Operational issues within private bank

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THE RUSSIAN PRESIDENTIAL ACADEMY OF NATIONAL ECONOMY AND PUBLIC ADMINISTATION

MASTER OF SCIENCE IN PROJECT MANAGEMENT

Assignment: Operational issues within Private Bank X

Professor:

Nicholas A.C. Read

Student:

Izabella Dzhazaeva

Moscow 2017

Content

Executive Summary

1. Overview of the Private Bank X

2. Service Process within Private Bank X

3. Recommendation of Key Improvements

4. Breakdown of Supply Chain Management Process

Conclusion

References

Executive Summary

Private Bank X aims to provide exceptional banking services to select a group of High Net worth clients. Within X Private Bank's supply chain, a continual balance has to be maintained between easy and quick transactions, while security for both the client and the bank are maintained at the highest possible level.

This report will look at the supply chain management of completing service requests for clients, and make several recommendations in which to improve the processes for client services within the Private Bank X.

1. Overview of the Private Bank X

Private Bank X caters to the ultra High Net Worth clients, and prides itself on providing exceptional and customized quality customer service, supported by a comprehensive offering of financial products.

Private Bank X acts as a virtual branch, able to conduct all requests by clients either in person, over the phone or via email. Private Banker X generally manages around 80 to 100 HNW individuals and their families, as siting them with lending, investment and all other day to day general banking requirements.

The services offered from Private Bank X vary immensely, and can involve setting up complex family trust structures for overseas investments, or basic account servicing such as providing tax statements or conducting account transfers on behalf of the clients.

Private Bank X, while offering a vast array of financial products and services to its various clients has a complex and in some cases convoluted process chain in which the final products and services are delivered to the end user, the clients themselves.

This report will look into a specific process conducted by the Private Bankers on a daily basis, which is not an important area for creating revenue for Private Bank, however is as critically as important.

The Associate Private Bankers within Private Bank X deal with most of the day to day servicing and administration tasks requested by Private Bank clients. While the Associate's spend most of their time in the office completing such tasks, the Private Bankers have an expectation that they will be proactively meeting with clients within their portfolio as well as meeting with prospective clines to build their portfolio of High Net Worth clients.

A central team within Private Bank called Private Office Services actually process the required tasks, resulting in a supply chain to meet the clients end requirements in a timely and cost effective manner. A basic flow chart of this process can be seen in the chart1, showing the steps in which most tasks are completed within Private Bank X.

Using a central program, the Associate Private Banker receives the request either from the client themselves or the Banker who has confirmed the transaction or request with the client.

The Associate Private Banker then uses the central program to type in a Diary Note, which is a permanent record of the request that is saved for the bank's records for compliance reasons.

Once the diary note is complete the service request it typed into the system, which informs the Private Office Service team of the type of request, the specific details and the expected time frame in which the request is expected to be completed. bank transactional saving account

Account openings such as transaction and savings accounts are an important process in migrating new customers into the bank, and the process itself is usually one of the first processes that the clients experience, therefore it is crucial for the account opening procedure to be stress free and a pleasant experience for the client.

This report will look at the specific process of opening accounts and service requests as an attempt to identify the areas in which Private Bank X can improve the complete operation process chain for this task.

2. Service Process within Private Bank X

The process in which tasks are completed will now be described. The basic processes of tasks to be completed by Private Bank X were described above, and a simple flowchart was shown in the chart1. This process will now be examined via the five key strategic performance goals that are common among most supply chain management operations.

Quality

Quality is a high contentious topic throughout academic literature. Firms compete on quality, customers search for quality, and markets are transformed by quality.

The supply chain from request to completion of a customer requirement is absolutely critical that quality is maintained and errors are reduced to an absolute minimum.

Marketers and organizations try to define service quality in advance while customers make during and after use evaluations. The Associate Private Bankers speak directly with the client either in person, over the phone or via email. The Associate Private Bankers have a thorough understanding of private banking products and procedures and can set the steps and the expected time to the client in the first instance. The Associate Private Banker also ensures that the completed task, from a simple request such as changing a postal address through to opening a Self Managed Super Fund is completed correctly and to the clients expectations before the confirmation is communicated to the client.

Quality in the banking industry, especially a Private Bank is absolutely critical for customer satisfaction and Private Bank X aims for TQM (Total Quality Management) throughout all business processes.

For the specific process of requests that are carried out by the Private Office Services team to assist the Associate Private Bankers, quality is managed by the percentage of rework, that is the requests that have to be confirmed or clarified with the Associate Private Banker that typed in the request.

Speed

The “speed” that this report will be concerned with is the timing of the process from customer request, through to confirmation that the process has been completed.

Private Bank X prides itself on ”skipping the queue” so to speak, as the Associate Private Bankers and the Bankers have authority to act upon the customers request usually without paperwork required to be signed. A simply phone call from a client requesting to transfer money to an overseas bank account can be completed without any signatures or paperwork whatsoever. If a retail bank wanted to complete this process they would either have to spend a lengthy time processing this themselves online via Internet Banking, or they would have to go into a branch in person, sign the required forms and have the teller process this to the Foreign Exchange department, which in turn pay the funds to the receiving bank account.

Dependability

“Dependability” refers to the level of guarantee that can be implied for “on time” delivery, by reducing uncertainty and achieving a consistent delivery time.

