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Strategic Operations Issues

Australian Institute of Business

Michael C Yule - A001322735


22nd April 2014









Word Count 2605

Not including Executive Summary and Calculations






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Executive Summary

Westpac Private Bank aims to provide exceptional banking services to a select group of High
Net worth clients. Within Westpac Private Banks supply chain, a continual balance has to be
maintained between easy and quick transactions, while security for both the client and the
bank are maintained at the highest possible level.
This report will look at the supply chain management of completing service requests for
clients, and make several recommendations in which to improve the processes for client
services within Westpac Private Bank.





Table of Contents


1.1 Overview of Westpac Private Bank 5
1.2 Account Service Process within Private Bank 7
2.0 Analysis of the Process 9
3.0 Recommendation of Key Improvements 12
3.1 Implementation of Recommended Improvements 16
4.0 Conclusion 19
5.0 References 20
6.0 Appendix 21












1.1 Overview of Westpac Private Bank



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Westpac Private Bank caters to the ultra High Net Worth clients of Westpac, and prides itself
on providing exceptional and customised quality customer service, supported by a
comprehensive offering of financial products. For clients to be managed by Westpac Private
Bank, they require personal earning before tax of $450,000 AUD p.a, or net assets of 2.5
million AUD or greater. (WBC Private Bank 2014)

Westpac Private Bank acts as a virtual branch, able to conduct all requests by clients either in
person, over the phone or via email. A Westpac Private Banker generally manages around 80
to 100 HNW individuals and their families, as siting them with lending, investment and all
other day to day general banking requirements. An Associate Private Banker is assigned to
each Private Banker, to support the Banker with general administration and management
tasks, as the Banker is expected to be out of the office for a majority of their day, meeting
with clients and selling products offered by Westpac, and BT Financial Group, which is the
Private Wealth arm of Westpac.

The services offered from Westpac Private Bank vary immensely, and can involve setting up
complex family trust structures for overseas investments, or basic account servicing such as
providing tax statements or conducting account transfers on behalf of the clients.
Westpac Private Bank, while offering a vast array of financial products and services to its
various clients has a complex and in some cases convoluted process chain in which the final
products and services are delivered to the end user, the clients themselves.
This report will look into a specific process conducted by the Associate Private Bankers on a
daily basis, which is not an important area for creating revenue for Private Bank, however is
as critically as important.




The Associate Private Bankers within Westpac Private Bank deal with most of the day to day
servicing and administration tasks requested by Private Bank clients. While the Associates
spend most of their time in the office completing such tasks, the Private Bankers have an
expectation that they will be proactively meeting with clients within their portfolio as well as
meeting with prospective clines to build their portfolio of High Net Worth clients.


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A central team within Private Bank called Private Office Services actually process the
required tasks, resulting in a supply chain to meet the clients end requirements in a timely and
cost effective manner. A basic flow chart of this process can be seen in Appendix 5.1,
showing the steps in which most tasks are completed within Westpac Private Bank.

Using a central program, the Associate Private Banker receives the request either from the
client themselves or the Banker who has confirmed the transaction or request with the client.
The Associate Private Banker then uses the central program to type in a Diary Note, which is
a permanent record of the request that is saved for Westpacs records for compliance reasons.
Once the diary note is complete the service request it typed into the system, which informs
the Private Office Service team of the type of request, the specific details and the expected
time frame in which the request is expected to be completed.

Account openings such as transaction and savings accounts are an important process in
migrating new customers into the bank, and the process itself is usually one of the first
processes that the clients experience, therefore it is crucial for the account opening procedure
to be stress free and a pleasant experience for the client. The flow chart for the account
opening process within Westpac Private Bank can be seen in Appendix 5.2.
This report will look at the specific process of opening accounts and service requests as an
attempt to identify the areas in which Westpac Private Bank can improve the complete
operation process chain for this task.




1.2 Service Process within Westpac Private Bank


The process in which tasks are completed will now be described. The basic process of tasks
to be completed by Westpac Private Bank were described above, and a simple flowchart was
shown in Appendix 5.1. This process will now be examined via the five key strategic
performance goals that are common among most supply chain management operations.

Quality

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Quality is a high contentious topic throughout academic literature. Firms compete on quality,
customers search for quality, and markets are transformed by quality. (Golder et al. 2012)
The supply chain from request to completion of a customer requirement is absolutely critical
that quality is maintained and errors are reduced to an absolute minimum.
Marketers and organisations try to define service quality in advance while customers make
during and after use evaluations. (Sunayna 2013) The Associate Private Bankers speak
directly with the client either in person, over the phone or via email. The Associate Private
Bankers have a thorough understanding of Westpacs banking products and procedures and
can set the steps and the expected time to the client in the first instance. The Associate
Private Banker also ensures that the completed task, from a simple request such as changing a
postal address through to opening a Self Managed Super Fund is completed correctly and to
the clients expectations before the confirmation is communicated to the client.
Quality in the banking industry, especially a Private Bank is absolutely critical for customer
satisfaction and Westpac Private Bank aims for TQM (Total Quality Management)
throughout all business processes.

