The Evolution Of Operations And What To Expect Next?

Venkatesh Subbaraman, Regional Chief Operating Officer, ANZ Headquartered in Melbourne, ANZ is one of the world's largest bank, which provides services for retail, commercial & international customers through consumer & corporate offerings in core markets, regional trade and capital flows across the region.

In Elon Musk’s 2015 biography the author referred to the prediction by a physicist named Jonathan Heubener that the probability of us discovering another top-one-hundred-type invention gets smaller and smaller. Game-changing ideas such as the wheel, electricity, the airplane, and the television have already been invented, transforming the lives of billions of people along the way. Whilst Musk is trying his best to get into the Top 100 with SpaceX, Tesla Motors, and SolarCity, banking is not really expected to face such a revolution. We expect to see more of a constant evolution in our industry. (This assumes, of course, that Musk continues to be pre-occupied with his current ventures!)

From 'Back - Office' to a Trusted Business Partner
Over the last decade or so, the Operations function in the banking context has emerged from the tag of ‘back-office’ to being a trusted business partner - one that occupies a seat at the leadership table equal to any of the other CXO roles.

This recognition has come about from the increasingly significant role CIO’s and their staff play in supporting the customers. Operations have always had the benefit of many touch points with Clients and over the years this natural connection has been leveraged to increase the quality of those interactions and thereby enhance the relevance of the function. There are three main areas, where the Operations function has been adding value to the organization through the years:

1. Standardization of Systems & Processes – An exponential increase in STP(straight through processing) for client-initiated transactions has been realized. This has been a priority for product areas with high transaction volumes where no-one in the bank touches the transaction, thanks to the efforts to integrate many Interconnecting systems. Standardization of systems has also enabled centralization of manual processes to offshore service centers to leverage the benefits of scale, best practice across multiple countries, and a standard service offering.

2. Data Analytics - The sheer magnitude of data stored in bank databases has driven a whole new Industry in data analytics. For example, this creates an opportunity for us to analyze the nature of the many thousands of client inquiries
and work with them individually to understand their needs better. This, in turn, enables us to help customers get the required information faster or remove the need to make the inquiry altogether (via self-serve options). Either way, there is a time saving both for the client and for the bank.

3. Revenue Enablement - Operations teams are fully empowered to work directly with clients to support revenue initiatives, e.g. operations can look at unutilized loan limits and encourage utilization.

The above initiatives have helped Operations play a more meaningful role in the customer experience. Capacity created has been used to reduce cost, reinvest in process improvement efforts and re-orient operations staff from manual transaction processing to proactively satisfying internal and external clients.

What does the Future Look like for Operations?
Competition in banking has gone up many notches, thanks to the rise of non-bank players such as crypto currencies, peer to peer lending and ambitious fintechs who are all gunning for a slice of lucrative market share.

Operations will play an integral role by having a real impact on earnings’ growth and controlling costs

To stay relevant we expect to see a constant evolution in banking and consequently in operations. A number of themes are emerging that will be part of the future of operations. Below I describe a few of these:

1. Silos – Banks will be more adaptable, faster to market and more scalable. Historical boundaries between operations, technology, product, and risk will disappear. Dependencies between departments will not be constrained as new teams are created with change agents that have relevant expertise who are collectively fully empowered to develop and deploy bank-wide solutions. Change delivery disciplines such as Agile will be fundamental to successfully delivering the required volume and pace of change.

2. Convergence – The allocation of financial and people resources into systems development will be prioritized. Highly-automated systems that allow clients to transact real-time will fundamentally change the way they interact with the bank. Clients will be trained to be able to configure the systems without having to request the bank to develop expensive technology patches. This will improve customer loyalty for those banks that are able to do this first and are able to incorporate the ever-changing and onerous risk and compliance requirements.

3. Functional & Multi-product Experts - Operations teams will be organized across the value chain which includes functions such as onboarding, transaction management, and servicing. This is a shift from the traditional product unit set-up that is typical in banking operations. The result will be flatter structures, reduced number of teams and an increase in the breadth of products supported by tech-savvy operations experts.

4. Client Facing Value – Operations will have more customer touch points with clients and their role will become more sophisticated as they help them migrate to new ways of banking. Operations will lead customer events, tapping into the areas where there is clearly a demand for sharing expertise.

5. Values & Behaviors – Success in the new world will be underpinned by the banks’ greatest asset – its people. Navigating through a constant evolution will be much easier for people that have a growth mindset and are able to work together. A stronger emphasis on Values is expected, with a premium placed on collaborative work styles. Gone are the days of the big boss delegating and command-and-control workplaces. Seasoned leaders and subject matter experts that can ‘leave the title at the door’ for the good of the organization will thrive.

The above trends will typify the evolution of operations and the integral role they play in helping the Organization in the coming period. Operations will play an integral role by having a real impact on earnings’ growth and controlling costs.