Lloyds Banking Group is claiming dramatic improvements in the quality of its customer service after investing in technology to automate and simplify complex manual banking processes.
The bank, formed from the merger of Lloyds TSB and HBOS in the aftermath of the banking crisis, claims to have reduced customer complaints to the lowest levels in the UK banking sector, following a major programme of investment in business automation technology.
“We wanted to put customers first – not just do it, but make sure it was tangible to customers. We wanted to make products simple, easy to understand,” Annette Barnes, group change director of Lloyds, told an industry conference.
The company began automating business processes two years ago, using Pegasystems’ business process management software, as part of a wider programme to simplify the complex structure of Lloyds Banking Group.
Cutting time and errors by automating manual processes
The bank has used the software to cut the time it takes staff to close old accounts from 30 minutes to three minutes, Barnes told the audience at the Pegaworld conference in Orlando, Florida.
“It was a highly manual process, with lots of paperwork and lots of room for errors," she said.
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The bank has also used the software to reduce the time it takes for customers to transfer money into ISAs by days. The process was intensely manual – it required scanning documents and filling in forms, resulting in a huge potential for errors, said Barnes.
“ISAs can now be processed in 24 hours,” she said. “As the customer walks out of the branch, they receive a text saying we are on to this, this is where we are up to, and this is when it will be completed.”
Pega’s technology has also helped the bank reduce the number of unique business processes staff need to follow – from 700 to just 23 – in its life, pensions and investment division, helping to halve the errors made by staff.
Barnes did not give any return on investment figures for the project, but said that improvements in business processes meant that the bank now needed fewer customer contact centres.
One of the bank’s business units has cut the number of contact centres from 30 to 15. "We could not do that before, because the processes were so paper-based,” she said.
Lessons learned along the way
Barnes said the deployment of Pega’s technology had been a learning curve, however, and with hindsight, the bank would do things differently.
Lloyds integration programme at halfway point
Lloyds is now halfway through its four-year integration programme, which includes more than 200 major change initiatives.
Among them are simplifying the company structure, rationalising Lloyds’ supplier base, and an end-to-end review of its business processes.
The company moved its HBOS and Lloyds TSB platforms to a single technology platform in 2011, and has begun a programme to rationalise the number of servers it uses.
Lloyds underestimated the level of expertise it would need in place to implement Pega, for example. “If we knew then what we know now, we would have put that expertise in earlier,” she said.
It was “desperate” to use straight-through processing for everything, she said, and with hindsight, starting with the aim of 80% or even 60% would have been good enough.
The company uses both the traditional waterfall approach to software development and agile development, but struggled to get the mix right when implementing Pega.
“We do lots of waterfall, we do lots of agile too. But the bit we needed to figure out was how we do those together,” she said.
Although Pega is often seen as a technology company, it is more a business change company, said Barnes: “Working with Pega requires you to think differently about your business.”