Operational efficiency in the UK is at an all-time low, with the ONS recently reporting zero annual growth in economic output per hour in the last quarter of 2022
The ongoing cost of living crisis, increasing inflation and interest rates are having a direct impact on demand for businesses. Against a backdrop of a declining economy, demand for banking services like savings and mortgages has decreased, making inbound work for service operations teams harder to plan for.
At the same time, recent research from ActiveOps revealed that operational efficiency performance in the UK and Ireland is slumping, with growing levels of capacity being wasted at a time when businesses are pushed to stretch existing resources further.
Facing an uphill battle with these challenges, operations teams are being left with unpredictable workloads. Vital business operations such as capacity planning, staff performance and management have never been so critical yet so hard to achieve.
One of the most impacted industries is the banking and financial services sector, where the past few years have completely changed the way providers deliver new products, reach new customers and plan employee capacity.
Coupled with the challenges of post-pandemic economy, these changes have shifted the whole sector to new ways of working that have released capacity across organisations. Now is the time for these businesses to go back to basics and focus on improving how they run operations in a way that will help them make the most out of the available capacity and boost efficiency levels.
The fundamental role of operations teams
According to our recent study, OpsTracker: The Performance Tracker for Operations in Financial Services Q1 report, operations leaders in the UK and Ireland are still struggling to figure out how to get the most out of their teams.
The latest results show that operational efficiency in UK and Ireland dropped to 44.2% from 47.5% in the first quarter of 2023.
This is why running operations effectively has become fundamental to an organisation’s success and a key business differentiator—given the same market context, compliance constraints and customer base.
Too much capacity sounds like a dream to those who have got used to quarter after quarter of stress and stretch, but it’s important that this capacity is invested in boosting the right skills and projects that will create a competitive advantage.
As the economy inevitably recovers in the coming months, achieving operational efficiency will be the ‘secret sauce’ for financial services organisations to quickly react to the needs of customers.
Five key elements to optimising operational efficiency
To build this competitive advantage now, businesses must ensure they have the right level of visibility over performance and productivity levels so business leaders can fully understand where the roadblocks are.
There are five levers that operations managers can pull that measure how well operations are being run within the variety and complexity of the underlying business activities:
-
Agility
How easily can operations teams flex resources?
2. Control
Is your organisation able to forecast future workloads across teams and understand the capacity to ensure teams are operating at maximum level of performance?
3. Effectiveness
How well can your operations team keep work in progress on track or even ahead of schedule?
4. Efficiency
How successfully does your operations team meet challenging but attainable work targets?
5. Focus
How much time does your operations team spend on core day-to-day activities when compared with holidays, sickness, meetings and training?
These elements give businesses vital data and intelligence to make better decisions and ensure optimal performance. Balancing these metrics right helps businesses meet fluctuating service needs at any time.
For example, if you push too hard or pull too little on one metric, it could negatively impact another. In the same way, to boost your agility levels, you may need to reduce focus on core work by increasing training and development.
Getting the balance right is important—too much training and those new skills may end up going unused. By monitoring how these metrics interplay with each other, businesses can maintain the right balance and fine-tune levels as needed to achieve optimal operational efficiency and performance.
To get an idea of how this works in practice, picture a bank with two back-office departments that operate in complete isolation. One looks after mortgages and the other looks after insurance services. As economic conditions deteriorate, mortgage applications are likely to fall, resulting in less work for the mortgage department.
That means capacity gets squandered and may increase the risk of layoffs. At the same time, insurance claims become more in demand, resulting in more work for the claims team than usual, stretching resources to their limits and likely needing overtime to keep up—creating more expense for the bank and increasing the risk of burnout.
Supporting projects that will boost efficiency levels
Rather than having workers struggle to fill their time, ops leaders should use the available capacity to take back control and support projects that will boost efficiency levels. Having the right tools and processes in place to manage and turn this data into actionable insight will be a key differentiator for businesses in the second half of the year.
Real-time and consistent monitoring and measurement of service operations can help business leaders to plan and manage incoming workloads while balancing the peaks and troughs more effectively through smarter work allocation.
By making improvements across the five key metrics – agility, control, effectiveness, efficiency, and focus – businesses can transform the way they run operations and help them build the operational efficiency they need to thrive.
This piece was written and provided by Ian Carter, Head of Insight and Innovation, ActiveOps.
