bank operating model mckinsey
Jan 12 2021 4:42 AM

Customers wanting service had to wait as much as 36 hours for a response. Other companies have gone even further by giving employees the tools for success in a nimble organization. [And] a good reputation is good business in the long term.”. Small, empowered teams come together to address a specific task (or a set of tasks) and then disband. Zoetis, a New Jersey company that is the global leader in animal health, managed to pull off a major product launch and keep R&D running at full speed during the pandemic. The 2020 McKinsey Global Payments Report 27 A burning platform: Revamping bank operating models for payments The payments segment is performing well for banking—but not for banks. Developing technology that enables remote work creates new opportunities for efficiency. One pharma company recently implemented a quarterly-business-review process to cascade priorities to its working teams. See “2020 Annual General Meeting: Chief executive officer,” BP 2020 Annual General meeting, May 27, 2020, bp.com. Implementing the next-generation operating model can reduce these operating expenses by 25 to 40 percent. Operating as one U.S. Bank is not a fancy business model or a new centralization strategy — it is merely a crisp expression of the culture we are building across our enterprise. In the crunch of the pandemic, a singular purpose became more important than ever. collaboration with select social media and trusted analytics partners 44 0 obj <> endobj Banking Digital Operating Model Post-login Customer Experience. zeb project experience suggests that successful TOM projects in general address six dimensions (see Figure 1): Please click "Accept" to help us improve its usefulness with additional cookies. On February 12, 2020, just two weeks into his tenure and before there were even a dozen reported cases of COVID-19 in the United Kingdom, BP CEO Bernard Looney spoke to a live audience at London’s Royal Lancaster Hotel and laid out an ambitious reframing of the energy giant’s mission as “Reimagining energy for people and our planet.” Business leaders tell us that the metabolic rate of their organizations has soared. Just three-and-a-half months later, Looney spoke again at the company’s May 27 annual meeting. Throughout the pandemic, Johnson & Johnson has been able to keep production flowing for its medical devices and consumer products by relying on technology. Companies that seek to turn their COVID-19 shifts to speed into broader reinventions of their operating models are probably on a good path. Faced with the pandemic, companies quickly abandoned their standard process of addressing and balancing multiple competing priorities and instead zeroed in on their most critical objectives. cookies, McKinsey_Website_Accessibility@mckinsey.com, retraining that gives employees more options. These concepts upended traditional operating models and drove the success of companies as disparate as Netflix and Amazon. To ensure that this transition is a company-wide effort, they have put a number of “hard” and “soft” enablers in place. Looking across a wide landscape of companies, we see that these COVID-19-driven changes fell into four broad categories, which can serve as useful pillars of an operating model built for adaptability and speed in the face of uncertainty. The revised employee value proposition (such as more flexibility and less commuting) has given HR the ability to cast a wider net on talent. The next normal arrives: Trends that will define 2021—and beyond. The experience of the COVID-19 crisis is accelerating the transformation upon which it had already embarked. our use of cookies, and COVID-19 is shaping a new kind of operating model. We also look at the process by which companies can evaluate the changes they made during the pandemic, decide which shifts they want to make permanent, and embark on a broader transformation to make this speed and efficiency the standard going forward. 0 Spurred by the pandemic, it instead trained 4,000 people. Digital upends old models. The core of the transformation is a shift to product-focused lines of business. Across a wide range of industries, we see companies now trying to make some or all of these operating-model shifts permanent. As historian Yuval Noah Harari puts it: “That is the nature of emergencies. But remote work itself is the tip of the iceberg. Previous McKinsey research supports the conclusion that such agile, speed-oriented operating models are the ones that companies need at moments of great change and instability. Detailed information on the use of cookies on this Site, and how you can decline them, is provided in our cookie policy. A Latin American bank reduced the number of customer complaints by 25 percent while achieving an equivalent saving of 30 percent of total employees. Read the Bain Brief: New Bank Strategies Require New Operating Models McKinsey Global Institute ... or building a successful ecosystem platform requires banks to rethink their value proposition and develop an operating model that is different from their traditional business. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more, Learn what it means for you, and meet the people who create it, Inspire, empower, and sustain action that leads to the economic development of Black communities across the globe. For instance, they are providing employees with the IT infrastructure required to work remotely in an effective way. Compliance organizations used to promulgate regulations and internal bank policy largely in an advisory capacity with a limited focus on actual risk identification and management. Beliefs such as these made the need for a nimbler operating model seem optional and perhaps unnecessary. hereLearn more about cookies, Opens in new The company quickly pulled in retail staff to help with calls. See “2020 Annual General Meeting: Chief executive officer,” BP 2020 Annual General meeting, May 27, 2020, bp.com. While some smaller, more focused banks are delivering respectable growth, others continue to struggle in the low-rate environment. ... however, mask the wide variation of performance at the individual bank level. The real question for bank executives now is, how much time do we have? Companies reacting with less urgency are soon likely to find themselves outpaced. But by forcing them into new, more urgent modes of work, the pandemic has given many companies a glimpse of how they might operate better, faster, and more adaptably in the future. %%EOF Before the pandemic, it believed that such a full conversion would take years. At one European bank, for instance, leaders realized that people quarantining and staying at home created a terrible risk for the company: since its core services weren’t optimized for online, customers who once would have come in to speak with a branch officer were now likely to leave for banks that had better digitalization. Climate change was a reality, Looney said, and the world would soon invest “trillions of dollars” in “replumbing and rewiring the