Royal Bank of Scotland Drives Continuous Transformation
Client:Royal Bank of Scotland
- Create standardized global HR delivery model using Workday
- Outsource HR management and HR call center to provide exemplary service
- Engage DXC to provide best practice, global management and delivery of HR and call center services
- Outsource HR management to leverage existing resources for more mission-critical projects
- Standardize call center practice to improve business continuity
- Best practice expertise increases efficiency and productivity
- Outsourced delivery solution reduces support needs and service costs
- Significant cost savings from standardized global delivery model and centralization of operations
Collaboration with DXC on LEAN initiatives drives efficiencies
Well after a decade since it first outsourced its cheque processing operation to DXC Technology, The Royal Bank of
Scotland continues to leverage that operation to drive additional value, including improved process efficiency and reduced costs— improvements which support the bank’s broader corporate goals of improved customer service and advocacy.
The global financial crisis of 2008-2009 roiled many financial institutions, and The Royal Bank of Scotland (RBS) Group was no exception. In the years since, however, RBS proved its resilience. It recommitted to its core business priorities through a combination of internal reorganization, strategic partnerships, and divestitures. It strengthened its capitalization. It identified ways to simplify its business processes and reduce overhead costs.
One of the areas where this transformation is most evident is within the bank’s cheque-clearing organization. There, RBS and its outsourcing partner, DXC, have collaborated on a range of initiatives designed to drive continuous improvements in process efficiency, business optimization, and cost-savings.
Goal: Leadership in customer trust, service, advocacy
Established in 1727, RBS offers business and private banking, insurance and corporate finance services. Its consumer
brands include Direct Line, Churchill, Coutts and Citizens; RBS also controls National Westminster Bank (NatWest) and
Ireland’s Ulster Bank.
It is one of the largest banks in the United Kingdom; the 2,000 RBS branches serve some 35 million customers, 17 million of these customers turn to RBS for their everyday banking needs.
RBS is not content to be a leader in terms of number of customers alone, however: by 2020, the bank intends to rank first in the United Kingdom in terms of customer trust, service, and advocacy. It therefore tracks a number of metrics, such as the time it takes for customers to open a personal current account and the time required to make small business lending decisions. It also embraced a corporatewide culture of business transformation to enable it to improve on those metrics.
RBS has achieved impressive gains in many of the areas it has identified as crucial to its corporate goals. But challenges remain. The banking industry is under intense regulatory scrutiny. RBS also knows it must continue to reduce its overhead and infrastructure costs.
These pressures are particularly acute within the cheque-clearing organization: due to the popularity of electronic payment methods like credit and debit cards, the number of cheques RBS processes falls at the rate of approximately 10% every year.
This, in turn, means that the cost of processing cheques keeps going up on a per-cheque basis. RBS can’t eliminate cheque processing because of its commitment to customer service: some customer segments, such as charities and small businesses, require cheque processing. Eliminating the service would disenfranchise those firms.
So instead, RBS has looked to DXC to help it run its cheque processing operations more cost-efficiently.
DXC began managing the RBS cheque-clearing processes around 15 years ago. It’s been a satisfying partnership ever
since. Several years ago, for example, the 11 sites run by DXC processed a monthly average of 71.6 million items for
all work streams, which included a monthly average of 65.2 million cheques within the bank’s outand in-clearing
processes. In that same year, the monthly SLA achieved by DXC regularly stood at between 99.64 and 99.99%.
This achievement is typical of DXC’s performance throughout the history of the relationship.
More recently, however, DXC and RBS embarked on a journey to drive additional value from this longstanding partnership, including collaborating on a LEAN initiative to drive additional efficiencies within the bank’s cheque- clearing processes. The LEAN project was initiated by the bank as part of a broader, end-to-end evaluation of its operations and supply chains. Within the cheque processing organization, managing LEAN activities fell to Judy Lenihan, business manager, Clearing Operations, RBS. “We knew that LEAN would help us find ways to reduce the infrastructure costs associated with our cheque-clearing activities,” says Lenihan.
Lenihan and DXC decided early on to take a teamwork approach to the LEAN project. “Hewlett Packard Enterprise (now DXC) embraced it,” says Lenihan.
“They took LEAN on board and trained their own people so that they could not only contribute to the bank’s initiative, but also leverage LEAN within their internal process reviews.”
Within a short time of embracing LEAN, RBS and DXC identified a number of opportunities for process improvements.
Fewer courier runs reduce overhead costs
One of the most significant areas the two companies addressed was the number of courier deliveries required to
transport cheques from RBS branches to the cheque-clearing centres run by DXC. Historically, couriers picked up
cheques from each branch multiple times per day. These cheques therefore arrived in increments at the DXC cheque-
clearing centres, and the receipt of the deliveries was spread out over the entire business day.
Moving physical cheques around the country is a relatively costly thing to do, however.
The bank and DXC decided to apply LEAN methodology to replace these multiple, small-increment deliveries with a new schedule featuring fewer deliveries that would begin later in the day.
All cheques would still need to be processed by 10 p.m. on the day they were presented at RBS branches to maintain the bank’s standards for customer service.
With the new, efficient work stream, instead of processing cheques in small batches throughout the day, DXC processes an entire day’s worth of cheques within 2-4 hours. DXC did this by implementing two changes. First, it worked with one of its vendors to boost the performance of a key image scanning system by 20%. This sped up the throughput rate of its cheque clearing procedures. In addition, DXC leveraged offshore image processing resources to augment its onshore teams. These additional resources enable DXC to handle the increased volume of cheques within the compressed window of the new courier schedule.
The benefit of these improvements to RBS is significant: it reduced the number of courier runs required to transport its cheques, which in turn reduced the costs associated with the courier service. As a consequence of LEAN activity, the number of drivers were reduced considerably.
*This success story was originally written by HPE-Enterprise Services, which has become DXC Technology as of April 2017.