Lean Banking

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The principle of lean banking is all about identifying areas of waste and inefficiency within a banking Organisation, and applying proven methodologies to generate high quality solutions. The aim of this book is to help banks improve their customer experiences, get the most out of their staff and reduce monetary and other forms of waste wherever possible.

In response to the recent economy’s woes, banks have placed a growing premium on reducing costs and improving operational efficiencies and many banks have turned to lean programs as a useful tool. Most of these banks will find themselves disappointed, however, because few lean initiatives, in our experience, deliver the expected results. The near and longer-term impact on costs proves to be far less than expected, and any gains in efficiency prove to be either temporary or too limited in scope to make a real difference. There is no fundamental, lasting change in the way the bank conducts its operations and hence little impact on long-term performance.

The problem is not with lean itself, however. Indeed, we believe that lean has much to offer banks. The problem lies in the approach and implementation. Typically, banks go wrong in one of two ways. One, they apply lean too narrowly and from too limited a perspective. There is no cohesive, end-to-end view of the process itself or the alignment of all of its elements. Alternatively, the effort is driven solely from the top down and fails to engage and involve the key people who actually perform the critical tasks within the process. This leads to a lack of process ownership and accountability. The end result, in either case, is that the lean effort delivers only a fraction of its potential benefits.

In this book, we discuss what we consider to be the optimal means of deploying lean in the banking sector. Specifically, we advocate a holistic lean program that addresses underlying processes and employee behaviours and attitudes. We also recommend an incremental, pilot-based approach to adoption, one that allows banks to generate quick wins and establish a culture of continuous self-improvement. These elements, we believe, can mean the difference between an unsuccessful lean initiative and a truly transformational one.

Finance leaders are facing a hailstorm of accounting, regulatory, and management challenges, creating pressure to improve the efficiency of Finance and information quality. Externally, stakeholders and regulators demand more transparent and reliable information in less time.

Internally, business leaders require fast, accurate, and increasingly transparent information to support smart, informed business decisions. Meanwhile, overlapping and inconsistent data, manual reporting, disparate systems, and aging technology lead to poor information quality.

By reducing costs and releasing capacity, Lean can contribute significantly to the bottom line. Financial institutions leveraging Lean report results of 20-30% cost reduction within 12 to 18 months and maintain cost-efficiency ratios below the industry average. Unlike other process improvement methodologies, Lean does not require significant capital investment. Lean concepts and tools are relatively easy to learn and apply and often boiling down to common sense.

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