I think the opportunity for banks, especially community banks is to open themselves to hosting events in the lounge and providing shared work spaces for entrepreneurs that do not have offices.  We need to attract them away from the restaurants and coffee shops into the lounge.  The branch is not longer about transactions, it should be a place to meet, learn, and engage with people.  It is where social media converges with face to face interaction. Let the entrepreneurs hold seminars at night when the branch is normally vacant.  Have a representative on hand to answer questions or open accounts.  I think these activities will result in higher conversions that the tired old “free checking” or “free gift” signs.

I am a big fan of the lounge concept, but it will require a shift in our mentally of how we view the purpose of a branch.  We will need clear strategy to attract people, notice I did not say “customers”, to use the space and have a reason to come back.

In our blog on “Sure you have them but do they work,” we proposed that the purchase and implementation of a SaaS tool was just the beginning of the effort to maximize value.  At that time we did not elaborate on the process to truly maximize utilization, so as a follow-up we wanted to provide some direction to get you started.

Traditionally when working with our clients our first step is to develop an IDEF0 diagram for the new software tool.  We like to use this method because of its simplicity and clear visual effect.  We have tried cross functional diagrams, but have not found them as effective for this type of modeling.  An added benefit is that you can choose the level of the organization (component, role/function, department, division, company) you want to start and move up or down as required.  The figure on the left shows the basic construct.  For a high-level overview refer to http://en.wikipedia.org/wiki/IDEF0 .

Let’s examine this in a hypothetical example to give you a better understand of how its’ constructed.  In this example we will use a simple online calculator tool for a new car.

Let’s start with the inputs.  Aside from the obvious inputs (price, term, etc.), what additional information would improve the final outputs or solution?  Would you be able to provide improved pricing if authenticated?  Then it should be an input.  Does interest rate or promotions vary by state?  Make it an input.  One note here, just because it is an input does not imply that the customer should enter the field.  We need to leverage the information available within the organization before we request any data input.

Next, let’s examine outputs.  The obvious one is payment, but what other outputs are possible?  Can we feed the information to a marketing campaign for an auto loan, or how about an opportunity to review their insurance policies?  When looking at outputs one needs to examine who else in the organization would be interested in this data or who could benefit from it if they talking to the customer.  Only then are you truly maximizing the tools capabilities and leveraging it for increased returns.

Finally, what features or functionality are available and have you leveraged them.  The easiest way to do this is to get a list of capabilities from the software firm and match them against how you are currently using the tool.  In many cases there are additional features that are underutilized that can be leveraged in the new solution.  If something is not clear how it could benefit your implementation, ask the firm best practices or how other firms that have already implemented it use the functionality.

Your organization has already spent the money to purchase the product and completed some level of implementation, but the next step is to make it perform well by fully utilizing it for maximum returns.  Even though we used a simple calculator in this example the opportunities abound with more robust tools.  Pick an opportunity and start today.

To highlight the point, I will share a story of a recent operational unit we visited, a call center of sorts. I say that because these folks were responsible for data entry, answering inbound calls, and following up with outbound calls. There was a significant amount of disruption due to varied tasks and I estimated approximately 15% of labor was associated with this disruption and switching. When I asked the manager what the standard was for this group I was told 100 per day. It seemed curious because each task required a significantly different amount of time. If the employee never answered the phone the 100 in data entry would be entirely feasible, and in fact we found the highest producers, the ones being rewarded, were doing exactly that. They were setting their phone to unavailable, while the others, “low producers”, were picking up the majority of the calls and driving down their productivity.

We worked with the teams to derive individual standards for each function and provided daily employee feedback.  At first the management was reluctant and somewhat skeptical.  We proposed this simple separation of duties would in fact save the group over 12 people or 13%.  The savings was even higher in actuality due to the increased monitoring, feedback, and clear objectives.  After the realignment was completed, they were able to handle the same volume with 28% less people, saving of over $1.1 million a year.

There in was the first lesson.  Make sure that each function a particular role performs can be independently measured and a feedback loop has been established.   You will find significant expense reduction opportunity, improved morale and lower turnover if you get it right.

In subsequent discussions, we will cover how to establish meaningful metrics, managing to volume trends, and using capacity plans for flexible staffing and budgeting.

As most of you are aware, we have been partnering with technology firms and working for financial institutions (FI’s) for some time.  A common complaint we hear from the tech companies is that the FI does not understand how to leverage their particular tool, while the FI says that they are not getting the value from the tool that was presented to them.  A recent comment really brought this point to light; “it is one thing to say you “own” a bit of software, it is another to say it works, and it is quite a completely different animal to say that is works well”.

You bought it, but why?  What are your expectations from the product?  It starts with defining the problem you are trying to solve.  In some cases, the problem you are trying to solve may be your customers’ problem.  Several tools may do an adequate job of filling your need and a couple may do a great job, but to determine the right choice you need to know what you expect as the end result.  The end result is not that it achieves expected ROI and hurdle rates.  It is much deeper than that, what do you expect will be the tangible benefits.  It will help us or our customer do “x” better than we can today.  This is of critical importance throughout the next steps.

It works!  Often, the software firm will provide baseline implementation support and guidance.  Even with this support the FI needs to consider the impacts on ancillary services and how they will utilize the information provided or leverage the tool.  The FI purchases a tool and relies on the vendor to provide implementation support and thinks that is where it ends.  In actuality, that is just the beginning.  Putting the software under the “tools” section if not enough, in fact that is probably the wrong thing to do with it.

It works WELL!  If it a software product for your website, it should be integrated within the problem you are assisting the customer in solving.  If they are authenticated, does it populate based on the data you have about the client?    Now, it is time to revisit the “why” in why you purchased it in the first place.  Who should be leveraging the data?  Has it been integrated into their processes and mindshare so that it is leveraged to improve decisions?    Have you looked at all the ancillary functions that could be impacted and improved by this purchase?  This is when the real value begins, but also involves that most amount of analysis and design.

The opportunities abound with all of the new tools available to create a solution centric experience that provide your staff with deep insights and the ability to make smarter decisions.  It is time to fully maximize utilization to realize the full benefits they can have on customer satisfaction, productivity and revenue.

We will be attending FinovateSpring 2011– The best new fintech innovations from Silicon Valley and beyond demoed in the startup capital of the world — San Francisco.  Looking forward to seeing dozens of new innovations on May 10-11, 2011. Hope to see you there!

This year, analysts are predicting that other banks will seek buyers to help cut ties with the Treasury Department and burdensome TARP debt, http://www.labusinessjournal.com/news/2010/oct/18/banks-feeling-tarp-trapped/ rather than test capital markets and risk losing face with shareholders. Some banks will seek merger or acquisition to boost their capital ratios.

Once the deals are signed, however, banks still face the potentially daunting task of integrating staff, processes and technology. Already operating with lean staff and feeling pressure from consumers to upgrade online or mobile service offerings and maintain great service, banks must prioritize merger integration in the months ahead.

Too many banks in the past have left this process to the individual efforts of branch managers, human resources and IT after the merger. Each department follows its own lead on what is critical and what can wait for a quarter or two. An overall merger integration strategy never happens, and the downside ranges from minor disruptions in workflow to major audit violations in security protocols or compliance. When things don’t go as planned with revenue or compliance, the buck stops with the CIO or president.

Whether your bank has recently completed a merger or is considering one in the next year, there are several important areas to consider when integrating your people, processes or technology. These areas may also help you consider the best synergies and candidates for a merger — from the FDIC auction block or elsewhere.

For a copy of the Merger Potential and Integration Checklist or to take advantage of your complimentary strategy assessment, email me at ddickinson@glacierforce.com.