Quality Improvement in Financial Services
Process improvement through methodologies such as Six Sigma and Lean has found its way into nearly every industry. While Six Sigma had its beginnings in manufacturing, we’ve seen it and other process improvement techniques work very well in the service industry—from healthcare to more service-oriented business functions, such as human resources.
However, Six Sigma seems to have had a slower rate of adoption in financial services. I recently came across a great article about the challenges faced in the financial industry when it comes to successfully implementing a process improvement initiative. The article’s author, Joseph Goodman, spent several years as a Six Sigma black belt at a major financial management institution.
Goodman points out that using Six Sigma in financial services is not all that different from its use in other industries. Projects focused on improving the customer experience, such as improvements in call centers, or complaint tracking, etc., are especially valuable for financial institutions given the extremely high volume of transactions that occur every day. Even small increments of improvement can have a tremendous positive impact on the organization in terms of overall efficiency and better customer service.
Goodman categorizes the challenges many financial organizations face in making Six Sigma work for them. From having troubles achieving buy-in from top management and employees, to not assigning enough resources to projects, to having a hard time communicating initiatives throughout the organization—these are issues that he says tend to plague financial organizations’ success with Six Sigma. However, these issues are very similar to the issues encountered by all types of organizations and industries conducting process improvement.
Goodman argues that Six Sigma in the financial industry can work. After all, the goal of improving customer satisfaction is one that’s shared among organizations of all sizes and across all industries.
Applications of Process Improvement in Financial Services
This year, Minitab was proud to sponsor the annual ASQ International Team Excellence Award Process (ITEA), which celebrates the accomplishment of quality improvement teams from a broad spectrum of industries from all over the world. A few of these quality teams were from financial organizations, and they had some interesting projects and applications of various quality improvement methodologies.
ITEA teams selected for the final round gave live presentations at the ASQ World Conference this past May, and I got to attend several of those sessions—including sessions from two different Vanguard teams. One team presented an improvement project in the company’s Money Movement Unit, which executed 1,100 daily wire transactions totaling between $20-$25 billion before the project. After the improvement implementation, payment dollars were reduced by 60 percent, total number of payments by 30 percent, and $480,000 was saved in annual bank fees for Vanguard.
The other Vanguard team presented a very successful project that improved voluntary corporate action announcement and response collection effectiveness. Using DMAIC and Design for Six Sigma, the team employed gage R&R, Pareto charts, and hypothesis testing to identify a root cause and design an improved process. The improvements reduced financial risk through a reduction in errors of 59 percent, while improving the client experience through an 18 percent reduction in cycle time.
You can also read our case study about how another major U.S. financial institution used quality improvement methods and Minitab for statistical analysis to improve a crucial internal process dealing with the handling of collection data.
If you’re in financial services, how do you use process improvement techniques?