Need of Lean Practices in Pakistani Banks

(Improving Banking CX in Pakistan - Part 1)

Lean principles in Banks? A decade ago, it was a strange idea. However, in the today’s competitive market, increase in customer expectations have forced organizations to reconsider their operational activities and to become more efficient in order to provide better Customer Experience to their customer base or its retention.

It has been acknowledged now, that Customer Experience can be optimized through elimination of “Process waste” in the business processes related to BAU. In banking operations terminology, it can be referred to redundant processes that will result in waste of time, efforts and services. This is where we will need Lean business strategy.

Why Go Lean?

Since the inception of Lean methodology in early 90s, it was engaged only for Production related industries/firms, however, with the passage of time, it has been endorsed that it can be applied to any business. People and companies started understating that Lean is not any Cost Controlling Tool. For many years, lean was considered only for manufacturing industries. However, recent researches have shown that lean can be practiced in every business. It is not a cost reduction approach or program, but it is a state of mind, a way of thinking for organizations.

How it works?

In order to deal with the issue of process redundancies and leakage in Customer Experience or retain existing customers, banks must adopt the approach to focus on customer-centric strategy. All the banks more or less offer almost similar type of financial products which leaves good customer services a competitive edge for banks. The main issue is that mostly local banks are more inclined towards measuring the performance of their employees in terms of Sales and Revenue and loose focus on their behaviors that are directly associated with customer journey. Customers remains unsatisfied when errors made by their banks during the BAU which is due to the fact that employees are focused on selling their product rather than satisfying their clients. The banking sector in Pakistan, specifically its Retail face has been unanimously being under-rated for the customer experience. Not only the Big Banks but mid sized as well as Microfinance Banks usually focus on HNW clientele and not vey much focused on improving their overall customer journey, besides there are several efforts being paid at intervals but most of time it is not led by Lean methods rather than relying of coordination and interacting with clients as per need. Complaint management efforts are also placed but the core issue of process redundancies is not completely addressed. Customers usually face delays and errors, there is need of holistic change of process mapping, not limited to the inclusion of top management in exhibiting commitment to lean practices, but leading the way to frontline staff who should feel empowered to contribute by methods and not will.

Way out!

Lean principles can be implemented to banking operations directly. By applying various lean principles and tools Pakistani banks can not only reduce the time require to perform their BAU, but they can eradicate inefficient and sluggish activities to reduce business cost. Moreover, through the Lean practices, banks can reduce cost up-to 25/30 percent that are spent on lengthy SOPs. They can improve the response time and achieve healthy CX.

The idea should be to identify any process step that doesn’t add value to the product or services meant for customers, and then get rid of it. This would be a “Process waste”.

The famous Japanese 3S Lean principles are best suited for banking process improvements. 1. Sort, 2. Sweep, 3. Standardize, and use it wherever deem fit. They are simple methods to remove the issues that problems customers.