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Operational resilience takes “center stage” at financial institutions


Process transformation, automation portfolios, and Lean Six Sigma training are key to improving FIs’ operational resiliency.


In brief

  • FIs are safeguarding their businesses by simplifying processes, accelerating automation and revisiting the value of programs such as continuous improvement.
  • Business optimization can be achieved through automation portfolios using BPM and by employing robotics, artificial intelligence and decisioning tools.
  • Lean Six Sigma is not new, but it is having a “renaissance” to complement additional strategies to improve processes across an organization.

It’s no secret that the disruption caused by the COVID-19 pandemic laid bare financial services organizations’ operational challenges and inefficiencies. But forward-thinking financial institutions (FIs) are using the experiences of the last 22 months to safeguard their businesses to increase resilience, improve sustainability and drive growth.

They’re making bold moves to reimagine and reconfigure their operations and processes by focusing on three themes — process simplification, acceleration of automation and revisiting the value of programs such as continuous improvement — to help them not only maintain but strengthen their marketplace position.

Offshoring business processes: Key challenges

FIs with offshored business processes were caught off guard by a myriad of infrastructure failures that exposed them to significant operational risks during the onset of pandemic-issued quarantines. When many offshore countries instituted country-wide shutdowns, FIs were forced to return to an “onshore” business model as outsourcing providers struggled to meet demands. The FIs found that knowledgeable onshore resources were few and far between, as they had long since outsourced the bulk of operational work and were compelled to hire high-cost, onshore contractors.

Many offshore outsourcing providers, burdened with a lack of infrastructure for handling work from home, were prevented from fulfilling their service-level agreements (SLAs), causing detrimental force majeures. This lack of business continuity planning, coupled with inexperienced onshore contractors, affected overall business operations, and uncovered a previously unknown vulnerability in their risk management.

At present, many FIs are still recovering and working to right-size their operations. They’re reassessing their relationships with and reliance on third-party outsourcing providers while also examining their overall business continuity plans to protect their businesses against further disruptions. They’ve recognized that the operations and processes that were effective pre-pandemic may need to be reassessed and improved upon to drive future business resilience and operational effectiveness for more successful outcomes against future threats. Some FIs have realized that process transformation, automation portfolios and Lean Six Sigma training are key to improving resiliency while serving their customers better, faster and more economically.

Cooperation process of professionals analyzing information
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Chapter 1

Case study: Leveraging business process to drive modernization

The technology footprint and operational approach were modernized by using process transformation, ARIS and opportunity identification.

Leveraging business process to drive modernization

Emerging from the pandemic, a capital markets utility firm needed to modernize its technology footprint and operational approach to reduce dependency and use of mainframe applications. It also needed to design the future state for automation/straight-through processing and strengthen operational resiliency to deliver improved client satisfaction, mitigate risk and drive efficiency.

How we helped drive modernization

The company turned to an EY team for assistance with its IT modernization and operational assessment. The project required deep experience in business process innovation methods to facilitate visioning and reimagining of operational processes. We helped the firm establish its business architecture function and define its capability, process taxonomy and business architecture approach to the process definition.

The ARIS business process modeling tool was implemented to manage the company’s capability model, map current state processes and create linkages to systems, data, risks, controls and business rules. These inputs were then leveraged to assess the current state for improvement opportunities.

An EY team helped the company establish a replicable “process factory” approach to map current state processes for two proof-of-concept business areas, defining over 80 business processes for the organization. In addition, we helped the company reimagine its business processes for future state modernization by implementing a series of EY accelerators with the company’s key business and technology stakeholders across 18 business areas.

The result: by successfully leveraging process transformation, implementing the ARIS tool and employing opportunity identification with current and future state planning, the company modernized its technology footprint and operational approach and can now deliver improved client satisfaction, mitigate risk, and drive efficiency and effectiveness throughout the organization.

Two co-workers in front of computer
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Chapter 2

Case study: Acceleration of an enterprise automation program

Increased integration of intelligent automation within business processes enabled process efficiency gains, cost savings and revenue growth.

Financial services enterprise automation acceleration

In addition to leveraging process transformation, pandemic-advanced challenges illuminated the need for financial services organizations to optimize their enterprises through automation portfolios using business process management, as well as employing robotics, artificial intelligence and decisioning tools.

To illustrate, a global financial services firm sought assistance to support the build-out and acceleration of an enterprise automation program. The program aimed to increase the integration of intelligent automation within business processes to enable process efficiency gains, cost savings and revenue growth.

An EY team was retained to assess the firm’s current enterprise automation operating model, as well as to identify a portfolio of automation opportunities and obtain a commitment from senior leadership for delivery. In addition, the company required direction in developing a change management and communications program to reduce uncertainty and hasten program acceptance.

How we helped optimize enterprise automation

The EY team, using a process excellence-led approach, identified automation of segmentations, journeys and experiences at scale to achieve the desired outcome. We conducted more than 150 interviews and process deep dives to identify automation opportunities across all core functions and assessed the current automation operating model. The EY team also analyzed financial and operational data and KPIs to refine sizing estimates and opportunities that were shared with business leaders for sign-off. A cumulative benefits case was created to showcase run-rate P&L benefits in the target year (at program-end).

