How bank COOs can unlock value at scale and speed with zero operations

Chief Operating Officers (COOs) can accelerate transformation through embedding a "zero operations" mindset in their organizations.

In brief

• Reframing operations will drive end-to-end (E2E) journey transformation with higher returns on investment.
• COOs can enable faster and greater growth, accelerating the transformation of customer experience, cost efficiency, scalability and controls.
• In a complex operating environment, people benefit from the augmentation of their decisions and from being placed at the center of ongoing transformation.

To respond to ever more relentless customer demands while maintaining trust and stripping complexity and cost from operations, today’s banking COO must:

• Enable transparent, highly intuitive, personal and streamlined service delivery, primarily through digital self-service channels.
• Ensure innovative, automated operations with staff primarily focused on exception management, customer service and continuous improvement.
• Deliver scalable, sustainable, highly measured operations with the agility and discipline to shift rapidly with changing market, product and client needs.
• Ensure high-quality risk management, including data, privacy and resiliency.

COOs are under pressure to make operational activity faster, cheaper, safer and more sustainable. As most COOs are accountable for technology, they are critical to the future success of the bank.

Within this broad agenda, there are four aspects of transformation COOs should increase their focus on:

1) Reframe operations

To magnify the scale and speed of value creation, COOs need to work even more closely with their C-suite colleagues to reframe operations. Together, they must look at the bank’s highest possible proportion of operational activity, then apply the same or similar transformation levers across this expanded scope. For most banks, we believe this expanded view, which could include all servicing and “middle office” support activities post origination, would capture at least 30% to 35% more baseline headcount than currently defined solely in their operations functions. It’s an approach that will generate several advantages, including:

• Moving closer to the external customer service interactions in key value streams, making it easier to ultimately achieve end-to-end (E2E) journey transformation
• The increased ability to support innovative or disruptive products, channels and services that may be launched at speed
• A greater ability to drive consistency and simplification, reducing operational complexity, cost and risk
• A greater return on investment through increased economies of scale of transformation delivery

2) Move to a zero-operations mindset

To deliver this operational future state at scale and speed, COOs need to lead with and embed a zero-operations mindset across their organizations:

• Zero touch: 100% straight-through processing (STP) enabled by data-driven, predictive and proactive operations with embedded controls
• Zero latency: real-time processing, while ensuring compliance with data protection and privacy regulation
• Zero waste: elimination of activities that don’t create value for customers
• Zero breaks: ensuring quality with no defects or control failures
• Zero cost: elimination of “bad” cost, diverting that spend toward innovation at scale and agility to deliver sustainable growth
• Zero carbon: sustainable decarbonization of operational activities, including those provided by ecosystem partners and suppliers

Applying “Future-first” thinking, COOs need to ensure they define a vision such as this, signaling a change in mindset and perspective with a clear objective. It will drive much higher levels of consciousness on decisions. For example, although a fully digitized E2E journey may not be appropriate for all customer segments, it provides discipline around introducing human interaction at moments that matter. These include those ensuring financial inclusion and, in the UK, adherence to the recently introduced Consumer Duty regulations for retail banking customers.

As illustrated below, this approach will need to be delivered through unconstrained zero-based “leapfrog” initiatives, a robustly managed “stop” portfolio focused on ceasing non-value-adding tasks and an “incremental” portfolio that progressively contributes to the defined vision.