With securities industry firms these days placing such a high value on keeping the customers they already have, it's little surprise that Pershing LLC has an effort underway to continuously improve the processes it uses to keep its custodial services clients happy.
But while other firms are also pushing harder to improve customers' experiences, Pershing's development of an up-to-the-second scorecard on customer service satisfaction "is probably a differentiator for them (Pershing) today," says TowerGroup analyst Rodney Nelsetuen.
Jersey City, N.J.-based Pershing in late 2006 began developing a reporting tool that makes it possible for customers and independent broker/dealers to view their transaction histories for any approvals that may be pending on a request for a funds transfer, for instance, or the amount of time it took to process a funds transfer or to evaluate the percentage of transactions reopened by customers after an error.
In turn, Pershing executives are able to analyze records such as these to continually make adjustments and improvements to its nearly 400 customer quality service processes while evaluating and rewarding managers for proficiency and success on different metrics, says Evan LaHuta, a director in Pershing's quality management office.
The comparison and evaluation of customer satisfaction is performed with a variety of software tools on a support system for broker-dealers called NetExchange.
The broker-dealers retrieve the information using a business intelligence portion of NetExchange called eAnalytics.
The quality scorecard is a report produced by Information Builders Inc.'s separate business intelligence software, known as WebFocus, which pulls data from eAnalytics. And, by examining such metrics as the percentage of its one million monthly transactions that are handled on-time or which meet Pershing's guidelines for professionalism, the company can determine whether it is improving its ability to serve its customers or not. The company can also determine whether it has the appropriate metrics in place to drive continuous improvements for nearly 400 customer service processes, says LaHuta.
Getting Trades into Order
The scorecard provides insight to two types of users: operations managers and institutional customers.
The operations managers use the software to measure the accuracy and speed of interactions with clients involving its 300 customer service associates. The operations managers also use the tool to evaluate the efficiencies and professionalism of independent broker/dealers.
For instance, Pershing recently partnered on a defect-reducing Six Sigma project with a large independent contractor broker/dealer.
The goal was to reduce the NIGO (Not in Good Order) rate for mutual fund trade cancellations and corrections. Six Sigma is a defined sequence of statistical and other quality management steps used to identify and remove the causes of defects in manufacturing and business processes.
After making a number of improvements to what can be seen on screen by users and the ways that updates for mutual fund trades get processed, reworking these transactions was reduced by 35 percent, says LaHuta.
Pershing's institutional customers have access to the same customer service data, so each can drill down to determine how any one of Pershing's customer service reps is performing, says LaHuta.
For example, a broker/dealer at a global bank noticed a pattern over several weeks of cancellations of requests to disburse cash and securities between accounts, says LaHuta.
After analyzing the origin of these requests and the reasons for the cancellations, Pershing was able to determine for the client that professionals had initiated duplicate requests. The broker/dealer's investment professionals were then trained on how to view the status of transactions in progress rather than to initiate duplicate requests, LaHuta adds.
Customers are able to access the scorecard when they log onto Pershing's NetExchange broker system. The scorecard is a customized and formatted PDF document generated within the eAnalytics section of NetExchange.
The scorecard provides volume, service level performance, NIGO rates and other quality metrics for operational processing, system availability, trade execution and customer service.
Less Reopening, Less Rework
In addition to providing rolling three-month performance metrics for each customer, the scorecard also provides benchmarks which can compare the speed and accuracy of transactions processed by different parties, such as registered investment advisors and traditional brokers.
The NetExchange system also has a feature called a reopening indicator which alerts Pershing executives when a customer has reopened a transaction for rework, says Lucille Mayer, managing director and Pershing's chief quality officer. "Reopening" costs Pershing and its customers more than $1 million annually in productivity. So cutting the percentage of transactions that get reopened saves thousands of dollars each month.
Pershing uses the indicator to identify opportunities for improving operational processes by applying Six Sigma and Kaizen, a Japanese framework for continual review and never-ending improvement to operational processes, she adds.
The two projects have led to a 47 percent decrease in the amount of rework needed for customer transactions and a 54 percent reduction in transaction error rates, she adds. So far, these projects have been implemented across five of Pershing's departments--corporate actions, custody, account transfers, equity purchase and sales and options purchase and sales--with projects planned for six additional departments, says Mayer.
When the scorecard was launched in early 2007, Pershing was reopening approximately 5% of customer transactions for rework, says Mayer. By monitoring the metric and working on its processes since then, the percentage of transactions that were being reopened had dropped to just 2.1 percent as of April, she says.
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