Inheriting troubles I’m mentally numb
Crazy, I just cannot bear
I’m living with something that just isn’t fair
Mental wounds not healing
Who and what’s to blame
I’m going off the rails on a crazy train
– Ozzy Ozbourne, 1987
What do Bernie Madoff, Deepwater Horizon, Goldman Sachs and WAMU all have in common? Besides three of them failing miserably, in their quest for rewards they created and embraced chaos. Some built chaos into the quest. Others generated chaos when their journey ended. More commonly, chaos occurred during and after the event. The definition of chaos is a state lacking order or predictability. It is not coincidental that the word chaos is of Greek origin. All this aside, Gonzo Bankers should introduce a little more chaos into their own worlds. But we can do it a bit more intelligently and ethically than in my examples above.
Two areas, one internal and one external, are ripe for a little chaos today. The internal one has the potential to generate huge rewards in areas of efficiency, quality and scalability. The other is all about the money.
Internally, leveraging your enterprise content management (ECM a.k.a. document imaging) platform and migrating your processes to image-enabled processes is time and money well spent for the long term health of your bank. Although fraught with upheaval, teeth-gnashing and hand-wringing, it is well worth the effort. There are a few reasons “going imaged” is so painful:
The truth is most departments would welcome a paperless operating environment. But once they understand the process changes that have to occur, chaos comes into play.
CHAOS POINT #1 – Ancient ingrained and trained processes will absolutely change … finally
CHAOS POINT #2 – Ineffective leadership will get the results you expect it would
Even once the new, image-enabled, automated process is built, tested, piloted, trained and rolled out, there will be the curmudgeon who refuses to adapt. At this point management must step in and evaluate if the profit contribution of said curmudgeon warrants a process detour. If not, this could be a C.C. (chaos casualty).
CHAOS POINT #3 – Not everyone will be around when it’s over
Now on to the Mo Money, Mo Money, Mo Money external chaos opportunity. Nothing gets a customer more riled up than when he knows he has money in his account, whips out the ol’ debit card to pay for cute Claire’s birthday party at Chuck E. Cheese’s and Charlie Clerk says, “DENIED!” Therefore, most banks cringe at the thought of monkeying with EFT cards, networks and processors. And don’t even mention mass reissue. That’ll get you thrown out the sixth floor window faster than P&G stock on Flash Crash Thursday. But banks may be missing real, big, serious, hard, cold cash by not investigating their options here.If you are a Visa card issuer, MasterCard would love to sign you up. If you are MasterCard issuer, Visa would love to sign you up. If you belong to STAR and PULSE, ACCEL and NYCE would love to have you. If you belong to ACCEL and NYCE, PULSE and STAR would take you in a heartbeat. If you are processed by Fifth Third, FIS or Fiserv, one of the others would convert you in no time.
Sure, each of these introduces its own brand of chaos, but how many Tums could you buy for an extra $100,000 a month? Not worth it? How about $3 million a year? Still not worth it? How about $12 million over five years? Every chaos has its price, on the pain side and the gain side.
If you had to reissue cards from Visa or MasterCard to the other, there are risks. But has it been done before? Yes. Do you get a lot of calls? Yes. Do the calls die out after a couple of weeks? Yes. Does the money still keep rolling in? Yes.
CHAOS POINT #4 – A brand switch can be a disaster but it won’t be
Changing network associations can be very lucrative on both the interchange income side, since each network has its own interchange schedule, and on the expense side, since each network negotiates its own fees with each issuer. This is one where the chaos comes in the analysis of which option is best. If you asked four networks, they would each say they bring you the best profit. Once the decision to switch is made, there is some chaos around adding and removing networks. But again, some cardholders are affected, most are not, all get fixed within a couple of weeks.
CHAOS POINT #5 – If you want your customer’s banking experience to be flawless, change nothing … and it still won’t be
Processor switch-outs should be “transparent” to the cardholder. Yeah right! But even with the inherent glitches, the bigger chaos will come from the staff that has to learn new tools, new lingo, new codes, new nuances, etc. Do they ever learn it? Of course. Is any processor’s solution materially better than the others? They would like to think so, but they are not really so different.
CHAOS POINT #6 – If you don’t think your staff can handle learning a different system, they probably won’t offer to
The bottom line is that a little reckless abandon is not necessarily a bad thing. It can be healthy for the organization and profitable. It may resemble the DTs for a junkie-gone-cold-turkey, but after a year of being sober, ask the former addict if it was worth it.
Every organization has policies that don’t make sense, systems that don’t interface, and paper forms that shouldn’t exist.
Cornerstone Advisors provides the experience, methodology and leadership to tackle your company’s greatest process challenges. To make tangible process improvements, we provide a focused team to work with key individuals in your institution.
Our fast-track approach can bring process improvement results in as little as 60 days. In addition, Cornerstone can provide training and tools to enable process improvements to continue with your internal resources.
Contact us today to get started on a fast-track to efficiency.