Page 106 - Performance Leadership

Chapter 6 One Version of the Truth • 95

The first benchmark for gaining insight into transaction streams is to
know the number of customer contacts throughout all channels. This
would include people at the tellers’ windows at the bank branch, at the
ATMs, at the call center, on the Internet, and for the more complex
transactions, with the account managers. Not every customer contact
would lead to the next step, which would be a transaction. A transaction
would be every transfer-related activity. It would probably exclude send-
ing brochures, but may very well include opening up a savings account,
or changing an address or other personal information. It is not uncom-
mon that a single customer contact leads to multiple transactions.
The vast majority of transactions would involve some kind of actual
money transfer, which would be the basic business process in this
example. However, there is a difference between the number of trans-
actions taking place within the bank and between different banks. For
instance, money transfers between customers of the bank could be
done internally, and it doesn’t require a clearing house, although this
could differ by country and bank. This means the number of transac-
tions between banks, net transactions, is much smaller than the total
number of transactions triggered by customers.
Not every transaction may be accepted; some will be rejected. This
could be the case with accounts or credit cards being overdrawn, miss-
ing collateral, mistakes in the bank account (some bank account sys-
tems use an internal algorithm to validate bank account numbers), or
internal warning systems that flag a transaction that matches signs of
money laundering.
When counting transactions over a period of time, like a week or a
month, there might be differences as well. In many cases there is a clear-
ing time for processing checks. This means a transaction has a transac-
tion date and a clearing date. There is an interest date, where the
transaction starts to affect interest. This can be interest that is charged
for loans or for being overdrawn or interest that is paid on savings
accounts, particularly for transactions during the weekend where there
might be differences. Not only can these differences lead to differences
in management reports, they ultimately also affect compliance regula-
tions on operational and financial risk management.
Although the difference most likely is not material over time, count-
ing transactions in any of these ways will lead to different results. For