The result: The company realized a successful build-out and acceleration of its enterprise automation program, including an assessment of its operating and change management models, with the company holding a portfolio of over 90 automation opportunities with over US$150m in total benefits. The portfolio was segmented by prioritization, sizing, cost-to-achieve and other key process-decisioning criteria. The EY team also delivered detailed benefits cases for key opportunities with high-level execution road maps, estimated P&L impacts and qualitative value drivers, and a summary benefits case showing enterprise-wide net benefits within 18 months. In addition, a change management playbook was developed addressing key themes and communications, with recommended implementation approaches.

Executive with a vision for the company
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Chapter 3

Operational resiliency requires short- and long-term strategies

Capital investments in projects and programs like ERP replacements and business process improvement (BPI) programs have increased.

Operational resiliency: A long-term strategy

Growing awareness that financial institutions need to reduce risk and anticipate market decline, as well as embrace innovation to drive future growth, hinges not only on short-term strategies to resume and maintain safe operations but also on creating a robust, operational approach to enable resilience, sustainability and growth. In response, capital investments made in projects and programs today that have otherwise been considered major undertakings, like enterprise resource planning (ERP) replacements, scaled automation, resource and location consolidation, and business process improvement (BPI) programs, have increased across the board.

In turn, BPI programs have reignited businesses’ interest in continuous improvement programs, with companies recognizing the benefit of training employees to identify and realize opportunities to transform their work. We have observed a significant increase in the resources and growth of Lean Six Sigma programs with financial services organizations with existing BPI programs. Companies’ operational excellence and capital planning functions are starting to include these initiatives in their budgets for those without BPI programs.

It’s important to note that this prioritization to train employees on programs such as Lean Six Sigma is not new. Still, it is having an enhanced “renaissance” post-pandemic to complement the additional strategies to improve processes across an organization.

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Chapter 4

Case study: Accelerating use of Lean Six Sigma enablers

Implementation of a process management capability to promote a stronger control environment accelerating use of Lean Six Sigma enablers.

Lean Six Sigma

Case in point, as part of a domain model transformation, an EY team was engaged by a large financial services organization to develop a business process management training program to help business lines’ implement a process management capability to better identify risk and additional issues and promote a more robust control environment accelerating use of Lean Six Sigma enablers.

How we helped promote a stronger control environment

We engaged a cross-functional team of EY Lean Six Sigma, learning and development, and change management professionals; developed a lean process excellence playbook, produced creative communications and videos; and designed and delivered over 15 hours of interactive role-based training and live Q&A.

The result: the financial services organization is prepared to reduce risk and innovate to new growth through business process improvements supported by its continuous improvement training. The series of pilot sessions that were implemented gathered insights to enhance overall training effectiveness and helped define the value proposition. In contrast, train-the-trainer sessions enabled future instructors to scale the program across business lines. In addition, the playbook acted as a repository for an “all things” domain model, including customized Lean Six Sigma tools and templates, and the creative communications videos that were developed featuring the financial organization’s leaders, served to grow transformation awareness and buy-in.

Businessman working on a computer
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Chapter 5

FIs safeguard their operations for future disruption

Financial institutions embrace BPI programs and automation portfolios to enable process efficiency gains, cost savings and growth.

The final takeaway

The scale of disruption caused by the COVID-19 pandemic, although unprecedented, served as a real-time test of operational resiliency. Financial services organizations recognized that driving future growth hinges not only on short-term strategies to resume and maintain safe operations but on creating a robust, operational approach that allows FIs to safeguard their operations for future disruption. FIs that successfully anticipated, prepared for, responded to, and adapted their business continuity and operational frameworks to withstand unforeseen risks are emerging from the pandemic with increased agility, resilience and competitiveness.

As operations retake center stage, senior executives are engaging their operations, both middle and back, as well as front offices, to think more imaginatively and strategically about the work they do, who does the work, and how the work affects overall costs and revenue. FIs are undertaking transformative projects with bold outcomes and no-nonsense approaches to productivity. They’re embracing BPI programs and automation portfolios to enable process efficiency gains, cost savings and growth. And the resurgence of programs such as Lean Six Sigma reflects lessons learned during the height of the pandemic — that operational resilience is an “all-hands-on-deck” initiative, with every employee playing a part in the organization’s sustainability, future competitiveness and growth.


Summary

Financial Institutions (FIs) that experienced operational challenges and deficiencies during the COVID-19 pandemic are transforming their operations and processes to enable operational resilience in the face of unexpected change. They’re reimagining and reshaping their operational models by applying process simplification, acceleration of automation and by reassessing programs such as continuous improvement to sustain, as well as strengthen their market position. In addition, although Lean Six Sigma is not new, it is having a “renaissance” post-pandemic as FIs recognize the benefit of training employees to identify and realize opportunities to transform their work

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