NatWest
Challenge
NatWest operates a cheque clearing system on behalf of other UK clearing banks. Paragon was commissioned to produce a highly flexible model of the clearing process, examining a variety of operating ideas and analysing the effect on overall process performance
NatWest is the largest retail and commercial bank in the United Kingdom and has been part of The Royal Bank of Scotland Group Plc since 2000. The Royal Bank of Scotland Group (RBS) is ranked as the second largest bank in the world by assets.
NatWest operates a cheque clearing system on behalf of other UK clearing banks.
A number of major changes were planned in the cheque clearing scheme – decentralisation of payments, a requirement to clear cheques within a shorter period (3 days) and the availability of new improved (but very expensive) cheque handling and reading equipment. These changes prompted a major change in the way that NatWest operated the system.
Over 3.5 million cheques are handled by the system every day with strict service quality targets. NatWest needed to migrate in stages to the new process whilst ensuring continuity of service during the transition.
The process was highly complex and the planning needed to take account of:
- 5 main types of expensive sorting equipment
- 26 main sorting steps
- Introduction of new technology for greater efficiency in the sorting process (e.g. magnetic ink and optical character recognition)
- Volumes predicted to increase to well over 4 million daily
- Gradual decentralisation of payments to local branches requiring a new sorting regime
- Demands for increase quality and speed of service
The danger was that NatWest would either over-invest or fail to meet service quality targets, or both. NatWest decided that they needed absolute confidence in the transition process before they could proceed.
Solution
NatWest’s Project Director commissioned Paragon to produce a highly flexible model of the clearing process
The model calculated the time for each sorting task and modelled the complex sorting sequence across different machine types showing process times and revealing any bottlenecks. New machinery could be introduced in stages through the Paragon Scenario Manager to examine the effect on overall process performance.
The flexibility of the model allowed experimentation with a much greater variety of operating ideas than could otherwise be examined.
Predicted volumes for each phase of the decentralising programme could be entered via the Paragon Data Manager to test performance and results compared using the Paragon Results Manager.
Benefits
The model provided by Paragon was operated by NatWest to reveal the optimum number of sorting machines needed at each stage of the decentralisation programme in order to plan operations and capital expenditure.
NatWest was able to minimise both the disruption and the costs of the migration programme by examining various smarter scheduling options.
As a result, NatWest could have confidence in their migration programme. Even if predicted cheque volumes changed, the model could be updated with new data to see the impact and, if necessary, to re-plan.