AFS Operational Performance Benchmarking
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Bank of America Corporation
Bank of Oklahoma Bank of the West City National Corporation Comerica Incorporated Fifth Third Bancorp First Republic Bank First Tennessee |
Huntington Bancshares Incorporated
M&T Bank Corporation Regions Financial Corporation SunTrust Banks, Inc. UnionBanCal Corporation U.S. Bank Wells Fargo & Company |
Loan operations are responsible for functions critical to ensuring data quality and integrity, increasing lending business productivity and profitability, maintaining customer service and ensuring the proper allocation of capital that can directly impact reserves.
As a cornerstone of the Best Practices Leadership Council, powered by AFS, and through this service, AFS is commercial lending's exclusive provider of operational performance benchmarking metrics.
AFS Operational Performance Benchmarking collects, measures and reports on comparative, actionable data that lead to performance—and capital—improvements throughout the lending process.
Service Overview
The Operational Performance Benchmarking Service offers thought leadership, dialogue, and definition around industry best practices in risk management and performance achievement. Drawing upon AFS' commercial lending expertise, the Service provides independent data collection and normalization, common qualitative and quantitative measurement criteria, and comparable key operational metrics leading to performance improvement. The focus is on quality, efficiency, and risk as cornerstones of benchmarking measurements.
Benefits of the Service
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Benchmark operational efficiency against peer banks |
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Facilitate comparison of operating costs to competitor banks |
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Benchmark service quality against competitors |
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Provide an ongoing mechanism to monitor relative operating costs and delivery capabilities |
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Identify industry best practices for process improvement |
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Provide objective basis for prioritization of operational initiatives |
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Identify optimal opportunities for process automation |
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Provide an independent, external benchmark of operational performance |
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Provide consistent, credible, accurate industry standard definitions and metrics around commercial loan operations performance and delivery |
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Provide insights in correlating efficiency and quality |
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Provide ongoing assessment of a participant's progress relative to industry for Basel II compliance |
Scope
For purposes of definition within the Operational Performance Benchmarking Service, operational processes have been functionally specified. The initial focus of the Service is on the post approval processes indicated below. The scope of the Service is expected to expand over time, as directed by participating banks, to encompass the origination and approval processes and specialized operational functions.
Well established domestically, the Service will be localized geographically as appropriate on a global basis as it is rolled out internationally.
Are you investing enough to be a best practices bank?
Are you improving relative to the industry?
How should bank initiatives be prioritized?
How does your service model or organizational structure impact efficiency?
In what areas are you overstaffed? Understaffed?
How does the bank's operational quality compare to peers?
Data Construct
Data provided by participating banks is supplemented with qualitative information gathered on-site by expert AFS staff. Unique bank organizational considerations and processes are discussed and represented on a consistent, credible, and accurate basis for comparability. A high level summary of the types of data elements provided by participating banks and basic segmentation of reporting is depicted below. Reporting is provided at aggregate, line of business, and functional levels to provide comparability and to support education, awareness, and ongoing monitoring of the dynamics of change, accountability, and process improvement as the industry migrates through Basel II implementation.
Product Delivery
Participants provide information about their respective loan portfolios to AFS semi-annually. Data from multiple systems can be combined by AFS to present a complete view of a bank's combined commercial assets or operational processes. AFS conducts interviews with operations management to resolve questions about the data and ensure a complete understanding of the bank's terminology, processes, and structure. AFS normalizes the data and maps it to the Operational Performance Benchmarking Service database. Banks have an opportunity to review the data mapping prior to its inclusion in the database to ensure that it accurately represents the bank's operations. AFS delivers a written report containing independent evaluation of a bank's operational efficiency and quality for all lending lines of business and processes.
Written Semi-Annual Report - Provides individual bank and competitive data by category for comparison with analytical assessment of generalized findings.
Semi-Annual Webcast - Provides a review of important observations in the overall data by AFS and important lessons learned from Steering Committee observations.
Two-Day Annual Workshop - Provides a two-day review of the data findings and trends and promotes discussion/analysis and interpretation among all the participants. Provides review and planning opportunity for refining the data content/approach and the format for the coming year.
Steering Committee
A Steering Committee consisting of key bank participants assist in refining deliverable reporting to accommodate localized regulatory and bank reporting requirements. The Steering Committee is instrumental in framing the ways information will be used and therefore how it should be presented. The Committee further makes recommendations relative to the long term direction and utility of the Service deliverables, and assists in establishing the agendas for participant Web conferences and meetings.
Sample Metrics
Note: The charts below are not representative of actual bank data.
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For further information on the AFS Operational Performance Benchmarking Service, please contact Brenda Alek, Director, at +1.484.875.1302 or e-mail at balek@afsvision.com.