The four building blocks of operational transformation

Published on June 29, 2021 by Mohak Mantri

The term “four-minute mile” has historically been used to refer to something considered impossible to accomplish. It harkens back to the completion of a mile run in four minutes or less, first achieved in 1954 by Roger Bannister. Since then, more than 1,400 runners have accomplished this feat. Physical makeup and conditions have been the same since 1954, so what changed? Was it a change in mindset, or perhaps following Bannister’s training regimen?

Leaders of banking operations and risk management often have to juggle different priorities and challenges, and deliver cost savings, while meeting increasing customer demands. Added to the complexity is the intense competition among traditional industry rivals and fintechs. Leaders have to deploy a number of solutions — such as adopting robotic process automation (RPA), introducing lean and six-sigma practices and, in some cases, artificial-intelligence (AI) and machine-learning (ML) advanced analytics — to reduce operational costs, while providing a world-class service. The rapid evolution of technology coupled with the current economic dynamics demands even more decision making and commitment to efficiency and effectiveness to retain existing clients while acquiring ones.

Acquisition of new clients is extremely costly, and inadequate client management can be fatal for a business. Research shows that the cost of acquiring a new customer is five times higher than that of retaining an existing one. Increasing customer retention rates by 8% increases profits by 25–75%. Focus on delivery can increase client loyalty and retention, adding value to each new client acquired.

This blog discusses four easy steps to Operational transformation in lending for improved client experience along with market share and profitability without incurring extra cost:

  • Operational innovation and excellence — Understanding client needs, coming up with entirely new ways to meet the requirements, developing products, servicing accounts or performing any other activity the client needs support with along with value creation. It is not just about bottom-line efficiencies and effectiveness, but also top-line growth. Both innovation and excellence have a clear impact — the adoption of related practices helps differentiate firms with comparable offerings and strategies. According to a study by Harvard Business Review, changing management practices, incorporating best practices and routines and following the beginner’s-eye principle can lead to a USD15m increase in profits.
  • Cost optimisation — The biggest challenge is improving the efficiency ratio by reducing per unit costs in comparison to value generated for each process activity or transaction — such as the cost of origination processes, underwriting deals, portfolio management, collateral analysis, or operational needs such as account opening, creating loan document packages, servicing or account closures and lien releases. This requires continuous performance monitoring by defining, measuring, analysing, benchmarking and ultimately transforming middle- and back-office processes.
  • This would boost the delivery team to look at the processes and generate ideas for improvement in terms of approach and execution on an ongoing basis and helps convert employees from being passive participants who only notice problems to active participants who have the drive to solve them. Practices such as mobility for offsite work, flexible work arrangements and outsourcing less specialised activities could also be considered as it helps in redefining roles increasing overall morale and engagement levels

Acuity Knowledge Partners can help you address these key issues. Leveraging our deep industry and domain experience across the lending value chain, we help clients streamline existing functions by value stream mapping and incorporating best practices. Our suite of Business Excellence and Automation Tools (BEAT) and expertise help reduce costs, increase productivity and improve end-client experience. To know more, please visit Corporate and Commercial Lending Services | Acuity Knowledge Partners (

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About the Author

Mohak, Associate Director, Commercial lending, is part of the Commercial Lending Projects and Transition team at Acuity Knowledge Partners. He has over 13 years of experience in transitioning global projects and leading operations teams for wholesale lending, leasing operations, treasury services and consumer banking functions. Mohak is dual Six Sigma Green Belt certified and has expertise in consulting projects across operations and risk-based control testing and monitoring. He holds an MBA in International Business Strategy from the Indian Institute of Foreign Trade (IIFT) Delhi.

We write about financial industry trends, the impact of regulatory changes and opinions on industry inflection points.