Can banks lean out?

Posted on 25 Nov 2011

Roberto Priolo attends an event on banking and comes home with many good tips on what makes a bank a real lean organisation.

Thinking about one of the most important principles in lean, always be in tune with what your customer values, one could be inclined to think that banks are possibly the organisations that least comply to this rule.

When clients walk into a branch of their bank, they expect somebody who is going to care about them, who is going to look after them, their savings and their investments. Somebody they can trust.

Frequently, however, bankers are seen as merely interested in money. What a customer means to many of them is a bonus at the end of the year or the chance to close an extra deal. Is this why it sometimes seems difficult to apply lean methodologies to the sector?

Maybe, but there is also another reason. Banking as an industry is very different from manufacturing, where lean ideas were first generated, and many seem to think that it is not possible to adapt those principles to the sector. The reality, however, is that the services banks offer are not that different from a manufactured good. The processes necessary to get to the end product or service are the same, and the outcome (a satisfied customer) has to be the same as well.

These are some of the concepts yesterday’s Making life simpler for customers seminar in Cambridge, organised by consultancy oee, touched on. The line-up of speakers was impressive. The first of them was Dan Jones, who shared his impressive portfolio of experiences with an engaged audience. He talked about where lean is going as the customer base changes and about the work he did with Tesco (and how the company managed to reach number one in the online shopping market in South Korea thanks to the deployment of virtual stores set up in subway stations where people can shop using their smartphones) and about the deployment of lean in hospitals.

It was then the turn of oee’s managing consultant Chris Hallmark, who gave an insight into a very bad customer experience he had had with a telecommunication firm while trying to get back online after his phone line had been disconnected (we all have one of those, don’t we?). His enlightening presentation helped the audience understand what companies shouldn’t do, and offered several tips as to how they can actually make life easier for customers.

After lunch (discussion at tables inevitably focused to the debt crisis in Europe – after all, it was a room full of bankers), Joseph DiVanna proved to be the perfect antidote to what is usually the sleepiest slot at any conference, the one right after lunch.

DiVanna gave a very interesting and lively presentation on how banks are changing around the world. He has been working with banks for several years, and has a very good idea of what they think of themselves, of what customers think of them and what the examples of best practice in the sector are. He showed pictures of so many types of banks that we were all left with our heads spinning: from m pesa in Kenya, which transformed the way payments are delivered by enabling people to pay for anything using their mobile phone (it now controls 65% of all the transactions taking place in the country), to many other examples of banks that actually listened to their customers’ requirements and developed their offering around them. Some serve miners, others only serve women interested in starting an enterprise, others appeal to young people, others help you manage your monthly budget or offer you plans based on what other people with a similar way of life tend to be interested in.

Closing the one-day conference was Alan Mitchell, strategy director of Ctrl Shift, a firm that is developing a new way to offer value, by giving information (and therefore power) back to customers. They believe that the best way for organisations to flourish today is to start with the question “What do individuals want to achieve?”

Its approach is based on the fact that consumer power is on the rise, and empowering consumers is a fast-growing business opportunity. To achieve this Ctrl shift helps organisations understand and track the many different manifestations of the control shift (definitions of value, uses of information, etc) and find new opportunities within these shifts.

So, what is the reality of lean in the banking sector? Once again, what is needed is a cultural change. Brilliant successful cases abound, like yesterday’s seminar showed, but without a new mindset that keeps the customer at its core it will be difficult for banks to move forward in the age of the empowered consumer and reap all the benefits that a customer-centric approach can bring. And people will be even more tempted to keep their savings under the mattress.

Photo by 401K, on Flickr


Roberto Priolo

Editor, the Lean Management Journal