To create consistency and dependability within the Private Service Office team, there are approximately 3 staff members four each branch that all work out of the main office. The Private Office Service team have assigned specific employees that work with a specific branch. This allows common and recurring tasks for specific clients to be known to the Private Office Service team.

Flexibility

There is a continual balance between creating a lean supply chain, or an agile supply chain that can quickly adapt to large process variables. Chart illustrates the decisions that are made when considering the flexibility of the supply chain management system.

Chart - Supply Chain Management

The majority of tasks that are completed by the staff at Private Office Services are predictable with few changes between the processes, however the variety itself of the processes is wide which can involve quite complex tasks to complete the clients request.

Chart illustrates a brief break down of the variety of tasks that are conducted by Private Bank X Private Office Services.

Cost

The cost that is associated with completing requests will be broken down into a brief chart to illustrate the costs involved in providing accurate, efficient and timely results to clients of Private Bank X.

As it has been discussed Private Office Services mostly carry out a small and relatively simple variety of tasks that are sent from the Associate Private Bankers, though the complex tasks that are required can take hours, if not days to complete for a client. Private Office Services employees are only a small cost, as compliance, record keeping and many other factors are involved in the costs associated with processing service requests for Private Bank X.

Risk

Risk is an important factor in the supply chain management structure and development in the banking industry, and in this report will only be briefly discussed however should not diminish its perceptive importance.

With Private Bank X, the risks taken to service clients are increased over normal retail banking. The key risk that applies to Private Bank X is through client transactions, and the risk that fraud will be carried out by transacting on a clients account where the requestor did not have authority of the specific account. To mitigate this risk Associate Private Bankers have to call clients and speak with them verbally before any transfers for over $10,000 are requested to be completed through Private Office Services.

This is an attempt by Private Bank X to minimize the impact of failure, specifically names fail-safeing - by limiting the monetary amount that could be potentially transferred due to fraud from a clients account. This method aims to reduce “preventative costs”, as most transactions are below the amount of $10,000. A graph representation the fail-safe method by Private Bank X is shown in chart.

Chart - Transaction Threshold Prevention

Slack et al. aim to identify the different categories of failure, this report suggests that there is another key risk, Governance Risk. Governance risk is the failure from a lack control and analysis, resulting in financial loss.

Account Opening Process

A specific process that will be discussed in more detail within this report is the account opening process within Westpac Private Bank.

Account openings are an extremely common process and are critical to customer satisfaction. Customer accounts are extremely important as they provide transactions solutions for customers in which they access their funds for everyday purchasing. Banking accounts are a product which are rarely thought of, however are one of the most critical products offered.

3. Recommendation of Key Improvements

From the discussion above there are some obvious improvements that can be made to the process, especially in regards to the supply chain management process. While this report is to brief to conduct a comprehensive Six Sigma analyses, the same approach has been used to identify some key improvements that will be discussed below. Six Sigma in a very brief description is a comprehensive and flexible system for maximising business success. The key to the Six Sigma approach is that it is a continuous cycle. An illustration of the thought process used for this report is illustrated in Chart.

Chart - An Illustration of the Six Sigma Improvement Cycle

Account Opening Process

The first key recommendation that will be discussed is the account opening process. As shown in chart 2, there is a lengthy process that sacrifices speed of the request for dependability and quality of the account openings. Most banking accounts are opened when new clients are migrated into Private Bank X, and therefore the account opening process is an important first impression that is passed onto the clients when they first join the bank. As clients usually meet in person during the initial meeting to establish the needs for bank accounts, signatures from the clients should be collected from the clients at that initial stage, which provides Private Bank X the authority to open banking and business accounts from an email or verbal confirmation, without having to have the specific account form signed.

For compliance and AML (Anti-money laundering) reasons, the account forms would still be produced by the Associate Private Banker, along with the original authority that was collected at the initial meeting between the clients and the Private Banker.

4. Breakdown of Supply Chain Management Process

As seen in the discussion above, most transactions carried out by the Private Service Office team are simple “value” transactions that require very little strategic thinking or problem solving. The Associate Private Bankers already type and instruct the Private Service Office team the exact instructions, with a separate diary note needing to be typed for record keeping. For the simple transactions this report suggests that the Associate Private Bankers actually type in the transaction directly into the system, where there is a check carried out by the POS team before the payment being sent.

Implementation of Key Improvements

There are some key constraints and implications that need to be considered for the above recommendations to be implemented within Private Bank X.

- With regards to the account opening process, policy would have to be adjusted to allow the bank to open accounts without signatures for that specific account, and the costs of implementing this would have to be thoroughly researched before the recommendation is implanted

Conclusion

In the dynamic and ever changing environment of the banking industry, it is important to remember that banks deal in relationships that facilitate effective and efficient payments. (O'Shea, TJ 2011) The processes that have been discussed in this report are all designed with this core idea as the end goal, which allows relationships to flourish and the servicing of clients transactional needs to become seamless. The recommendations that have been discussed above attempt to streamline and create a more reliable and consistent method for servicing clients within Private Bank X.

References

1. Slack, N, Brandon-Jones, A, Johnston, R and Betts, A 2012, Operations and Process Management, 3rd edn, Prentice Hall (ISBN: 9780273768807)

2. Trkman, P. (2010). The critical success factors of business process management. International Journal of Information Management, 30(2), 125-134.

3. O'Shea, TJ 2011, 'Branches Are Now as Useful as a Dead Parrot', Credit Union Times, 22, 19, p. 10, Business Source Complete, EBSCOhost,

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