Allocating branch costs to lines of business accurately
The bank wanted to implement a credible, activity based program to charge back costs incurred by its branches in servicing customers of the bank’s various business lines, including corporate finance, retail, commercial, business banking, and consumer lending. At the same time, the bank wanted to refresh its time standards for staffing and scheduling.
Role-based activity time standards
To develop credible and comprehensive role-based activity time standards as a basis for cost allocation, the bank worked with a team from West Monroe Partners that blends deep experience in financial services operations with distinctive technical skills in workforce optimization.
The project team collaborated with bank executives and branch teams to quantify role-based activity times for all customer and non-customer-facing activities for each line of business. The team used its proprietary Activity Trak methodology, which offers a minimally invasive approach for collecting activity data for activity-costing and workforce management applications. Using this approach, 295 branch employees in 6 functional roles across 25 branches collected more than 250,000 activity timings, with a 95-percent data quality confidence level. To facilitate participation, the project team developed all program materials and delivered in-branch employee training, coaching, data quality assurance, and customer interaction modeling.
Following data collection, the team performed in-branch interviews and observations to rationalize the data and then benchmarked the findings against a bank peer group and best-in class institutions. The consultants also worked with bank executives to extrapolate the findings across the institution’s entire branch network and specific distribution channels (e.g., traditional branch, in-store, digital). These analyses provided the input for a branch time standards workbook that covers the 491 unique branch activities developed – with data by functional role and branch distribution and design, specific to each of the lines of business in scope for the project. The project team established comprehensive, role-based activity time standards for all branch channel customer-facing and non customer- facing activities. These represent the customer and employee experience times for all branch activities.
The final step in the project involved mapping the results to the corporate finance costing model and retail banking workforce management staffing and scheduling tools and then modeling the results for activity costing and workforce management uses.
Credible data that supports multiple applications
The bank now has credible and comprehensive role-based activity time standards that it uses for multiple applications – including allocating branch customer-service costs accurately to its lines of business, as well as establishing optimal branch staffing levels and schedules. Furthermore, by using a proven activity measurement approach and applying the results using the activity-costing model and workforce management tools, the bank established credibility with its key stakeholders in both branches and lines of business.