Towards the end of the 1990s, much of the European retail banking industry was facing unprecedented levels of competition. This was partly the result of excess capacity (many towns had four or more bank branches within 100 metres of each other) and partly triggered by the presence of aggressive new entrants, including insurance companies and other retailers, such as supermarkets. Many of the new retail banks concentrated on a few simple financial products such as current accounts, deposit accounts and mortgages, in contrast with most conventional banks (like South West Cross Bank) that offered hundreds or even thousands of different products. At the same time, new delivery systems such as telephone and Internet banking were being introduced.
South West Cross Bank (SWX) had not performed well and was in the lower quartile of the big banks in Europe. However, it did have a strong retail brand image, high market shares in some sectors (such as small business loans) and a reliable but unspectacular profit record. But it was perceived to be late in recognizing the importance of developing its operations. Many large banks had been much quicker to install the latest information systems, allowing automation of many routine activities. Several competitors had experimented with centralization and/or regionalization of routine operations, such as telephony and correspondence that had previously been carried out in the branches. This had freed up staff time for selling financial products and at the same time had introduced efficiencies that could never have been achieved at branch level. Some banks, however, had paid a price. Not all customers were satisfied by the changes and some banks had received bad publicity. This letter to a national newspaper was typical:
‘My bank recently introduced, without warning, a bizarre system whereby a customer cannot telephone his branch manager, or write to him and expect him to receive the letter and reply to it. A London customer now has to ring a number in Wales, where a call will be diverted to some central point which deals with general inquiries, balances, standing orders, statements and so on. If the customer writes to his branch manager, he does not see the letter and it frequently seems to disappear. When the customer does not receive a reply, he has no idea whom to ring to check up. In other words, there is no one point of contact within the bank. This appalling treatment is being meted out to all customers of, however long standing. Everyone I know is complaining bitterly about it.’
The appended editor’s comment was:
‘Everyone I know is complaining too! I sympathize wholeheartedly and have commented about it before in this paper. In an attempt to cut costs, all the big banks have introduced customer service call centres to deal with routine enquiries, frequently with automated recorded messages that require you to punch in numbers to access information on your account. These are known in the industry as “factories”.’
As a late implementer of operational change, SWX had the advantage of being able to learn from competitors’ mistakes. It decided that radical change was required to make the retail operation more efficient in driving down costs and more effective in improving customer service quality. These were to be achieved simultaneously, using the latest ‘state-of-the-art’ equipment.
SWX embarked on one of the most extensive operational change programmes ever conducted in the European banking industry. The project, budgeted at around three billion euros, was planned to roll out over two years and would redesign almost every process in the retail bank division. Most processes that had previously been carried out at branches were to be transferred to large, specialized processing centres, allowing head-count reductions and space saving at every branch. Valuable back-office space could then be sold or rented to other businesses, whilst more space could be devoted to front-office, customer-facing activities.
Branch staff had previously been involved both with dealing with customers and with a wide variety of back-office tasks. These included cheque processing, cash balancing, answering phone calls from branch customers, letter writing, setting up direct debits and other payment processes. One long-serving branch employee Christina Kusonski summed up her feelings about the proposed changes.
‘With the expected halving of the branch-staff numbers, those of us who have been asked to stay will see major changes to our jobs. We currently have to do a variety of tasks, including some boring ones like cheque processing. But these routine jobs only last for around half an hour and then we can do something else, as directed by the Assistant Manager. Every day is different, because the mix of work changes and we work with different people when they need help. For example, Fridays are usually busy on the cash desk, with people drawing money for the weekend. On Mondays we get more cheques paid in and more phone calls too. Under the new system, there will be hardly any back-room jobs, so we will be “on show” from morning to night. We won’t be able to have a chat out of sight of the customers like before when we were doing some routine office jobs! And the pressure will be on being nice to the customers and taking every opportunity to sell them insurance, or some other product.
And what about lunchtime when so many customers come in? Almost everyone used to come to serve at the counter, but now there won’t be anyone to call forward! To be honest, I’m not looking forward to it at all and I only hope the customers are very patient and loyal to our bank. Our manager has given us a number of briefings and has assured us that we are his selected team, but I am not convinced. Each of us will be responsible for serving just one customer at a time, so I can’t see how we will be working as an empowered work team as he described! Actually, I think it will be a worse job – we will be very isolated from each other and constantly under pressure.
I will give it a try, but if my fears come true, I will apply to work in the new call centre down the road. There are more than 300 staff members there and they work in close teams of 10. It has already got a reputation as a good place to work … the latest telephone equipment, a nice office and managers who are listening to suggestions from teams and individuals. I don’t think there is much future for us in the branches!’
The same evening, at a social event in the local pub, Christina met a former colleague, Silvia Lowener, who had been the first to leave the branch three weeks earlier. She now travelled daily to the new cheque-processing centre (CPC) some 20 km away. Inevitably, they soon began talking about work and Silvia was full of enthusiasm for the new job.
‘At first I found the job rather boring, but at least we don’t get any problems with customers; they could not get anywhere near the place! We work in teams and I am in the data entry department, where we read digital images (electronic photographs) of the cheques and key in the amount shown. We are only keying the ones, which the automated optical character recognition (OCR) system has not been able to read, which includes many with terrible handwriting. Most of the work comes in from the retail branches from lunchtime onwards, so we are all on afternoon or evening shifts. I work six hours, from 4 o’clock in the afternoon. I am in a team of eight and our workstations are on an octagonal layout facing in, so we can see each other. The team leader is one of the eight and is responsible for our output and quality performance that can be compared with other teams here and the other CPCs.
When working, we are required to key 12,000 characters per hour, which is around 3000 cheques, so we have to concentrate hard! We all have a 15-minute break every two hours; some of the staff go for a smoke, whilst others socialize over a coffee. We meet as a team for 10 minutes at the beginning of every shift. We are encouraged to join process improvement teams, both in our own areas and covering the whole process. We have already made lots of good suggestions for improvements, but most involve re-programming, so there are long delays in getting the changes we want. We are near the end of the process here. The polythene-wrapped parcels of cheques are delivered periodically from the branches by a security firm, the bar codes are scanned and the parcels are check-weighed and signed for in the Reception Department. They are then accumulated in a wheeled trolley until it is full. The trolley is then wheeled through to the Preparation Room where the parcels are cut open and the bundles of cheques are extracted.
Individuals then sort through them, looking for and extracting any metal staples, rubber bands and perforations at the edges, all of which can cause blockages in the OCR machines. When this has been done, the bundles of cheques are vibrated in a special “joddle” machine to align two edges in preparation for feeding the OCRs. The prepared bundles are placed in trays and then on shelved trolleys to be moved, when full, to the OCR machine room, where they wait in a queue until an operative prepares them (further joddling!) for the machine. The first “capture pass” through the machine records the image and print encodes the cheques for subsequent identification. The digital image is either successfully read by the computer or passed to us for manual keying. Once this is done and the batch balances (credits and debits must match exactly), the cheques are then re- fed into the machines. This second-pass sorts by the origination bank in preparation for clearing in London. Sorted cheques are packed (by bank), taken to the Reception Department and then taken by courier to London.’