Federación de cajas de Ahorros Vasco-Navarras

INTRODUCTION

This book, entitled To excellence in financial services through Quality , is the second step in the consolidation of Ekonomi Gerizan as an editorial line focused on social, economic and financial issues. The idea behind the present work responds to the same philosophy applied in the first volume.

This book represents the culmination of a process which began with the choice of a central theme, around which a series of talks were organised, in the course of which the main conclusions of the projects initiated in the first part of the financial year were put forward. The summer season affords an occasion for their presentation in the framework of the Summer Courses, which propitiates direct contact with two university circles: the physical forum and contact with the students, most of whom are at college or recently graduated. On the other hand we also count on the presence of alumni from the professional world, as a counterpoint and a complement of the first. The process closes with the systematisation of the information given, following the general structural line of this book.

Attendants showing an interest in a better knowledge of the different points of view in connection with the attainment of Quality in financial services numbered over a hundred. As is customary, the students had the opportunity of taking active part in tracing the conclusion guidelines, by giving their own opinions throughout the discussions and the work groups that were held throughout the working sessions.

Knowledge of the fact does not detract from its relevance, and at present one of the priority objectives of any agent acting in a market, is to achieve differentiation from the rest of his competitors. This is equivalent to being noticed by customers as having a positive, specific and genuine identifying character.

The world of financial services is not unaware of this phenomenon. Here, the maintenance of differentiation via new products is very difficult, as, with the huge potential for "copying" on the market, based on modern technologies, within days of launching a new product there are already others of similar characteristics on the market. In this manner, the financial products offered, disguied in each case under different names and commercial brands, are very similar in all cases.

The second differentiation option consists of putting into practice an aggressive price strategy which is as difficult as the first in view of the high competition levels characterising the world of financial intermediation, which can seriously affect the different margins which are the backbone of activity.

The third alternative open to a financial entity involves offering a differentiated service to its customers. Efforts have been made to delve into this line, taking "Quality in financial services" as an important part of Total Quality Management, the final objective of our endeavour.

This subject is aimed at different groups, and affects each in a specific manner: students, the future managers of our society; personnel as representatives of the internal organisation of financial entities and, finally, public opinion in general, the basis of the financial intermediaries' clientele, with the role of judging the market, granting its confidence in some instances and withdrawing it in others.

The purpose is to offer a panoramic view of the different perspectives in connection with the central theme outlined above, and the ultimate objective of this task is the dissemination of the importance of Quality on a global level, in order to attain higher levels of competitiveness within the system and awareness among financial entity personnel of the importance of Quality of Services as a strategic differentiating variable. In short, we are striving to emphasise the importance of gearing an organisation towards continuous improvement, and to encourage the participation of all the integrating agents in the quality chain. Without neglecting the fact that Quality, more than merely an objective, is a philosophy, a way of life.

In the selection of talks, we have tried to keep a balance between theory and practice, between collaborators from academic, productive and financial circles, and at the same time, tried to avoid prejudice in any direction. A logical sequence from the general and theoretical to the particular and empirical is observed throughout. These are the basic criteria shaping this publication.

As for the arrangement of the available material, this book is structured into five parts, each responding to the objectives mentioned above and that, taken as a whole, these attempt to offer a wide perspective of the central theme.

Therefore, the first chapter presents an analysis of the philosophy of Quality, with the intention of stressing the importance of the customer, the core and main agent around whom the remaining aspects of Quality revolve. This is the key figure in this framework, towards which every future strategy for the definition of activity parameters should be aimed. This must also be considered from a much wider perspective, considering the staff involved in the process of designing the services who double as suppliers of services and customers, as internal customers.

In the second chapter, the importance of having a measurement system or a model that will allow us to know and quantify the Quality of services provided is underlined. This is nothing other than the evaluation of customer satisfaction in relation with their initial expectations from the service requested. This section stems from the idea "in order to improve on something, it must first be measured". Furthermore, the two other main keys to success are brought in, namely, the human factor, bastion and conductor of technical capital, and technology and organisation systems.

The outlook would remain incomplete if certain channels for perceiving the customer's point of view, as well as those of the various segments, were not examined. The third chapter is devoted to gathering information on this matter, identifying a series of improvements susceptible of being introduced into the supplier-customer relation. In this way, in the first place, it is possible to identify customer demands, and second, some of the answers to these demands, proposed by the system, can be analysed.

A fourth chapter follows which expounds certain novel techniques in the practical installation of systems for the realisation of Quality, illustrated by specific references to Quality achievers who relate their experience in this process, and by the specific applications of the tools for control in the financial field.

The work closes with a survey of future horizons, through the analysis of the competitive strategies based on Quality and a description of the Autonomous Administration perspectives, maintaining at all times the virtuality of Quality in public services.

