Save money. Improve efficiency. Increase margins. Please customers. Does this all sound familiar? Financial leaders today are faced with the difficult challenge of creating a streamlined, effective business model without breaking the bank, so to speak – all while balancing these varied goals at the same time.
On the surface, this idea of doing less with more sounds like a near impossibility. However, it is the core tenet behind “lean management” – or the managerial strategy of using as few resources as possible to improve efficiency, decrease wastefulness and create a quality banking product.
“Lean management doesn’t just mean cutting costs.”
In fact, reports have shown that lean management can lead to significant operating-cost reductions within a short time frame, even as little as one year. At its core, lean management is about removing waste – anything that doesn’t provide value to the consumer – but it can be about so much more.
Lean goes beyond efficiency
While the end result of lean management should be increased efficiency, it isn’t the only aspect worth your attention. A PwC report on lean management outlined the many areas where you should expand on the concept of lean.
These include:
- The customer – Knowing your customer is the first step of lean management. Since you can clearly state who they are, where they are located and what they value, you can easily identify wasteful practices that don’t provide a direct benefit.
- Performance – You’ll also need to assess your bank’s – and its employees’ – performance. Create a system that makes results easy to identify, hold regular discussions on problem-solving and improve accountability in the bank. Naturally, top-performing employees are more efficient, and thus more lean.
- Bank functions – What can your bank do? The systems, departments, teams and other elements you have in place will directly tie into lean management. A more capable bank is a leaner bank, because it will be operating at peak capacity and producing the most with the fewest amount of resources.
- Attitudes – Lean management must also involve your employees. Make sure everyone is on the same page with your strategies, and focus training on systems, operations and other factors that directly provide value to the customer.
The customer is at the heart of lean management.The customer is the core
The knee-jerk reaction to lean management is to cut costs. Financial leaders find ways to save money by subtraction. As stated above, this isn’t the only way to go lean. Furthermore, the key to lean management is the customer.
You don’t necessarily have to decrease expenses to save money. You just have to convert wasteful practices – those that don’t benefit the consumer – into services that have a clear benefit. With this in mind, your focus should be on best practices that have the customer at the core.
This means a cultural shift in business operations. More effective, efficient customer service can have as positive of an effect on lean management as overhead reduction. For your employees, the idea is to hone in on best practices that work with customers. Speed up service, streamline operations and simplify the process: This will get more customers in and out faster – and happier – saving you money in the process.
Lean management is the future
Lean management has the potential to position financial institutions for long-term success. The economy today is unstable, while the future is uncertain. Financial institutions have to find ways to generate a profit, help customers and stay solvent in a economy that is unpredictable.
Naturally, this is no small feat. However, lean management can provide the answer. No matter what is coming around the corner, having a business model that is efficient, effective and sustainable will offer you greater flexibility and profitability moving forward.