CASESTUDY19:SOUTHWESTCROSSBANK (questions in the end) Towards the…

Question Answered step-by-step CASESTUDY19:SOUTHWESTCROSSBANK (questions in the end) Towards the…  CASE STUDY 19: SOUTHWEST CROSS BANK (questions in the end) 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 meters of each other)and partly triggered by the presenceof aggressive new entrants, including insurance companies and other retailers, such as supermarkets. Many of the new retail banks concentrated on a few simplefinancial products such as currentaccounts, deposit accountsand mortgages, in contrastto most conventional banks, which offeredhundreds or even thousands of different products.At the same time, new deliverysystems 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 strongretail brand image,high market sharesin 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, allowingautomation of many routine activities. Several competitors had experimented with centralization and/or regionalization of routine operations, such as telephonyand 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 with the changes and some banks had received bad publicity. This letter to a nationalnewspaper 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 receivethe letter and reply to it. A London customernow has to ring a number in Wales,where a call will be diverted to some central point which deals with general enquiries, balances, standing orders, statements, etc. If the customer writes to his branch manager, he does not see the letter and it frequently seems to disappear. When the customerdoes not receivea reply, he has no idea whom to ring to check up. In other words, there is no one point of contactwithin the bank. This appallingtreatment is being meted out to all customers of however long standing. Everyone I know is complaining bitterly about it.’ The appended editor’scomment was: ‘Everyone I know is complainingtoo! 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 which 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 €3 billion 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, while more space could be devoted to front-office, customer-facing activities. Branch staff had previously been involved both with dealing with customers it 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, includingsome 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 weget more cheques paid in and more phone calls too. Under the new system, there will be hardlyany 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 pressurewill be on being nice to the customersand 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 therewon’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, managerhas given us a number of briefings, and has assuredus that we are his selectedteam, 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 otherand constantly under pressure. I will give it a try, but if my fears cometrue, I will apply towork in the new call centredown the road.There are more than 300 staff thereand they work in close teams of ten. It has alreadygot a reputation as a good place to work … the latesttelephone equipment, a nice officeand managers who are listening to suggestions from teams and individuals. I don’t thinkthere is much future for us in the branches.’ That 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 travelleddaily 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 branchesfrom lunchtime onwards,so we are all on afternoon or evening shifts.I work six hours, from 4 o’clockin the afternoon. I amin a team of eight and our workstations are on an octagonal layoutfacing in, so we can see· each other. The team leader is one of the eight and is responsible for our output and quality performance, which 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. Weall have a 15-minute break every two hours; some of the staff gofor a smoke, while otherssocialize over a coffee. We meet as a team for ten minutes at the beginning of every shift. We are encouraged to join process improvement teams,both in our own areasand covering the whole process. We have alreadymade lots of good suggestions for improvements, but most involve reprogramming, so there are long delays in getting the changes we want. I think we will also soon run out of things to do.’ ‘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 signedfor, in the reception department. They are then accumulated in a wheeled trolleyuntil 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 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 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 receptiondepartment and then taken by courierto London.’ Questions How would these changesaffect the job of a branch manager?What new skillswould be required?   What would be the effect on the job design of branch employeesin terms of the elementsof the ‘behavioural’ design model?Compare the extent to which empowerment is feasible and desirable at a branchand at a CPC.   Prepare a process flow chart for the cheque-processing operation. How many of the steps are value- adding? Engineering & Technology Industrial Engineering Operations Management MBAE 723 Share QuestionEmailCopy link Comments (0)