Delivering Sustainable Operational Excellence to Meet Today’s Challenges: Growth, Compliance, Efficiency and Competition
The Financial Services industry is currently grappling with numerous complex, resource-driven challenges and opportunities, including an uncertain and complex regulatory burden, technological advancements, aging core-system infrastructure, margin erosion and human capital demands. Exacerbating this complexity is an extraordinary degree of public and regulatory scrutiny. Under this glare, leaders are tasked with making bold moves and unprecedented organizational changes to deliver greater stability and transparency without sacrificing profits.
It is no wonder that many are turning to consulting firms for support during this tumultuous period of transformation. The Highland Group partners with regulated financial institutions, insurance companies, investment banks and third-party providers to rapidly achieve and sustain operational excellence amidst these uncertain and increasingly competitive conditions.
The most common challenges we see in the Financial Services industry are the inability to operationalize regulatory requirements, maintain competitive expense ratios and build the infrastructure necessary to support top-line revenue growth. Given the realities of operating in a politically charged industry where perception often trumps reality and the court of public opinion can cripple an otherwise sound business, well-defined and reproducible operating procedures are essential.
The ongoing need to replace aging technology infrastructure in order to maintain competitive products and consumer convenience further complicates the situation. Unfortunately, replacing technology seldom resolves root issues and sometimes merely automates poor processes.
Financial Services’ increasingly high-touch, self-service marketplace mandates that employees work more efficiently in compliance with tested, transparent and reproducible operating processes. Managing human capital, however, remains challenging. Maximizing wage dollar value through appropriate task assignment and responsibility frequently conflicts with the imperative to do more with less. Uncompromising internal controls and exceptional service both require a firm foundation of industry-leading process efficiency.
To address these and myriad other challenges, The Highland Group has developed two targeted Financial Services sub-practices: Banking Services and Insurance Services. Details of both follow below.
The Highland Group has worked with leading Financial Services companies around the world for more than two decades. We operate with specific knowledge and experience in addressing operational issues in the banking, insurance, mortgage and payment processing industries. Across the value chain, our company’s Senior Model helps us rapidly achieve results: all of our consultants bring a minimum of 15 years of successful industry and consulting experience.
Our Financial Services practice consists of senior consulting professionals, many of whom have held leadership and management positions in regulated environments. We solve problems in critical operational areas starting with market strategy and product development through to service, delivery, compliance and sales force effectiveness. Furthermore, our firm’s cross-sector collaborations empower us to bring the most innovative ideas from related industries to serve our Financial Services clients.
Financial Services executives choose The Highland Group as their partner in delivering sustainable operational change and performance improvements because we:
- Operate a global team ready to deploy anywhere in the world
- Offer complete focus and clarity in targeting our clients’ business Driver Goals
- Employ a robust, hands-on approach that leverages only senior consultants who have front-line, domain experience and credibility within the Financial Services sector
- Deliver significant, measurable results via our proven, proprietary project methodology
- Ensure sustainable change by delivering operational insight to client senior management while engaging employees and contractors at the front-line operations level
Implementing Sustainable Change to Overcome Increasing Regulatory Costs, Declining Margins and Increasing Competition in a Transforming Technology Landscape
The Banking industry is currently confronting the greatest regulatory oversight and public scrutiny we have witnessed in nearly a century. That harsh and protracted glare has resulted in deferred infrastructure investments, which are now well past due. Meanwhile, constant technology evolution and corresponding changes in consumer habits are increasing customer expectations and driving a total Banking transformation, especially in Retail.
Combine all of those factors with a reduced-rate environment and we get shrinking margins amidst a stubbornly uncertain economic outlook. Aside from revolutionary product offerings, The Highland Group believes that sales effectiveness and process efficiencies offer the most immediate relief. These are not technology changes at the core – these are people and process realignments.
We partner with banks and third-party providers to rapidly achieve sustainable operational excellence to mitigate and overcome the Banking sector’s increasingly volatile and risk-laden conditions. For example, in Commercial Banking, we typically help firms to streamline infrastructure and throughput while optimizing the value proposition. This often involves the development of new practices, procedures and performance management tools as well as role redefinition, organizational redesign and asset restructuring.
In Retail Banking, we help companies to manage risks, costs and opportunities by:
- Minimizing Operational Risk and Corresponding Costs: Risk frameworks continue to evolve and grow. Key to controlling the corresponding costs while satisfying each organization’s respective risk appetite is ensuring consistent, desk-level compliance, comprehension, execution and practical management tools. This extends by edict beyond each organization’s walls and by de facto into vendors and their own extended network of vendors. Responsible management must therefore extend in parallel.