In a breakdown of the contents of the chapters in this book, the opening article, written by professor Luis María Huete Gómez , entitled " Quality management approaches for the services that will be common in 21 st century companies" , warns us of the process of change we are undergoing. This matter is not superficial, but structural, and in the opinion of the author, we face a change of management model, abandoning the classical paradigm in favour of a new model in which, contrary to the above comparison, collaboration between agents must prevail. All this is based on the model of seven business variables, with mechanisms for customer satisfaction and recovery of dissatisfied clients gaining special relevance. The idea of creating value with relation to customers is emphasised, with the slogan "value for effort". It also introduces some novel concepts such as "mental wages", different from the customary pecuniary wages and equally necessary. Professor Huete's line of argument leads us to the fact that the objective must be to contribute to customer satisfaction, maintaining competitiveness in costs. Therefore, he echoes Carlzon's statement: "in services, people come first and things second".

The author sets out the guidelines for a handbook for the management of people, and throughout the article there is an underlying invitation for change, with dashes of good humour and illustrated with an abundance of examples from our environment.

The contribution of Professor Sonia Margarita Rodríguez Parada , under the title "The internal client of Quality" continues with the idea of stressing the importance of the individual, the customer in a word, but she defends the need to widen the customary perspective of the customer, making this condition extensive not only to those who deal directly with customers in the front office, but to all those who make up the organisation. She points out that synergy is at work, such that the final efficiency of the chain is superior to the sum of the individual efforts.

To the well-known advantages of joining loose links, shared responsibility and individual meaning inherent to each task, we must add those of job revaluation, with positive consequences in terms of motivation, internal cohesion and team spirit.

Few arguments are so widespread as the idea that to improve a given aspect, a method for the measurement of its records is preliminary condition. Applying this principle to Quality, we find that we need a measurement model for the quality offered by a company in order to assess the degree of satisfaction bestowed on the customer. Professors Ignacio Babé Romero and Javier Molina McGhee 's contribution, entitled "Measuring criteria associated with quality in financial services" distinguishes between management and evaluation models, measurement systems and systems for control. In this paper, the authors make a detailed tour of the main current measurement models for quality, explaining their peculiarities and at the same time comparing their basic features, after having previously identified the most commonly measured objects. In this manner, the reader is shown the tools required for measuring and comparison.

The last part of their article focuses on the application of the theoretical models for the financial world, which we have described earlier. Emphasis is placed on the fact that in the light of recent experience, financial entities have made considerable progress in the application of the three elements mentioned above (evaluation models, measuring and control systems), but some time must elapse before their use may be compared to such functions as financing or marketing.

Having overcome the measurement criteria, the following contribution by Professor Enrique Rey Arufe entitled "The human factor, communication, training and motivation: man as the central point in achieving quality service" , nominates man as the cornerstone of any organisation. In the first part of his work, he refers to the basic postulates of "The Goal", a philosophy defended by Professor E. Goldratt, and states the need to separate management problems from personal problems. To this end he treats the differential aspects between the goal and its necessary conditions, makes a distinction between local and global optimum conditions, emphasises the importance of the alignment with global objectives and describes the existing limitations for the management of complexity.

In the second part he deals with the problem of aligning persons and management, based on the three pillars of motivation, communication and training. He develops with great attention to detail the necessary conditions for communication within the organisation; and above all, he encourages thought, as the overall remedy to many of the problems that can be detected in organisations.

The specific phases for achieving effective communication, involve the identification of the underlying problem, and to understand it; for which the skill to build and pass on common sense must be acquired, and, finally, communicate the message. This entire process falls within the need of a change of model, capable of handling current levels of complexity.

Technical capital is the second pillar on which all modern establishments are based, and without it the required customer satisfaction levels could not be reached (internal and external customers), which on the other hand are necessary in order to subsist in markets with the current degree of competition. Within this context, the argument put forward by José Valiño Blanco is developed in his contribution "Technical capital, technology, systems and organisation: the importance of technological support in the acquisition of quality service" . This author advocates the theory that the quality processes of financial entities must be incorporated within larger processes known as BPR (Business Process Re-engineering). He defends the necessity of industrialising services to the maximum; technology playing a key role in such a process, as computer systems have, as a rule, proved to be capable of sustaining any technological change, however complex.

The part referring to customers claims and the answers proposed by financial entities is based on five collaborations. The first two are aimed at showing the importance of customers' opinion: in one case, through the use of empirical studies as those contained in "The appraisal of financial services by users and consumers" by María Angeles Guridi Legarra , and in the second case, through the opinions Santiago Orio Vega , the markets researcher specialised in carrying out financial studies, puts forward under the title "Quality as perceived by the customers of financial entities" .

These two contributions converge on a series of common elements, summarised in the model given by the second, in which confidence , expressed through solvency, honesty and confidentiality; service , where comfort, manner and efficiency take priority; saving, financing and innovation products and the social aspect expressed in its social sense and local implication, are the four attributes most highly valued by the clientele.

Following in this line, studying the opinions of the receivers of services, is the contribution of professors Francisco Alvira Martín and Marta Torres Rius, under the title "An approximation to quality through sociological investigation techniques: a practical case" . An account is given here of a qualitative project carried out in four groups from among the attendants at the Seminar, pursuing to identify the dimensions of Quality and its hierarchy of greater to lesser importance. In general, the results coincide with what we have said above, with some clarifications due to nature of the group involved.

