While digital channel growth accelerates, the humble
bank branch will not become extinct any time soon. But if branch
networks are to operate profitably, bankers need to bear down on
costs. A report from Celent suggests that workforce optimisation
will increasingly play its part in branch channel
transformation.
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Workforce optimisation solutions (WFO) have been around for
years and yet only a small number of banks deploy them.
Consultants Celent estimate less
than three% of banks in the US use WFO tools to help manage their
branch channels. And those that do deploy them tend to be the
larger retail banks.
But a report from Celent, Is
That Any Way to Run a Branch? Workforce Optimisation Solutions for
Retail Banking, suggests this may be set to change, for three
reasons:
- Retail banks of all sizes
are challenged to improve the efficiency and effectiveness of their
branch channels in order to remain viable; increased regulation
will only serve to make this an even more pressing
necessity. - WFO solutions, once the
purview of larger organisations, are now broadly available in the
cloud, slashing implementation costs and removing the requirement
for in-house expertise. - Over the past year, WFO
vendors have packaged software as a solution (SaaS) based solutions
together with turnkey services to further reduce solution cost and
complexity.
The report estimates most, if not
all lenders deploying WFO, enjoy returns on their WFO investment of
around $20,000 to $30,000 per branch over the first year, without
impacting adversely on customer satisfaction.
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By GlobalDataMost did so without layoffs.
Instead, they reduced the rate of hiring and let attrition reduce
staffing cost as the bank learned how to staff based on empirical
data.
The survey concedes that WFO
solutions are no quick fix, but argues they can provide banks with
a firm understanding of branch staff utilisation and transactional
efficiency.
WFO can, however complement a
bank’s customer relationship management tools to design, deploy,
and measure highly effective branch channel workflow and procedures
to maximise channel efficiency and effectiveness.
In particular, WFO solutions can be
viewed as a subset of a broader range of solutions commonly
referred to as human resource management, Bluntly, in the branch
environment, WFO tools are designed to help banks get the right
people in the right place and the right time.
For retail banking, this means
scheduling an appropriate mix of branch personnel across the
enterprise and throughout the day to maximise efficiency and
effectiveness consistent with forecasted customer flow and desired
service levels.
One way to measure branch
transactional efficiency is the average number of transactions
processed by tellers (transactions per hour, or TPH) and the
resulting staffing cost per transaction.
A recent benchmark report reveals
widely varying results with teller efficiency ranged from 10 to 26
TPH, with an average in the 14 to 16 TPH range. The most efficient
group of financial institutions averaged 22.6 TPH.
According to Celent, the majority
of banks surveyed support the assertion that most non-WFO
implementing financial institutions are over staffed. In addition
to being overstaffed, many branches do not balance staff capacity
to customer demand throughout the day.
Vendors: major
players
Historically, WFO solutions were offered as in-house
implementations and sold to large organisations but more recently,
vendors have configured SaaS or managed services offerings or both
alongside a broadening of sales and marketing efforts to include
smaller banks.
Through consolidation, vendors of
WFO tools are a relatively tidy group of around half a dozen
players.
Kronos, for example, is used by
Fifth Third Bank across its enterprise: in the branch network, call
centres, and several back-office operations.
Kronos enjoys the large Verint
Systems enjoys the largest market share as measured by branches
(35,000).
GMT ranks second as measured by
branches (20,000 outlets). Notable clients include ANZ, Bank of the
West, BB&T, Citigroup and Lloyds Banking Group.
FMSI has the next largest number of
banking clients (105 through June 2011), but those relatively large
numbers of clients correspond to just 2,000 branches as FMSI
primarily serves small US community banks;
SumTotal is implemented across 12,000 branches. Notable clients
include Citizens Bank, HSBC and USAA.
