FINANCIAL SERVICES INNOVATION
New ideas for banking and insurance
Friday 14 March 2008, 9:06 AM
Bankers borrow from industrialists
(Financial PLM)
On 4 May 2007 Barclays Wealth won an award for Financial Services Operational Excellence - at the Six Sigma IQ Awards sponsored by Venturehaus. The BBCs John Simpson hosted the dinner and prize giving ceremony. The success of Barclays Wealth was down to their client service improvement programme.
Using a good idea from one sector and applying it to another can be very rewarding. When in 1913 Henry Ford invented the first large moving assembly line, he may not have had ABN AMRO, RBS Group or Barclays in mind, but these banks are always looking for new ways to achieve production line efficiencies. Of course Henry Ford himself was inspired by companies from other sectors - like the Chicago meat-packers that used overhead trolleys and the grain mills with their conveyor belts. His cleverest idea was to transpose the concept to the automotive industry and develop it.
Banks constantly trying to improve operational efficiency and they need to industrialise to become more efficient. Their Target Operating Models need to separate production from sales and distribution – just like in manufacturing. Production is better centralised so that you can introduce best practice and achieve economies of scale. Methods such as LEAN, pioneered by Toyota in car manufacturing, have been successfully applied to improve back-office processing of financial products. Six Sigma developed by Motorola and famously sponsored by Jack Welsh at GE has been used by ABN AMRO to implement a consolidated approach for global deployment of new systems.
Its all about aligning your products with your clients’ needs and your manufacturing capability with those products, but banks still have a lot to learn about managing products. You rarely hear talk about Product Life-cycle Management (PLM) in banking circles, but this area is ripe for development by Tier 1 banks. They can once more learn the lessons of manufacturing; introduce best practice and efficiencies. We could call it Financial PLM.
Do any readers have experience of Financial PLM in banking? I would love to hear from you.