- Rationalizing/Transforming Branches for a Digital Future: There is no simple answer to optimizing an entire banking organization’s footprint today. Geography and demographics vary and will continue to change at an accelerated pace by orders of magnitude. Integral to addressing the near-certain continuing changes, however, are repeatable processes for agile decision-making and transformation of the retail footprint, contact channels and staffing requirements, including capacities and skill sets.
- Achieving Multi-channel Consistency: As Retail footprints and media evolve, consumers are reaching out and expecting uniform service across channels. To instill confidence, meet compliance requirements and minimize costly exception management, firms much achieve consistency and simplicity in desk-level execution.
- Managing and Executing Post-crisis Investments in Deferred Initiatives: Most organizations are facing some combination of deferred integration projects and aging infrastructure. Achieving organizational engagement and accelerating capacity/cost release are crucial to timely implementations. Underpinning the accelerated release are disciplined and accountable execution as well as revised workflows and roles to fully leverage technology investments.
- Maximizing Sales Effectiveness and Efficiency: Optimizing the total sales value chain – from market strategy through to customer retention – requires balancing customer needs and expectations with internal growth, market share and profitability objectives. Cultivating this balance begins by carefully examining sales strategy, culture, roles, accountabilities, expectations and employee skills as well as the systems for managing, technology, metrics and behavioral models for sales management and sales associates. Armed with a comprehensive understanding of both internal and external conditions, firms can achieve optimal revenue and market share expansion while maximizing customer satisfaction and profitability.
The U.S. insurance market continues to expand in both size and profitability. However, this positive trend varies dramatically by carrier and line of business. Small carriers tend to focus on their core lines of business to gain competitive advantage, while larger insurers offer greater diversification in their product offerings. Both small and large carriers struggle to grow organically, so acquisition activity is prominent for both. Unfortunately, sequential acquisitions often lead to organizational and cultural integration challenges, including redundancies and gaps.
Profit concerns frequently emerge when major catastrophic events occur – such as hurricanes, floods, terrorism, etc. – or major legal/regulatory changes are enacted, such as the Affordable Care Act. In either case, the resulting uncertainty in the market causes temporary retrenchment and reexamination of capital positions. Fortunately, insurers continue to see plenty of capital invested in the industry, though this leads to price competition in both the Life & Health and Property & Casualty segments.
These enduring trends show no sign of abating, so The Highland Group helps carriers to maximize their corresponding opportunities by:
- Pursuing Operational Excellence: As excess capital adds stress to ongoing price competition as well as the current and future rate of acquisitions, it is imperative that insurers rapidly break down silo barriers to integrate corporate functions such as human resources, accounting/finance, legal and data/information technology. This integration typically delivers rapid results and reveals opportunities within functional areas such as marketing/distribution, underwriting, claims and risk management. Companies with desirable core expertise that fail to sufficiently address productivity and expense loads often experience margin erosion and become easy acquisition targets.
- Managing Risk Holistically: For many years, insurers managed risk by line of business: geographically for property and by non-weather-related events for most other lines. Now and in the years to come, they must instead employ more advanced data analytics and sophisticated enterprise risk management programs. The 9/11 terror attacks prompted chief underwriting and chief risk officers to fundamentally alter their approach to managing risk. The new objective – holistic risk management – will be achieved only by those companies that have integrated operationally and established data analytics to support highly complex models.
- Enhancing Revenue Opportunities: Aside from acquisition activity, carriers typically rely on internal and external distribution channels for revenue growth. Therefore, it is critical that insurers minimize the nonproductive sales time of brokers and agents and maximize their time spent on cultivating relationships and selling. To maximize each broker/agent’s opportunity to deliver higher revenues, productivity measurements must encompass both the number of sales completed and nonproductive use of time, often caused by inefficient processes, systems and workflow. Additional opportunities to increase revenue come from new product development, which may temporarily grant competitive advantage, and utilizing customer care centers to up-sell and cross-sell products and services. Because care centers deal directly with customers, this touch point is invaluable for maximizing loyalty and share of wallet.
The Highland Group’s unique combination of sector experience and implementation focus makes us ideally suited to help our Financial Services clients thrive amidst intensifying challenges and increasingly competitive markets.