Three Ways To Extend Efficiencies Throughout Your Organization

Community banks today are finding themselves under mounting pressure. The battle for deposits is more critical than ever before, new entrants to the space are creating unprecedented competition, customer expectations continue to climb and technology is evolving at a rapid rate. Not to mention, these institutions are expected to effectively manage and maintain regulatory requirements, security protocols and growing their portfolios – all within set budgets.

Community banks are realizing that to effectively scale and compete in this environment, they must operate as efficiently and productively as possible. These institutions simply do not have the resources to keep up with the expansive budgets of large national banks, so they must be able to spend less time on cumbersome, manual processes and more time on strengthening customer relationships. While efficiency is a term or goal that is often talked about within institutions, it is rarely mastered. In fact, many community banks struggle with how to actually achieve meaningful efficiencies that contribute to their bottom lines.

There are several common mistakes that community banks make when trying to boost efficiencies. Although change can be daunting for some, the benefits can significantly outweigh the temporary pain points. Below are some tips and best practices that community banks should keep in mind when trying to reengineer processes and find better, more efficient ways to operate.

 Leverage new or younger associates

 One of the easiest and most cost-effective ways to improve processes is to take advantage of newer or younger employees, those that haven’t been at the bank long enough to become overly comfortable – and therefore resistant to change – with certain processes and procedures. Having a new employee shadow different positions across various departments of the institution and observe how employees conduct tasks can be extremely illuminating. An internal audit with a fresh pair of eyes is likely to uncover redundancies or inefficiencies that haven’t been noticed before while improving accountability.

If a bank does task a newer or younger employee to complete this exercise, that associate should then be given an audience with a more senior level employee or two to discuss the findings, observations and even ideas for process tweaks or improvements. This small group scenario may allow them to feel more comfortable to freely share ideas and suggestions. Younger or newer employees are often a wealth of ideas and untapped potential, and this scenario is a great example of how their voices can be heard and utilized.

 Proactively identify red flags

 Red flags or warning signs often manifest when an inefficiency is present. For example, while a department requesting an additional full-time employee is often a legitimate request, it also can be a telltale sign that process improvements could be made. Before a new hire is pursued, the bank’s leadership team should take steps to determine if there are any processes that can be reengineered or bottlenecks removed before an additional person is added. Simply onboarding and training another employee in a department or project that is already inefficient will only compound the issue.

Another red flag is any time banks store physical files. Not only is the handling of paper manual, cumbersome and inefficient, it also introduces unnecessary risk. To boost efficiencies and make the employee experience more seamless and productive, community banks should digitize traditionally paper heavy processes, like loan review, portfolio management and exceptions tracking.

Perhaps the largest red flag of all is hearing the phrase ‘we’ve always done it this way.’ This type of resistance to change and unwillingness to embrace new ways of doing things can be extremely detrimental to banks, especially community institutions. The competitive technology and business landscape are all evolving, and banks’ processes and methods must evolve concurrently or they risk becoming irrelevant. Those banks that are open to new ideas are most likely to thrive.

 Implement automation in new areas – but not too much of it

 There are many benefits community banks can gain by implementing automation into new areas of an institution. Automating previously manual and paper-based processes can reduce the time it takes to complete certain tasks, such as account balancing, from hours to a matter of minutes. Plus, automation can also improve accuracy and remove the risk of human error when reviewing, moving and indexing documents and sensitive customer information. Overall, leveraging automation throughout the organization, if done correctly, can allow community banks to boost productivity, save time and optimize profits.

However, there is a delicate balance to strike between man and machine. Community banks’ primary differentiator has always been their commitment to exceptional, personal service. Too much automation poses the risk of erasing the human factor and commoditizing the banking experience. Banks must find a way to leverage automation that enhances – not replaces – the human connection and personal service.

Those banks that are dedicated to effectively improving their efficiency ratios will be well positioned to grow and compete. With economists predicting a slowdown next year, it’s crucial that community banks are taking steps and implementing strategies now to streamline processes and operations across various lines of business including lending, deposits and treasury management. The more efficient an institution is operating, the more time its employees will have to focus on customer service, the most important aspect of community banking.­­­­­­­­­