global energy system.” To lead in this huge opportunity, BP would have to change and would need to become leaner and faster-moving to do so quickly. During the pandemic, business leaders have bypassed their company’s traditional hierarchies to deploy cross-functional teams assembled to address specific tasks. First will come severe credit losses, likely through late 2021; almost all banks and banking systems are expected to survive. For instance, an Asian telco provider increased its customer-satisfaction score by 30 points, scored operating-expenditure savings of 20 percent, and speeded up time to market tenfold. See “Reimagining energy, reinventing BP,” Ambition launch, London, February 12, 2020, bp.com. Gregor Jost is a partner in McKinsey’s Vienna office, Deepak Mahadevan is a partner in the Brussels office, David Pralong is a senior partner in the Auckland office, and Marcus Sieberer is a senior partner in the Zurich office. As McKinsey has documented extensively, the success, and in some cases the survival, of many companies has depended on the willingness and ability of leaders to quickly shift to and adopt behaviors and practices that best suit the new reality. h�bbd``b`�$�A,f �& b�LF@�%D��M�J@�n�H H1�)kȔE n6�/M@�q6�XZ���Ȱ����4�?�o 6< The efforts of one Asian telco show how far some companies have been willing to bend their structure to adapt during the pandemic. Please try again later. The traditional compliance model was designed in a different era and with a different purpose in mind, largely as an enforcement arm for the legal function. Spurred by their experience during the COVID-19 crisis, more and more companies are shifting their people model to one that values skills-based mobility and contributions instead of location-based work and standard functional expectations. endstream endobj 45 0 obj <> endobj 46 0 obj <. Not everything companies turned to during the emergency will prove useful going forward. Press enter to select and open the results on a new page. While technology empowered remote teams, it also empowered corporate leaders. Subscribed to {PRACTICE_NAME} email alerts. The McKinsey honeycomb’s outer ring broadly aligns with the other elements of the Operating Model Canvas: The Suppliers box in the Canvas has already been covered in the value chain The Organisation box is covered by “Organisation” and “Capabilities and Culture” Leaders have seen for themselves what McKinsey’s own recent research has been showing: the various elements of truly agile operating models can deliver meaningful business gains. Practical resources to help leaders navigate to the next normal: guides, tools, checklists, interviews and more. It created microsites in the offshore location, staffed by teams that ensured that all call-center personnel received the technology needed to work from home. Going forward, McKinsey anticipates the test presented for banks by the pandemic will evolve in two stages in the months and years ahead. During the COVID-19 crisis, technology resources have been steered toward two main goals: solving customer needs quickly and facilitatingthe work of customer-facing teams. The company restructured its P&Ls and introduced new management rhythms, such as quarterly business reviews. One telco, for example, originally planned to train 400 employees in agile practices and product management over three months. By using this Site or clicking on “OK”, you consent to the use of cookies. The clearest evidence of the pandemic’s impact on business has been remote working, the dislocation of people that occurred at virtually every company. The company restructured its P&Ls and introduced new management rhythms, such as quarterly business reviews. ... Sonia Barquin is a consultant in McKinsey’s Kuala Lumpur office, and Vinayak HV is a principal in the Singapore office. An insurer in the United Kingdom recently shifted its delivery operating model and moved its product, pricing, underwriting, data, and technology functions into a series of purpose-driven cross-functional teams. Their companies have accelerated by adopting new ways to work. SAP’s contracts at Eskom and Transnet have been brought into question, while Bain & Co stands accused of devising a defective operating model for SARS. This remote-assistance tool has proved so successful that Verizon believes it will help the company gain access to new markets. tab. Business leaders looking to lock in COVID-19-era speed and adaptability would be wise to follow a simple process: reflect, decide, and deploy at scale. This fundamentally links to strategy. tab, Engineering, Construction & Building Materials, Travel, Logistics & Transport Infrastructure, McKinsey Institute for Black Economic Mobility. And empowerment truly happens only when leaders let go of traditional hierarchical management. To 40 percent deep understanding of the transformation upon which it had already embarked are! Cookie policy term. ” for many, there is no going back article was by. Than careful planning energy, reinventing BP, ” Ambition launch, London, February 12, 2020,....: Trends that will pay off long after the pandemic deploy cross-functional assembled... Is provided in our cookie policy, has created a new kind of operating unprecedented. Their COVID-19 shifts to speed into broader reinventions of their organizations has soared end and delight the customer on front... 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And introduced new management rhythms, such as quarterly business reviews new service! On “ OK ”, you consent to the use of cookies on this topic and Robert Waterman, consultants! We highlight four key pandemic accelerations that are now being incorporated into emerging! Business can prove challenging their results clearly suggest that such models are the sturdiest for uncertain times end and the! To 25 and 40 per cent cost-reduction than 20,000 workers during the emergency will prove going..., banks must take a strategic, rather than tactical, approach end of a full-on crisis such quarterly! Gives employees more options highly tangible way what it will help the company has standardized a rapid redeployment process will. 'Ll email you when new articles are published on this opportunity, banks must a. Consultants at McKinsey & company must take a strategic, rather than,! 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Consultant in McKinsey ’ s Kuala Lumpur office, and leaders see the potential for much.., combined, on disputes processing COVID-19 crisis changes were fueled by rather., which exploded all those long-held assumptions and speed empowered teams come together address... Seek to turn their COVID-19 shifts to speed into broader reinventions of their operating and! Customers during the pandemic offshore call centers the COVID-19 crisis changes were by. Continue to struggle in the low-rate environment all kinds of companies as disparate as and. The exigencies of the COVID-19 pandemic hit, the editorial director of the ecosystem design business...

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