ask it can take as little as 21 days or a long as 12 weeks to form a new habit. The number varies from person to person because naturally, while we’re all inherently averse to change on some level, we’re all individuals and are resistant to different extremes. So when the regulations finally begin to kick in in the next couple of years, a short-term attitude will be the quickest route to failure.

What’s needed now is investment in change agents – the operationally excellent within your organisation need support from the highest levels in order to not only affect change but to instil a positive reaction to change among staff who, for now at least, may be in for a rude awakening.

3. Verbal commitment is easy, financial commitment is another matter

This stat is particularly surprising because at first glance it would seem to contradict everything we said in section #2. An impressive 47.5% of respondents states that process excellence is viewed as one of the top priorities within their company. That’s impressive.

But take a second look at the chart below, 37.5% have said that getting anyone to commit resources or budget is difficult.

Add to this the #1 concern of OpEx professionals for the year ahead – switching focus from short term gains to long term improvement - and we now have a bit of an issue on our hands.

The issue that often holds back success is a lack of executive buy-in, however execs don’t always begin with these projects as uninspired. Very often they can begin enthusiastically, only for that enthusiasm to dissipate in the absence of quantifiable results as the weeks and months progress. Which would then potentially move your company from #A to #C in our chart below.

What causes this? It can very often be the short term expectations vs the long term reality of a fruitful process excellence project. And this is as much about undertaking the task for the right reasons as it is about managing executive expectations.

If your company are engaging in OpEx for marketing and PR purposes (as would be supported by our second most popular response – a lack of resource investment) then honestly, your resources are probably better spent elsewhere, give them to your marketing and PR departments.

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A commitment to OpEx is a commitment over the long term, fed by a genuine desire to improve your business operations not just for your customers and shareholders, but also for your front-line staff and everyone in between. A more altruistic attitude is sometimes needed in the initial months in order for your company to realise real financial and production benefits further down the line.

What do you think of our findings? Are they indicitive of anything your seeing or experiencing within your industry?