For the specific process of requests that are carried out by the Private Office Services team to
assist the Associate Private Bankers, quality is managed by the percentage of rework, that is
the requests that have to be confirmed or clarified with the Associate Private Banker that
typed in the request.






Speed

The speed that this report will be concerned with is the timing of the process from customer
request, through to confirmation that the process has been completed.
Westpac Private Bank prides itself on skipping the queue so to speak, as the Associate
Private Bankers and the Bankers have authority to act upon the customers request usually
without paperwork required to be signed. A simply phone call from a client requesting to
transfer 500,000 AUD to an overseas bank account can be completed without any signatures
or paperwork whatsoever. If a retail bank wanted to complete this process they would either

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have to spend a lengthy time processing this themselves online via Internet Banking, or they
would have to go into a branch in person, sign the required forms and have the teller process
this to the Foreign Exchange department, which in turn pay the funds to the receiving bank
account.


Dependability

Dependability refers to the level of guarantee that can be implied for on time delivery, by
reducing uncertainty and achieving a consistent delivery time. ( Slack et al. 2012)
To create consistency and dependability within the Private Service Office team, there are
approximately 3 staff members four each state that all work out of the main office in Sydney.
As there are approximately 15 Associate Private Bankers in each state within the country, the
Private Office Service team have assigned specific employees that work with a specific state.
This allows common and recurring tasks for specific clients to be known to the Private Office
Service team.







Flexibility

There is a continual balance between creating a lean supply chain, or an agile supply chain
that can quickly adapt to large process variables. Appendix 5.3 illustrates the decisions that
are made when considering the flexibility of the supply chain management system.
The majority of tasks that are completed by the staff at Private Office Services are predictable
with few changes between the processes, however the variety itself of the processes is wide
which can involve quite complex tasks to complete the clients request.
Appendix 5.4 illustrates a brief break down of the variety of tasks that are conducted by
Westpac Private Bank Private Office Services.

Cost

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The cost that is associated with completing requests will be broken down into a brief chart to
illustrate the costs involved in providing accurate, efficient and timely results to clients of
Westpac Private Bank.
As it has been discussed Private Office Services mostly carry out a small and relatively
simple variety of tasks that are sent from the Associate Private Bankers, though the complex
tasks that are required can take hours, if not days to complete for a client. Private Office
Services employees are only a small cost, as compliance, record keeping and many other
factors are involved in the costs associated with processing service requests for Westpac
Private Bank.










Risk

Risk is an important factor in the supply chain management structure and development in the
banking industry, and in this report will only be briefly discussed however should not
diminish its perceptive importance.
With Westpac Private Bank, the risks taken to service clients are increased over normal retail
banking. The key risk that applies to Westpac Private Bank is through client transactions, and
the risk that fraud will be carried out by transacting on a clients account where the requestor
did not have authority of the specific account. To mitigate this risk Associate Private Bankers
have to call clients and speak with them verbally before any transfers for over $10,000 AUD
are requested to be completed through Private Office Services.
This is an attempt by Westpac Private Bank to minimise the impact of failure, specifically
names fail-safeing - by limiting the monetary amount that could be potentially transferred due
to fraud from a clients account. This method aims to reduce preventative costs, as most

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transactions are below the amount of $10,000 AUD. A graph representation the fail-safeng
method by Westpac Private Bank is shown in Figure 1.0.
Slack et al. (2012) aim to identify the different categories of failure, this report suggests that
there is another key risk, Governance Risk. Governance risk is the failure from a lack control
and analysis, resulting in financial loss.











Figure 1.0 - Transaction Threshold Prevention
Account Opening Process

A specific process that will be discussed in more detail within this report is the account
opening process within Westpac Private Bank.
Account openings are an extremely common process and are critical to customer satisfaction.
Customer accounts are extremely important as they provide transactions solutions for
customers in which they access their funds for everyday purchasing. Banking accounts are a
product which are rarely thought of, however are one of the most critical products offered.










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4.0 Recommendation of Key I mprovements

From the discussion above there are some obvious improvements that can be made to the
process, especially in regards to the supply chain management process. While this report is to
brief to conduct a comprehensive Six Sigma analyses, the same approach has been used to
identify some key improvements that will be discussed below. Six Sigma in a very brief
description is a comprehensive and flexible system for maximising business success. The key
to the Six Sigma approach is that it is a continuous cycle. An illustration of the thought
process used for this report is illustrated in Appendix 5.6.

