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How shared-services organizations can prepare for a digital future

Source | McKinsey & Company

Over the past few years, companies have taken many routes to digitizing the front ends of their businesses to create seamless customer interactions—for instance, building mobile apps that make it easier for customers to, say, order clothing or open a bank account.

To ensure greater success with those efforts, companies may want to consider ways to digitize their back-office functions, which in many companies are handled by shared-services organizations. These groups typically manage and deliver technical and administrative support in areas common to all business units in a company, such as finance, human resources, and IT. In many cases, they undergird core business functions. In a financial-services setting, for instance, the shared-services organization might be charged with processing loan applications or insurance claims. By incorporating automation, virtualization, advanced analytics, and other digital technologies into their operations, shared-services organizations may be able to streamline processes. These technologies also may enable them to make better decisions and improve the quality of internal and external customer interactions. McKinsey research suggests that companies, by digitizing their shared-services organizations, can achieve significant savings in both time and money—for example, up to 50 percent increases in efficiency in some back-office functions.1

Consider the digital transformation at one global bank. The customer-onboarding experience has been largely automated. Customers build their own profiles and initiate lower-level transactions; shared-services teams intervene only to check documents and manage approvals if required. Managers of the shared-services organization can monitor employees’ capacity in real time and allocate support assignments accordingly. The results have included a productivity increase of more than 40 percent, improvements in internal controls, and greater customer satisfaction. Indeed, customers’ likelihood of recommending a product or service to others rose by about five percentage points over a 12-month period. The bank attributes this increase in part to its digital back-office capabilities.

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