LMJ’s editorial board member and lean services manager at Cardiff Business School, Sarah Lethbridge espouses the building society’s leaned mortgage lending practices with a view to customer relations and views form Nationwide’s senior change manager, Ben Cuthbert.

Nationwide is the world’s largest building society and is run for the benefit of its members. Being a building society means that they are free to reinvest profits to improve the products and services they offer. Consequently, customers’ must trust Nationwide to make the right decisions and directly feel the benefit of success.

Ben Cuthbert gives us a rundown of where Nationwide has got it right:

The customer is key

We are a customer focused organisation. We won’t be satisfied until we are consistently seen as the number one financial service provider by our customers and indeed we have achieved and maintained number one for service on the high street for some time now. So we continually review what we are doing to improve services – this is where the lean thinking methodology and a focus on continuous improvement can really help to make a real difference.

We have understood that to achieve the status as number one for financial services, we have to create a continuous improvement culture in everything that we do, and so have invested in developing our people.


A progressive history of developing lean practitioners

We began when a team of five black belt practitioners were established to undertake focused reviews within business units to analyse, design and implement change. Although this unit was successful, progression could not be achieved at pace without more practitioners giving greater scope and so a change of approach was required to increase progress.

Our idea was to move from a central team doing lean to others to a decentralised approach, creating lean capability within existing business units, thus developing a continuous improvement culture of self-sufficiency. We wanted to be able to train our own people ourselves, so we sought accreditation of our own training system by working with the Lean Enterprise Research Centre at Cardiff University to achieve lean competency system status.

Through our training programmes and the development of online materials, two qualifications could be achieved – a yellow or green belt in LSS. The learning approach we took was to provide students with the opportunity to learn at pace but to also be flexible enough to ensure individuals could work to a programme that suited their individual needs.

The success of this programme has resulted in c.1400 people accredited to yellow c.40 to green belt grade to date. By creating this capability across our operations, continuous improvement has become part of people’s working day.

Additionally, we have created 40 continuous improvement analyst (CIA) roles. Qualified to green belt level, the CIA’s focus is to work within our operational and drive operational improvements using lean principles. Whilst analysing processes within the operations, they are able to identify both quick win enhancements which only require a process tweak but also can spot opportunities for larger change. By implementing these roles we are able to realise cost efficiencies, improve the customer experience and drive a lean culture.


Turning learning into positive practice

We have been recognised for our lean achievements within our bereavement services area when we were shortlisted for the British Quality Foundation’s LSS awards. By re-engineering the way we handle bereavements we could more than double the amount of cases where funds were released the same day as notified. The benefit to our customers this provides is immeasurable. Relatives and friends are obviously extremely upset when their loved one has passed away and the last thing they want to deal with is a complicated and protracted process to release funds – funds that could be needed to pay for a funeral, for example. Our desire for simplicity and customer service as the core values of our approach to continuous improvement are clearly evident here.

In the same project, we also improved the workflow of our complex cases to prevent delays and provide a much more tailored approach to very sensitive situations. This included reducing our average process time from over 17 days to eight and reducing our complaints by half.

We were nominated for the LSS award through the improvements we have delivered in our subject access request process (SARs). With the recent industry wide insurance mis-selling investigations we experienced We experienced a 700% increase in our customers requesting SARs, creating obvious operational demand challenges. For us to react to these challenges we had to look for opportunities to optimise our current processes using lean expertise. The introduction of a reduced SAR process which required less than half the effort of the full resulted in over a 50% reduction in resource requirement and reduced our overall lead time by 75%.


Building on project success and creating the right culture

We recognise that creating new capabilities amongst our people is important, but empowering them to enact change is just as crucial. Training and development activities can do so much, but really enabling our people to speak out when something is in the way of excelling at service. This allows them to remove the barriers to putting our members first and give them the opportunity to inspire trust through being decent and straightforward.

In support of this thinking, we held events called ‘being number one’ where we invite our colleagues to throw away the rule books and any other reason to be negative and tell us everything and anything which would enable them to be positive. The events are organised into different sections and activities, each focusing on a different topic e.g. technology. We asked individuals, what should our technology do in order to make us number one? Vast amounts of ideas and improvements were identified and presented back to the group and post event would be investigated for do-ability. We also set up an internal website to keep collecting ideas and statements from people on what we should or what they have done differently in the spirit of being number one.


