Applying Lean Principles: Back-Office Payments Use Case

LEJLA VULOVIĆ | HEAD OF CENTRAL OPERATIONS DIVIS ION | RAIFFEISEN BANK BOSNIA AND HERZEGOVINA

Business Agility in Financial ServicesApplying Lean Principles: Back-Office Use Case

PPM ExperienceOrganizational Transformation &

Restructuring, PMO Set-up, Cash Operations

Management, E-ChannelsInnovation, Payments Operations,

IT/ SW development, Sizes from €20k to € 50 mil.

Education

M.Sc.Eng (Faculty of Electrical

Engineering, University of

Sarajevo)

Certified PMP since 2012

Name Function CompanyLejla Vulović

Head of Central (non-retail)

Operations

Raiffeisen Bank dd BiH

Professional Experinece

10 yrs. Project Mgm in Banking area

5 yrs. Senior Leadership &

Management

5 yrs. Trainer, Coach

Agenda

Lean in Banking

Main elements of Lean transformation

Payments Back Office Use Case

Lean in Banking

LEANcreating more value for customers with fewer resources.

Lean /li:n/ – eng. adjective (of a person or animal) slim, thin, especially healthily so, without fat; adjective (of an industry or company) efficient with no wastage.

It all started with TOYOTA!

Lean implementation moved from car manufacturing to other industries and productions, healthcare, service companies such as banking and finance, IT...

Lean was originally created by Toyota to eliminate waste and inefficiency in its manufacturing operations.

The process became so successful that it has been embraced in manufacturing sectors around the world.

1956 – TPS (Toyota Production System) with all lean elements introduced1982 – Toyota and General Motors introduced the first lean production system in western countries1990s – TPS (lean) started to concour Europe (Opel, Audi, Mercedes-Benz, Porsche,...)

The best definition of Lean in banking is …

…satisfying explicit and implicit customer needs

with the lowest consumption of resources and preserving the assets of the bank

by continuously eliminating waste, variability and rigidity

SOURCE: McKinsey

Lean Strategy

Improve customer satisfaction by:

» Shortening processes

» Delivering faster

» Flexible production

» Improving quality

» Increasing productivity

» Decreasing costs

Lean Transformation consists of three phases: Diagnosis, Design and Implementation.Continious Improvement!

Main elements of Lean transformation

Lean attacks 3 main inhibitors of superior performance – Waste, Inflexibility, and Variability

Less waste means lower costs,better quality and consistentthroughput (service level)

Reducing inflexibility meansdelivering what clients want,when they want it, and in theright quantity (service level)

Reducing variability meansimproving process reliability,i.e., lowering cost and improvingquality

SOURCE: McKinsey

3 main elements of Lean Approah

Around Voice of the Customer, Lean approach is built on three elements, that must all be present for a successful implementation.

Operating system“The way the process is configured and optimized to create value and minimize losses”

Management Infrastructure“The formal structures and systems through which resources are managed in support of the service process”

Mindset and Behavior“The way people think, feel and conduct themselves on the shop floor, individually and collectively”

SOURCE: McKinsey

Payments Back Office Use Case

Optimize processes and working methods

end to end

› Process simplification (removing process steps)

› SOPs - Standard operating procedures

› Physical layout changes

› 5 “S”

Payment processing time reduced 33%*

*From 42s (before lean implementation) to 28s through continious improvement.

Lean Office Layout

Build formal structures and processes to manage

the operating system to deliver business objectives

› Cascaded KPI structure

› Visual performance boards

› Performance reviews

› Daily morning meetings around KPIs

› Capacity planning

DRAMATIC INCREASE OF PRODUCTIVITY AND DECREASE OF ERROR RATE

Productivity Doubledand further increased through continious improvement

Continious Improvement

Error Rate decreased 50%and it is continiously reduced

Lean Sustainability Review performed twice a year. LSR Index 98%!

Employee Satisfaction in average 95%

Internal Customer Satisfaction in

average 93%

LEJLA VULOVIĆ | HEAD OF CENTRAL OPERATIONS DIVIS ION | RAIFFEISEN BANK BOSNIA AND HERZEGOVINA

Be Lean!