Newcastle Building Society improves cost efficiency by 68% with Global 360 solution

-Implementation of the Newcastle Building Society's 'Virtual Processing Hub' using Global 360-


Challenge
The Newcastle Building Society was experiencing delays in delivering products to customers from its central processing facility. To compete in the mortgage and investment industry, the Newcastle needed a new solution that would improve its cost efficiency and customer service.

Solution
The Global 360 solution was chosen to automate processes and eliminate paper based records. Customised workflow platforms now distribute application and existing account processing to multi skilled employees across the Newcastle's branch officers. As a result, cost efficiency has risen by 68% and processing costs per hour have fallen by 17%. The capacity freed by the Global 360 platform has allowed the Newcastle to develop a new revenue stream: outsourced processing for other organisations.

Platform: Microsoft Windows NT
Newcastle Building Society (the Newcastle) is currently the 13th largest building society in the UK and the biggest in the North East, holding £2.75 billion in assets. With 51 branches across the North and the Midlands, and in Gibraltar, the society employs around 650 people and provides a total of 450,000 investors and 59,000 borrowers in the UK and beyond with savings accounts and mortgages.

In 1998-1999 the Newcastle began experiencing problems with processing applications and administration of existing accounts for both investments and mortgages. Alternating peaks and troughs of work to be processed across the group meant that the organisation was experiencing periods when the processing centre either has spare capacity or was overwhelmed.

Colin Greaves, General Manager of the Newcastle, explained: "The fluctuations in workload at the central processing facility were beginning to create delays in delivering products to customers. With competition in the retail financial services industry coupled to customers' demands for fast responses and on-line services, it was clear that the Newcastle needed a new process management solution that automated processing and which eliminated paper based records."

At the same time the Newcastle wished to initiate a programme of 'multi-skilling' to enable the majority of its workforce to handle any type of application and query. Under the programme, the peaks and troughs in the processing workload were to be levelled out using a new solution that both shortened average process times, and facilitated the distribution of application and existing account processing to employees wherever they may be located across the Newcastle's branches and at home.

G360 Enterprise BPM was chosen in early 2000, to be implemented in conjunction with BT Syntegra. In March 2000 an initial pilot project was launched to handle inquiries from the Internet and the administration of investment accounts. This was an essential stress test to determine whether a full roll out of the technology would be able to manage processing the peaks and troughs in the administrative workload the Newcastle was experiencing, and also whether staff could have the flexibility and creativity to adapt to new, multi-skilled roles.

After the trial was successfully completed, a generic base model of the new solution was rolled out to all staff with a customer facing or servicing role within its principle offices, to ten branches and ten home workers. Tailored versions of the platform were then created for the specific needs of different departments. By June 2001, customised workflow platforms for Investment and Mortgage Administration, Credit Control and Deed Administration, and the lending processes had all gone live. Throughout this time, staff from the Newcastle and BT Syntegra followed a skills transfer programme that has enabled building society staff to work directly with Global 360 and further develop and grow the platform.

The "multi-skilling" aspect to the workflow programme has given staff the opportunity to move from one discipline to another (for example, from investment to mortgage administration), increasing levels of job satisfaction and staff retention within the building society. A further innovation is that people who want to work from home can be sent work for processing. Using a secure access system utilising Citrix, managers can allocate tasks in the job queues to home workers - a process that represents an efficient use of time and resource.

By the summer of 2002, the benefits of the process management system were becoming evident. Substantial efficiency increases have been created, with a 68% improvement in cost efficiency across the organisation and an average reduction in the cost per hour of processing by 17%. Detailed recording of the paths taken around the society by applications for products and the amount of time spent on each one has enhanced the society's ability to actively control its internal processes. The full audit trail of every piece of incoming and outgoing mail, along with every telephone call and Internet query, enabled any issues that have arisen to be quickly addressed, a process that was considerably more arduous under the previous system.

Commenting on the implementation, Colin Greaves says: "The innovation of the system is the transformation of the Newcastle Building Society into a 'virtual processing hub', giving the entire organisation the ability to flex its resources to support its central processing centre. This virtual hub structure has also created a new revenue stream by enabling the Newcastle to act as an outsourced processing facility for third party organisations. By using the document management and workflow system as a common platform for shared processing between similar companies, the Newcastle has derived extra value from the investment made in the system, and as also become a key provider of outsourced processing facilities in the UK's mortgage sector.

With the Global 360 system being used in the majority of principle office departments, there are currently 350 employees trained to use the system. The workflow system has revolutionised the way work is allocated across the building society, with managers now able to make decisions based on a holistic view of the society's principle office processing capability. The retention of staff has improved since the implementation of remote and home working, with 20 employees currently benefiting from the society's ability to accommodate their specific requirements. Staff retention has also resulted in both a reduction in the associated recruitment and training costs, as well as retention of experienced and highly competent staff.

The Global 360 system gives the Newcastle the flexibility and adaptability to maintain competitive advantage even as its business grows and develops. By adding branches to the "virtual office" created by the cross branch communication that the workflow technology had facilitated, the Global 360 solution can be expanded to cover all 51 branches.

In 2003, the Newcastle will process in excess of £400 million worth of mortgages for third parties, generating additional income. Looking further into the future, there is the possibility of allowing other building societies to outsource some or all of their processing to the Newcastle, and vice versa, as the Newcastle ca provide its solution to other organisations to establish a common processing platform. The virtual processing hub will also provide the Newcastle with increased opportunities for developing existing revenue streams: the manufacture and distribution of investment products carrying third party branding, which it then processes itself.

"As the Newcastle is a very change-oriented and flexible organisation, everyone was eager to embrace the new opportunities that the business process management system created. training obviously needed careful planning, as did the actual implementation timetable, but both were achieved with complete success and to deadline," concludes Colin Greaves.

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