Lean Six Sigma for the Banking Sector
What is Lean Six Sigma (LSS)?
& Six Sigma is continuous improvement methodologies that focus upon the
elimination of waste
using "Lean" and the reduction of variation
found within processes using "Six Sigma", whether they are
manufacturing or transactional in nature.
Benefits from Deployment/Implementation
of Lean Six Sigma Methodologies
The banking sector has found the
benefits to be reduced cycle times, better cash management, reductions in
complaints due to defects and overall customer satisfaction from improved
Methodology for Banking is as follows:
& loyalty are the deciding factor to bank employee's efforts to achieve
higher profits. Lean Six Sigma projects involve defining objectives and
opportunities in consultation with bank employees, as well as senior
management. There may be an opportunity to improve, based on customers'
feedback, complaints or escalation received at management level.
The measure phase requires
to collect data regarding bank operations & processes followed by various
departments in consultation with top management. This data is important and
helps the team to understand the impact of the process on customer satisfaction
& helps to follow RBI Guidelines. Interviews and feedback from employees
and customers can be very useful in understanding stages where processes slow
down. These could help to
find solutions to problems caused under different situations. These processes
can be marked for immediate changes or improvements through either BPR or
The analyze phase
entails making an in-depth study of data that has been measured. The data
collected helps teams understand the aspects affecting both internal &
external customers of the banks & shows the actual performance of the
branch or department at any point of time during the financial year. Steps that
are time-consuming and need reconsideration or rearrangement are identified and
sent for approval. Adoption of New technology to reduce the same.
phase involves undertaking actual changes and improvement in the process in
consultation with staff. These measures are taken based on the data collected
according to the guidelines from top management. Before the changes are finally
made, tests are undertaken to ensure that any changes do not affect customers
adversely for any reason. A pilot project may be run for testing of results.
has to be some control mechanism to ensure that the changes made achieve
results as expected. If the changes do not bear results, then they need to be
reconsidered. To ensure processes do not have drawbacks leading to errors, some
measures, such as mistake proofing of the process can be taken, using electronic
ensures that the data entered or provided are correct in the first place. If
awareness is created among customers about the provision of correct data, then
every time they approach the bank, it makes it simpler to provide faster
could be areas or processes that may have needed customer contact too many
times, leading to customer dissatisfaction.
Sigma tools and techniques can help eliminate overlapping processes - and in
turn, prove easier and beneficial to the customer. Faster processing and
reduced cycle times can help banks to provide best services to their customers,
which in turn means good profits.
Common lean Six Sigma projects
identified in Finance and Banking are listed below:
- Improving customer feedback and response processes.
- Reducing documentation errors & improving accuracy.
- Improving the reconciliation processes.
- Reducing response delays.
- Reducing or eliminating invoicing errors.
- Eliminating the possibility of erroneous data entry.
- Reducing audit non conformities.
- Reducing Turnaround Time (TAT) for various processes.
- Reduction of waiting & service time.
- Reduce electronic financial transaction costs.
- Reducing complaints by (First Time Resolution) for complaints/queries.
- Enhancing (internal or external) customer satisfaction.
- Improved customer experience for Net Banking, Mobile Banking & Phone banking.
- Increased business in terms of new customers.
- Reducing the cycle time to Process a Loan Application (both Mortgage & Personal loans).