Starting small, thinking big: Scalable FM supports regional banks

The 4,000 regional banks in the U.S. today are facing unique challenges. There’s pressure to scale up or consolidate to compete more effectively. Many are feeling the pressure to contain costs, be more operationally efficient and assume more control over maintenance and repair spend. And at the same time, they have a responsibility to support local suppliers and provide a community connection.

A centralized facilities management (FM) platform can address all of these challenges, giving regional banks powerful new tools to operate their retail branches and offices at a lower cost and more efficiently. Larger commercial banks have already embraced centralized FM, but many regional banks perceive cost as a barrier to entry. A scalable FM platform could be the answer.

Many regional banks still manage facilities internally and have siloed systems. They also have decentralized processes and work order management systems that struggle to manage tickets quickly and efficiently.

According to Dina Villa, a managing director JLL Financial Services, it isn’t uncommon to find work orders submitted by phone or email with maintenance records tracked through spreadsheets. “Many of the decisions about service providers are not standardized,” she says. “They are left up to individual branch managers, which can make scalability difficult, accelerate costs and create inefficiencies.”

As regional banks often grow through mergers and acquisitions, having a scalable FM platform in place allows organizations to seamlessly integrate operations. These newly formed organizations can find their real estate portfolios doubling overnight, and at the same time, have a rush of locations that need to be downsized or vacated. Larger, more geographically dispersed portfolios also bring greater exposure to weather events that could compromise operations. The faster an organization can mobilize post-M&A, from vendor notifications to active site support, the lower the financial, regulatory, and operational risk.

Villa has worked with clients who have grown significantly through mergers and didn’t have the bandwidth or capacity with their outdated systems and rising maintenance costs to roll out the types of modernized programs that are being asked of their C-suite. Being able to scale without losing control is often a challenge.

Operational risk as well as compliance demands also can pose an issue and shrink margins. Missed preventative maintenance or service schedules that are not standardized, for example, can have an impact on uptime, on customer experience, and can increase the risk of a branch’s exposure to regulatory issues or fines.

At a time when margins are slim and cost containment is critical, having a scalable facilities management plan in place can give new visibility into the efficiency of buildings, spaces and equipment. Banks of all sizes can assume more control over their maintenance budgets in addition to a better understanding of vendor and technician performance, eliminating the burden of many mundane administrative tasks from the local staff.

For some smaller regional banks, who might be outsourcing FM for the first time, it can feel like a big step, which is why it is important to have a partner that can help simplify the process, and easily add or remove resources as needed – such as moving from mobile technicians to dedicated on-site staff. Over time a program can add energy and sustainability initiatives, capital project management, location strategy and much more.

Local supplier relationships are incredibly important to regional banks. Having the right partner can bring new supplier relationships or support the ones already in place. JLL Marketplace, for example, offers more than three million curated products and transparent, pre-negotiated rates with leading industry suppliers. Banking clients would have access to those savings and relationships or have the option to assimilate their local vendors into the program. Transparent pricing models allow banks to mitigate repair and maintenance costs and have full visibility into spend.

Certain patterns indicate when there is the need for a more structured FM model, such as when branch managers managing facilities on their own with inconsistent results or when work orders are tracked manually or on an ad hoc basis. Unpredictable or escalating maintenance spend can also indicate the need.

For many regional banks, the first step to outsourced FM is building a technology foundation that brings together work order management, asset data and Service Level Agreement (SLA) oversight in one place. This integration streamlines day-to-day operations and creates the conditions for a shift from reactive to preventative maintenance. From there, cost-effective shared services can centralize dispatch, governance, and vendor coordination, which can allow internal teams to focus on strategic initiatives.

Banks that adopt a structured and technology-enabled facilities management approach often find that they have reduce reactive maintenance by 40%[AV1] [DV2] through preventative schedules. Post-merger integration timelines can also be dramatically shortened.

“One regional institution we worked with was able to successfully onboard many newly acquired locations to a single work order platform in 30-45 days from notification to vendors all while maintaining uptime and customer service levels,” says Villa. “That is how you know a platform is working.”

A scalable FM program flexes with the needs of an organization at any point in time, delivering consistency, strong governance, cost savings and operational efficiency every step of the way. A centralized team can lead the charge with an open communications and change management program that invites branch managers, suppliers and the surrounding community in for a journey.

While cost considerations are always top of mind, building the business case for outsourced FM is easy, because inefficiency often proves to be a greater expense in the end.

Want to learn more? Contact JLL’s Banking and Financial Services team to explore how scalable FM can help transform portfolio operations.