Lean Transformation Applied in the Financial Industry

1. Lean Transformation Applied
Nikat Malik
December 2013
All Rights Reserved

2. Lean Transformation Defined
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Holistic approach with a function centric focus to realise time measured benefits
User involved participative method to identify issues and develop solutions
Marked emphasis on continuous innovation
Increases organisational capacity by improving productivity and responsiveness
Structure of Lean Transformation
Response
Rework
Waste
Cost
Flexibility
Continuous Innovation
Organisation
Objective & Results Management
Training
Communication
Deliverables
User Needs
Model
Value Add
Proposition
Pull Versus Push
Service Demand Model
Functional Process
Value Model
Workflow
Based Model
Optimised Output
- capable, available, adequate, flexible, continuous flow.

3. Phase
Define
Measure
Analyse
Design
Control
the opportunity
the performance
the opportunity
the solution
the performance
Objective
• Understand
opportunity and
problems
• Establish case for
change
• Define vision for
change and criteria
for future state
• Current state
analysis and
evaluation
parameters
• Design target state
and operating
model
• Establish new
operational
methods
• Establish control
framework and a
culture of
continuous
innovation
Activity
• Assess the
opportunity
• Organise Team
• Identify Processes
• Define User Needs
• Define process to
measure
• Apply measures
• Understand
deviation
• Determine sigma
• Define hypothesis
• Undertake analysis
• Develop business
case
• Establish causes
• Innovation ideas
• Evaluate solution
• Present
recommendation
• Implement solution
• Integrate processes
• Confirm & close
Deliverable
Lean Transformation – Structured Method to Manage Change Efficiently
• Project charter
• User needs
• Process maps
• Performance targets
• Confirm
stakeholders
• Base performance
• Inputs, processes,
outputs
• Operational
parameters
• Data collection plan
• Formulate problem
• Analyse data
• Validate root causes
• Document solution
• Map processes
• Engage process
owners
• Organisation impact
• Finalise solution
• Implementation
plan
• IT requirements
• Document new
processes
• Agree measures &
targets

4. Lean Transformation Components
User Value
Capability
• Identify customer
• Determine user value
• Internal & external
usage needs
• Benchmark user
experience
Performance
Process
• Capability required to
deliver value
• Resources required to
deliver capability
• Align end-to-end value
streams
• Empower continuous
innovation
• Business strategy led
performance objectives
• Accepted measurement
methods
• Visible results and
defects
• Participative solutions
• Defined roles &
responsibilities
• Meaningful metrics
• Transparent process
models and workflow
• Deliver value on
demand
• Error proof controls
versus defect &
exception management
• Standardised processes
with expected results
• Provide capacity for
value creation
Culture
• Business strategy led transformation objectives
• Involved & committed leadership
• Imbibe lean principles in organisation
• Emphasize behaviour to focus on customer value &
focus on end-to-end value creation
• Encourage innovation & learning
• Re-examine processes periodically
• Function-wide ownership for innovation
Operating Methodology
• Continuous innovation platform, tools and
methodologies
• Shared lean vision
• Communicate change, action and plans
• Collaborative execution
• Measureable performance and rewards
• Leadership and work force learning
• Common language and terminology

5. Successful Application of Lean Principles in the Financial Industry
Opportunity Application Areas
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Securities Services
Trade Processing
Accounting Processes
Confirmation of transactions
Cash Settlements
With holding Tax
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Income Collection – Dividend, Interest
Corporate Actions – rights & bonus issues
Treasury Services – securities lending, CLS
Custody, Trust & Depository
Compliance Monitoring
Fund Services – performance & attribution
Rationale for Lean
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Matured products
Standardized processes
Low variation in tasks
Narrow/Low expert requirements
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Predictive work effort
Limited external interaction
Rule based workflow
Risk exposure
Realized Benefits
• Clarity on actual performance versus perception
• Analytic base to identity improvement & innovation opportunities
• Metrics to measure performance & confidence in new capabilities
• Efficient utilisation of resources, technology and capacity
• Improved accuracy, timeliness, risk control with less breaks, errors & open items
• 60% of capital market processes can be standardised using Lean to achieve savings
• Implementing a Lean programme has proven less expensive than Technology / Outsourcing /
Offshoring alternatives for matured products & processes

6. Lean Operating Model
Current State Operating Model
Current State Assessment
• Business Functions & Objectives
• Process & Workflow Map
• Current Performance
• Performance & Control Structure
• Value Stream Analysis
• Environmental Factors
Workload Assessment
Time & Motion Study
Identify Waste & Opportunity Areas
Risk Assessment
Target Operating Model
Lean Design Principles
• Standardised Work
• Integrated Workflow
• Transparent Control
• Quality at Source
• Pull Through Basis
• People Participative
• Process Alignment
• Workload Balancing
Operating Model Design
Relationship Management
Service Delivery
Operations
Centres of Excellence
Shared Services
Implementation Road Map
Benefit Realization
Organisation & Implementation Plan
Prioritize Projects
Communication