Key takeaways
- Many financial institutions continue to use decades-old processes, including some that rely on pen and paper or calculator tape.
- Identifying and updating these inefficient processes can dramatically improve operational results, often with little to no transition costs.
- Embracing a mindset shift that encourages your team to question existing processes and explore innovative alternatives is the essential first step.
As financial institutions seek to adapt to today’s ever more competitive business climate, leaders are looking for new ways to operate more efficiently. But could the key to doing this successfully be simpler than you think?
For many institutions, the answer is yes. While some may benefit from new systems, better analytics or AI, there are often lower-hanging fruit available, like simple, practical process improvements that deliver meaningful improvements in efficiency while cutting costs.
Keep reading to learn the top process improvements that could help your team operate more effectively.
Too many financial institutions are still missing out on efficiencies
Financial institutions are often slow to embrace change. This makes sense for a heavily regulated industry, but it also means many institutions are still operating like the 1970s — and missing out on practical opportunities to work faster and more effectively.
For example, many institutions are still using pen, paper and calculator tape to prepare call reports or reconcile accounts. These institutions often don’t even use basic software like Excel, let alone the more advanced features that may be available within their core systems.
If your institution operates this way, you might still need 25 hours to prepare a call report, while your more up-to-date competitors can do it in 5 or 6 hours. These kinds of operational inefficiencies add up, costing your institution time and money.
However, there are practical steps you can take to change that.
5 practical action steps for financial institutions to operate more efficiently
Improving your financial institution’s processes doesn’t have to mean upgrading to expensive new systems. Try these targeted, practical adjustments (some of which are free to implement) to operate more efficiently, save people-hours and stop wasting resources.
1. Embrace a mindset shift
For many years, “because we’ve always done it this way” was a good enough reason to keep a process in place. Changing that starts with a mindset shift that encourages your team members to question existing processes and look for more efficient ways to operate.
For starters, simply ask why existing processes are the way they are. There may be a good reason, but you could also quickly discover processes that are ripe for innovation.
Identify and act on those opportunities when they come up. As your team gets more comfortable thinking this way, you’ll uncover more of them.
2. Print to PDF rather than a hard copy
If a report needs to be signed, many financial institutions continue to print a hard copy, gather signatures and then scan that report back into their systems. Making the switch to printing to PDF and getting electronic signatures instead is faster, less prone to getting lost in the shuffle and will save your institution a lot of money on paper over time.
3. Use Excel rather than calculator tape
Another quick win: moving from adding machines and calculator tape to Excel. Most other industries made this jump decades ago, but many financial institutions have continued to do things the old-fashioned way.
This is a low-cost transition that makes a big impact. If your team gets comfortable with Excel (for example, learning how to use formulas), this can dramatically speed up work around reporting while also making it easier to catch errors.
4. Make better use of your core systems
Every financial institution runs on a handful of core systems. But many institutions don’t take advantage of all the features these systems offer, including those that can improve operational efficiency.
Ask your core provider to help you learn more about your core systems’ full capabilities. Do they include a built-in auto-reconciliation feature, for example? Can you sign off on reports within the system?
Also, explore whether there are any add-on features available that would be worth investing in. Core providers are working hard to remain relevant during the AI era and may have new feature offerings that you don’t know about, but which could help your team work faster and more effectively.
5. Leverage outsourcing
For institutions looking to operate more efficiently, outsourcing can often help — but not necessarily in the way you might expect. The most effective use of outsourcing here is often as a coach — for example, an outsourced CFO who comes to support your full-time CFO specifically by looking for process improvements, implementing more efficient processes and then exiting stage left.
Outsourcing can also be a crucial tool to spread institutional knowledge. Within many financial institutions, crucial process knowledge is often closely held by a small number of senior employees who are at or near retirement age.
An outsourced CFO can help transition that knowledge to younger team members, as well as cross-train your team so that critical skills are more widely distributed.
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