In "Complaints as an opportunity for service and reduction of costs" Professor José Antonio Pérez Fernández de Velasco , brings to light the fact that dissatisfaction exists even if it not always manifest. Furthermore, he underlines the well-known phenomenon that negative publicity expands much more potently than positive, with complaints estimated at a total of 15 times those reaching the notice of the management.

The author invites us to take action, focusing the problem from a "pro-active" perspective, in an effort to take maximum advantage of the detection of certain complaints, and considering them as true opportunities for improvement as far as their resolution and the decision to avoid future repetition is concerned, these are aspects that contribute to the reduction of costs and therefore, to improving the profitability of the entity. He incorporates the concept of the client's future value , justifying maintaining this in the medium term, in such a way that investing in customer satisfaction implies raising the probability of repurchase, with an impact on the promotion of positive publicity.

"Institutional answers: customer service offices" , constitutes, in Carmen Castilla Ortiz de Elguea's opinion, a reaction to the dissatisfactions observed in the clientele and an effective means for channelling their claims in an appropriate manner. Through the experience of her own entity, she reinforces the argument set out in the preceding paper, emphasising the unworkability of ignoring the existence of complaints and applying "ostrich tactics". She defends the advisability of establishing adequate detection and treatment mechanisms for dealing with complaints. All within a climate of real commitment in the organisation, from where customer satisfaction should be pursued with determination.

Professor Miguel Angel Heras, in his article "The re-engineering of processes and benchmarking. A reflection on their application in financial entities" opens the fourth chapter related to the last techniques applied to Quality implantation systems. He defends the need to using an integrating approach to the management of modern financial entities. This approach should increase the Quality of Service and the degree of fidelity, aligning the implantation of incremental or radical improvements to processes, assuring the quality of new products and services and pursuing continued costs reduction, thus developing Total Quality Management. This management must be based on benchmarking, to identify the best practices and on re-engineering applied as radical costs improvement.

The section on practical applications opens with the paper by Professor María José Pinillos, "Tools for Quality control and portfolios management". An empirical analysis based on the application of control tables (one of the so-called seven quality control tools) is presented, for following-up and surveillance of the production process in portfolios management companies, for the period between 1993 and September 1994, to 29 investment funds agencies. It has the purpose of evaluating the degree of efficiency attained in the management of these funds, taking the criteria of daily profitability as an exponent of quality and comparing this with the allocation made by the market.

Within the field of the practical aspects of the implantation of management systems, carried out with quality criteria, we include the article "A practical case of implantation of a management programme with Total Quality criteria" , in which the author, Manuel Gómez Martínez , in his capacity as Quality Director of a Savings Bank, reports the experience of his company and describes in detail the different phases they traversed before accomplishing the yearly Management Plan based on the criterion of Quality. The subject is treated from the perspective of a company already well on the way to Quality, which will surely guide others further behind.

The case of ERICSSON is well known, as the prizewinner company of the European Quality Award. The work of the company's General Director, Eduardo Herranz Cordero , entitled " Total Quality, a profitable investment " he studies the point of view of someone immersed in an improvement process and becoming acquainted with the implementation and start up methods, as well as maintaining a large organisation in a permanent state of improvement. All this without forgetting the difficulties and obstacles they must overcome in the process, making it necessary to be constantly on the alert to avoid returning to a state of neutrality.

The vice-president of the Basque Government, Juan José Ibarretxe Markuartu , expresses to the public the importance of striving to achieve a society actively geared towards Quality, stressing the fact that some measures are being taken by the Autonomous Administration, with a view to bringing about the future in the key of Quality. It is a case of practising what one preaches, standing at the head of social expression in the search for Quality and encouraging other social agents to follow suit.

The reflection of Professor Charles Aubrey , is offered in the paper entitled "Advanced strategies for Total Quality " . Here some of the most meaningful actions in which next century's companies will be involved are portrayed. The author stresses the need for applying a long-term approach to quality management, thinking not only in terms of achieving the satisfaction of current customers, but also of future customers, maintaining their loyalty in time.

To achieve a common strategic vision for all the company's components, unifying efforts in the same direction, is one of the keys to success in any organisation. The bottom line of the process leads not to a satisfied client, but to a delighted one. This fact causes the customer's loyalty towards the entity to be considerably increased and results in some very favourable consequences in terms of income and costs contention.

The model is based on the so-called quality trilogy: planning, control and improvement of quality, and incorporates strategic planning as a middle-term tool. Loyalty, non-quality costs, quality culture and systems evaluation, constitute the basis of advanced quality strategies.

The implantation of these strategies depends on such tools as benchmarking and re-engineering processes. Furthermore, Professor Charles Aubrey foresees that this process will be essential for companies and especially for the financial entities of the century to come.

These are, in short, the main features of the present volume, which aims to offer a wide and varied outlook on the importance of Quality in Financial Services, as a significant part of the philosophy of Total Quality Management or TQM.