Using continuous improvement for our mortgage process

We have employed this spirit most recently when improving our mortgage process (thanks to changes imposed on the industry through the mortgage market review (MMR)). We realised that due to additional eligibility and affordability checks on mortgage applications demanded by the MMR it was possible that the process could become frustrating for customers. Having highlighted this we were keen to address the issue to make sure that we streamlined the process. We know that buying a home is stressful and we want to help make this process easier.

We recognised that if we continued to process new business in the existing way it lead to taking on average 35% longer for our members whilst adding a similar percentage of extra cost into the business. For us this situation presented an opportunity to use a lean approach. An opportunity not only for us to drive the changes, but also for our raft of process experts who undertake mortgage processing day to day to and stretch their continuous improvement legs with the new skills.

We needed to understand the customer view and expectations of their mortgage provider. We held an event in London and met mortgage customers who had recent experiences with a variety of different providers. The information collated really bolstered and supported our views and ideas, whereas other inputs made us consider new ideas about how we could go that extra mile.

Workshops and design forums were undertaken to incorporate new lending policies, innovative technological designs, new operating models and processes in order to meet new regulatory demands. Whilst validating our proposed changes against our customer principles and experience measures we were able to refine a design which satisfied the success criteria.

Using technology, we were able to minimise and focus interactions during the application process to elements where customers wanted to interact with us, or regulation dictated it or where critical human decisions were required. Doing this enabled us to largely mitigate the service level impacts of the new regulations.

From this piece of work we have come up with a number of ways to help the customer and improve their service including:

  • A welcome box for all customers who move into a new home with essentials like cleaning materials and tea;
  • Make a specialist team of people available for cases that are more complex;
  • Set expectations to customers and brokers of what we will need from them and expected timescales;
  • Regular text and email contact to keep customers and advisors informed;
  • Phoning customers rather than writing to them if we need more information;
  • Application to offer within nine days, which is industry leading.

By deploying lean principles, we can continue to identify ways to make a difference to customer experience whilst at the same time helping us to make brilliant commercial decisions.

A customer’s view by Sarah Lethbridge:

As you may have read in our previous edition’s introduction, I recently bought a new house and, as a previous satisfied customer of Nationwide, decided that I would stick with them for my new mortgage. As soon as the process started I could detect the hallmarks of a lean approach. I’m aware of their use of the lean competency system and Nationwide were also kind enough to house a demand mapping module of our MSc Lean Systems, so I knew how dedicated they are to continuous improvement To me, their story clearly conveys several important lean messages:

  1. The importance of simplicity within lean service design.
  2. The importance of using the voice and mind of the customer as a vehicle to achieve elegant simplicity. Holding the mortgage customer focus group was invaluable in ensuring that this simplicity was at the heart of the redesigned service.
  3. Ensuring process visibility at every possible moment. These were the text messages that I received:

Text 1: To let me know that the mortgage product I had requested had been reserved and that they’d “be in touch again shortly”.

Text 2: That the mortgage application has been received and that they’d let me know how the processes progresses.

Text 3: That the mortgage valuation was booked, the date, and that they’d be in touch when they’d received the report.

Text 4: That they had received a satisfactory valuation report.

Text 5: That they were delighted to inform me that they had now issued a formal mortgage offer and that they look forward to completing on this offer (stages 1-5 happened within a week).

Text 6: That my solicitor had requested mortgage funds to be released by a certain completion date and if that date did not suit, then to please inform my solicitor.

To me, this level of process visibility was impressive. Not only from a speed perspective, but also from a customer satisfaction perspective. Buying a house is a worrying time and yet I felt reassured that things were progressing. These simple automated texts were helping me to feel more in control of a process that in reality, I had very little control of. It also saved Nationwide work; I wasn’t ringing them every other day to check how my application was proceeding or when the valuation was going to take place. Automated text messages made the process transparent.

Fred Reichheld taught us about the importance of the loyalty effect for business growth. I think Nationwide, through their customer centric lean service design, have made their products pretty difficult to turn away from.