This section assumes the bank has embarked on a customer-centric strategy, redefined their business model and undertaken a deep analysis of its operating model to define the ‘As is’ state and to define the ‘To be’ target operating model.

A Target Operating Model (TOM) describes how the bank operates as two states, an ‘As is’ and a ‘To be’, that serves as the blueprint for it to move from a product-centric to customer-centric operating model.

TOMs affect all a bank’s functions, such as customer management and sales, and within Operations it is used to identify the changes that one of these areas is asking Operations to improve. It can include measures of processing or productivity for the ‘As is’ process, and the improvements from the ‘to be’ process.

It documents the ‘As is’ state from any existing business model and operating model documents, combined with observation by the team that will define the changes. This is crucial in defining the ‘As is’ state, as what the documents say and what people actually do in practice can be two very different things!

This is an example of how the ‘As is’ and ‘To be’ processes will be documented:

Process‘As is’ process‘To be’ process
Customer contact preferences allow customers to define how and through which channel we may contact them.Contact preferences can only be collected by employees through face-to-face channels.To implement an Omnichannel capability, all assisted and unassisted/self-service channels will allow customers to define their contact preferences.

While the ‘To be’ operating model is designed from the bank’s Strategy and its Business Model, it must be capable of being implemented by the bank and its employees. It is no good having a brilliant TOM that far exceeds the capabilities that it can reasonably stretch to.

Before it is approved, the Target Operating model should be tested to determine whether the new capabilities can be achieved and what is required to ensure that they are achieved.

The bank’s Chief Operating Officer (COO) will normally be responsible for the preparation, testing and approval of the TOM. The COO will set up a team experienced in business transformation to undertake the project, working with all the retail bank’s departments.