‘’Operational Efficiency’’ VS ‘’Putting the Customer First’’

1. ‘’Operational Efficiency’’ VS ‘’Putting the Customer First’’ Presented to: 19th East African Banking School By: Joseph Iha, CEO Bank of Africa T.Z 12th– 16th August 2019

2. HENRY HAZLITT’S GOLDEN RULE(Economics in One Lesson 1946)

3. Why Operational Efficiency? • Increasing expectations from Shareholders • Ever changing demands of customers • Growth and complexity of organizations • Increasing cost of doing business • Increased competition from alternative providers

4. Who should benefit the most from Operational Efficiency? • Employees? • Shareholders? • Customers? • Regulators? • Government?

5. The Operational Efficiency Equation Efficiency = f(PxPxS) P – People P – Processes S - Systems Great efficiency demands a delicate balance of all three in the equation

6. Employees are critical to the success of operational efficiency programs • Staff reflect on the outside the intense pride and ownership they are experiencing on the inside • For any change to succeed, employees must understand and own the changes • Yet in most cases, they feel targeted by the same changes

7. The Leader’s biggest challenge is to get as many employees involved • Start with the WHY! • Service excellence and efficiency requires PASSIONATE, MOTIVATED and ENTHUSIASTIC employees • Hire based on attitude, train for skills • Emotional climate contributes 30-40% of customer experience/success • Ensure an organizational culture that supports change implementation • Flexibility and agility very critical for any institution to adapt to changes • Leaders’ challenge is to inspire PASSION and create a BUZZ in business

8. Efficiency is not about headcount but competence and attitudes • If four people take 8 hours to accomplish a task, does it mean eight people will take four hours to accomplish the same task? • Too many layers of bosses lead to unnecessary bureaucracy hence inefficiency • For greater success of efficiency implementation, Bosses need to transform themselves to Builders. • Continuous employee involvement and capacity building will see the success of enhancement of efficiency

9. The Organization Chart vs The Organization • Just like the map of Tanzania is not Tanzania, the organization chart is not the organization. • Too much fixation on organization structure leads to unnecessary bureaucracy hence inefficiency • Leadership must ensure seamless interactions across all business units and focus on the CUSTOMER always. • Encourage open door policy for supervisors and their subordinates for ease of consultations. • Leaders/supervisors must constantly come out of their offices and interact with staff/customers to assess the level of efficiency • Staff promoted to supervisory roles must have the right competency and customer centric attitude

10. The Head Office Dilemma • Do we really need Head Offices? • Head office is often regarded as a bottleneck to superior customer service and efficiency • Seamless flow of information from branches/front office to HO/back office will enhance efficiency • HO/back office staff must understand that the purpose of everything they do is service to the CUSTOMER • Top leadership MUST be vigilant about efficiency and must have daily reports that measure the same. • Efficiency/Customer Focus comes from the TOP and is MOSTLY blocked by it!

11. How do you achieve efficiency under strict compliance/regulatory regime? • Strict regulatory/compliance procedures leave little room for innovation. • Compliance and control units need to invest more time training frontline staff to build confidence • Automation of back office process through STP processes reduces risk of errors

12. Increasing Demand for Automation/Digitization • Customer’s are increasingly looking for Convenience, Flexibility, Affordability and Freedom. • Experience given by Fintech/Big Tech companies has threatened banks’ relevance • Huge investment in IT platforms, MIS systems, Data & Predictive analytics is inevitable. • Alternative payments systems: Cryptocurrencies, Facebook, Mpesa, etcetc • Banking has transformed to something to Do not a place to GO!

13. Outsourcing/Strategic Partnerships • Strategic partnerships & outsourcing is on the increase. • Areas: Payments/Remittances, Cash management, Loan processing, KYC/Onboarding • Firm SLAs on TAT, System availability and Disputes resolution is critical. • Third party dependencies can ruin your bank’s reputation and brand. • Customer ownership cannot be outsourced

14. Traditional Banking and Payments are Broken • Too cumbersome, Too expensive, Too old world for customers in a click-click done world • Banks’ biggest threat: Mpesa Libra Paypal Bitcoin Aggregators

15. Beyond intermediation, customers expect much more from their bank

16. Overwhelming pace of technological change Pope’s Coronation Vatican 2005 Pope’s Coronation Vatican 2013

17. Bank’s cannot ignore the power of the mobile Where is your Phone @ Night Z Z 3% Z Z 13% 55% In my hand 24% On the bed 4% Arms reach In another room Who knows

18. Use of predictive data analytics is becoming inevitable I would like to open a bank account I need a loan to pay for electricity but I have never borrowed from you before I would like to save for my child’s education I want life insurance I want to buy a Smart Phone

19. Is the automation geared towards meeting customers needs?

20. Customers’ Perception is Reality Avoid risk of self glorification Customers’ perception is reality How accessible is Leadership to customers? How does leadership ensure feedback is not suppressed? What kind of customer escalation matrix do you have? Constantly push the bar when it comes to service. • Th

21. What top teams should be preoccupied with • Remove Frictions • Improve Speeds • Design Smart Interfaces • Reduce Fees/Costs This involves Fresh Thinking, New Talent and Many Collaborations

22. In the end, Employees are the most critical success factor in driving change • Employees are not just Human Resources; they’re Human Beings • Management has to win the Hearts & Minds of the employees • Blend Old and New • Protect Values; Empathy & Openness • Rapid Cultural Change Program

23. Where Technology Fails, Happy Employees Rescue • Technology is bound to fail at some point; Happy Customer Focused employees rescue • The future is both Analogue & Digital – the human interface matters just as much • Efficiency is about new technologies, fresh channels, quick transactions & short interactions; but it’s also about people. • Perfect Harmony: Happy Employees, Happy Customers, Happy Shareholders

24. How do you create an organizational culture of efficiency & service excellence? • Customer service is not an event – it’s a way of being • Put the right people infront of your customers • Customer service should be everyone’s job • Awareness – if staff don’t feel it’s monotonous, you are not talking enough about it • Product and organizational knowledge builds staff confidence • Invest in front office leadership • Everyone’s job description #1 should be to make the customers HAPPY

25. Why do customers move to the competitor? • 4% Customer dies/moves • 5% Friends influence • 9% Lured by competitors • 14% Unhappy with products • 68% Your indifference *Customers are 70% more likely to recommend a bank where a complaint has been handled satisfactorily than one where they have never had a problem

26. Social media has created a highly sophisticated and connected consumer • Customers tell their story and experiences simultaneously with your brand/product campaigns • Realtime information is available to customers • Banks are therefore made accountable to their service promises • If facebook was a country, it would be the most populous country; 2.7bn active monthly users • Younger, Decentralised, Decorporatised, Connected and Unconvinced population • Who engages your customers in their social media space?

27. EXCEED your customers’ expectations and they wont stop talking about you

28. So how do you know what your customers are saying about you? Listen to the sound of the river if you want to catch fish IRISH PROVERB

29. THANK YOU