How BNY Mellon Is Scaling Process Improvements
Growth is good, but along with increased revenues and marketshare there often are big challenges around efficiency, scalability, and performance excellence. One financial institution that has faced these challenges head-on is New York-based BNY Mellon, which as a result of acquisitions and the growth of various business and investment services found itself hampered by siloed business operations, duplicated functions, and inefficient processes. The investment management and investment services company has committed to a concept of continuous process improvement, “a process-focused effort that leverages lean methodologies,” reports Jeffrey Kuhn, executive vice president and co-head of client service delivery for the company.
The streamlining effort started in about five years ago, says Kuhn, who is responsible for what he calls “change the bank” operations and program management, and for a number of control and regulatory-related functions. His “co-heads,” Andy Bell and Peter Johnston, oversee middle-office (which includes business units such as accounting services and corporate trust services) and shared-office (what Kuhn terms “centers of excellence,” such as billing, reconciliations, and cash processing) operations.
[Operational efficiency, continuous process improvement, and faster time-to-market are anticipated benefits of BNY Mellon’s new payments infrastructure.]
In 2009, there were a number of discrete businesses across BNY Mellon, each with its own chief operating officer. “I was COO for six of the businesses at the time,” Kuhn notes. Recognizing that, as “a technology and operations company that supports our financial services and investment services model,” this had to change, the institution embarked on what it called “operations transformation.” According to Kuhn, “We were looking to identify common functions and create horizontal centers of excellence. We did this for about half of processing businesses in the bank.”
Another tactic involved shifting jobs to lower-cost locations. “Since 2009 ... we have taken advantage of salary arbitrage in areas like India, Manchester [UK], and central New York,” he says. There also has been some application rationalization, he adds. “If we had multiple applications in technology that were doing the same basic function, we started looking at how we can consolidate applications with common functions and streamline our technology model and ... organizational design,” he says.
The goal, he relates, was to “create efficiencies, drive expense reduction, and streamline how we do work.” One result of these efforts occurred in 2012 with the creation of the investment services operation. “All the processing services in the bank came together under one CEO, Tim F. Keaney,” he says.
Having addressed what Kuhn describes as “the low-hanging fruit, the relatively easy work,” the next question was, “How we can take our work to the next level?” BNY Mellon now is grappling with “how we do work,” he explains. This involves “studying process and process owners. As we look at processes and operations, how can we apply lean methodologies to streamline the processes [and] reduce work, end-to-end? How can we make both our clients and employees most productive?”
This effort is what BNY Mellon now calls continuous process improvement (CPI). “We are continuing to study the footprint of our staff working on particular processes, and identifying where pockets of work are being done very well,” he says. The bank wants to figure out how to extend these “pockets of excellence” into enterprise-wide best practices.
While stressing that “there’s no cookie-cutter, straightforward straight answer for how we think about CPI,” he explains that it typically involves learning from process owners how they move work through the organization and how they address waste.
Automation tools also help the process improvement effort. BNY Mellon is working with Pegasystems to streamline systems, improve routing, increase straight-through processing, and create centers of excellence to address service quality and productivity. Pegasystems workflow technology “allows us to capture [and] study the elements of a query,” he says. For example, if it’s a query about income processing, the Pegasystems technology can route it to the income processing group, making it “a faster and more responsive matter to move queries and work to the appropriate place in the organization,” he adds.
Now, “when a client calls the help desk or a service operator, we can go online and see where the query is.” This Automated Query Management System (AQM) was originally built using the Pega BPM technology for asset servicing, one of BNY Mellon’s largest businesses. The vision is to broaden its use enterprise-wide as an inquiry platform/shared service for all lines of business. “We are building more enterprise solutions off the Pegasystems platform, to have more scalable solutions, not just for business problems, but for enterprise solutions,” he says.
Among the benefits of the automated query system has been a reduction in the time it takes to handle transaction queries from as long as five hours, with multiple people involved, to just seconds, he reports, adding, “It’s currently deployed on more than 10,000 desktops. We’re looking to expand that capability to different functions in the company. It’s one of the key elements of our overall continuous process improvement strategy.”
While technology has been crucial to the CPI endeavor, success of course requires more than that. “The only way a program like this is successful is, there needs to be a federated model,” says Kuhn. “The business and operational groups have to have champions who become the owners of projects and initiatives. They have to own the process.” He sums up his approach as, “Build for the enterprise, leverage business owners, make sure there’s ownership and accountability [and extend] to the businesses, so it’s not me in a centralized group pushing the mandate.”
Katherine Burger is Editorial Director of Bank Systems & Technology and Insurance & Technology, members of UBM TechWeb's InformationWeek Financial Services. She assumed leadership of Bank Systems & Technology in 2003 and of Insurance & Technology in 1991. In addition to ... View Full Bio