4.1 Account Opening Process

The first key recommendation that will be discussed is the account opening process. As
shown in Appendix 5.2, there is a lengthy process that sacrifices speed of the request for
dependability and quality of the account openings. Most banking accounts are opened when
new clients are migrated into Westpac, and therefore the account opening process is an
important first impression that is passed onto the clients when they first join the bank. As
clients usually meet in person during the initial meeting to establish the needs for bank
accounts, signatures from the clients should be collected from the clients at that initial stage,
which provides Westpac Private Bank the authority to open banking and business accounts

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from an email or verbal confirmation, without having to have the specific account form
signed.
For compliance and AML (Anti-money laundering) reasons, the account forms would still be
produced by the Associate Private Banker, along with the original authority that was
collected at the initial meeting between the clients and the Private Banker.






4.2 Breakdown of Supply Chain Management Process

As seen in the discussion above, most transactions carried out by the Private Service Office
team are simple value transactions that require very little strategic thinking or problem
solving. The Associate Private Bankers already type and instruct the Private Service Office
team the exact instructions, with a separate diary note needing to be typed for record keeping.
For the simple transactions this report suggests that the Associate Private Bankers actually
type in the transaction directly into the system, where there is a check carried out by the POS
team before the payment being sent.















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4.0 I mplementation of Key I mprovements

There are some key constraints and implications that need to be considered for the above
recommendations to be implemented within Westpac Private Bank.

- With regards to the account opening process, policy would have to be adjusted to
allow the bank to open accounts without signatures for that specific account, and the costs of
implementing this would have to be thoroughly researched before the recommendation is
implanted


As Trkman, P. (2010) states in an influential paper regarding BPM (Business Process
Management), in order to reach long-term success and improved performance, BPM must
be linked to the organisational strategy.













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4.0 Conclusion

In the dynamic and ever changing environment of the banking industry, it is important to
remember that banks deal in relationships that facilitate effective and efficient payments.
(O'Shea, TJ 2011) The processes that have been discussed in this report are all designed with
this core idea as the end goal, which allows relationships to flourish and the servicing of
clients transactional needs to become seamless. The recommendations that have been
discussed above attempt to streamline and create a more reliable and consistent method for
servicing clients within Westpac Private Bank.




















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4.0 References


WBC Private Bank, 2014 ,
http://privatebank.westpac.com.au/, accessed April 11 2014

Slack, N, Brandon-Jones, A, Johnston, R and Betts, A 2012, Operations and
Process Management, 3
rd
edn, Prentice Hall (ISBN: 9780273768807)

Davamanirajan, P, Kauffman, R, Kriebel, C, & Mukhopadhyay, T 2006, 'Systems Design,
Process Performance, and Economic Outcomes in International Banking', Journal Of
Management Information Systems, 23, 2, pp. 65-90, Business Source Complete, EBSCOhost,
viewed 17 April 2014

Peschel, D, & Ahmed, I 2008, 'Total Quality Management and the Malcolm Baldrige
National Quality Award: Benefits and Directions for Banking Institutions', Business
Renaissance Quarterly, 3, 4, pp. 49-66, Business Source Complete, EBSCOhost, viewed 17
April 20

Sunayna 2013, 'Service Quality Versus Customer Satisfaction in Banking Sector: A
Literature Review', IUP Journal Of Marketing Management, 12, 4, pp. 65-78, Business
Source Complete, EBSCOhost, viewed 17 April 2014

Golder, P, Mitra, D, & Moorman, C 2012, 'What Is Quality? An Integrative Framework of
Processes and States', Journal Of Marketing, 76, 4, pp. 1-23, Business Source Complete,
EBSCOhost, viewed 17 April 2014

Trkman, P. (2010). The critical success factors of business process management.
International Journal of Information Management, 30(2), 125-134.

Kng, P., & Hagen, C. (2007). The fruits of Business Process Management: an experience
report from a Swiss bank. Business Process Management Journal, 13(4), 477-48

O'Shea, TJ 2011, 'Branches Are Now as Useful as a Dead Parrot', Credit Union
Times, 22, 19, p. 10, Business Source Complete, EBSCOhost, viewed 16 April 2014










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5.0 Appendix


5.1 - Standard Service Process within Westpac Private Bank




































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5.2 Account Opening Process within Westpac Private Bank




































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5.3 Supply Chain Management































Slack, N, Brandon-Jones, A, Johnston, R and Betts, A 2012 page 468


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5.4 Breakdown of Tasks for Private Office Services































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50.00%
8.00%
5.00%
8.00%
25.00%
4.00%
Transfers Update Contact Details Statements
Online Banking Account Openings Complex Investigations

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5.5 Management of Failure (Risk)


























Slack, N, Brandon-Jones, A, Johnston, R and Betts, A 2012 page 468






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5.6 An Illustration of the Six Sigma Improvement Cycle























Slack, N, Brandon-Jones, A, Johnston, R and Betts, A 2012 page 444