3 Benefits of Lean Six Sigma in Banking

“Lean Six Sigma is not a program, it is a total strategy.”  - Alex Miller, Professor of Management at University of Tennessee​

​Lean Six Sigma is a philosophy that aims to increase efficiency and reduce waste. It was first introduced in the manufacturing industry and since its introduction, production related firms around the world have greatly benefited from its methodologies.

However, there are often doubts whether the same methodology can be applied to the banking industry or not. This confusion exists mainly because Banks operate in the world of Financial Services and they do not directly manufacture anything.

While it is true that banks don’t produce physical goods, it is absolutely incorrect to believe that they can’t make use of Lean Six Sigma. The flow of information that takes place in a bank is quite complicated and their operations are very process oriented. Applying Lean Six Sigma in such an environment can be quite helpful.

In this article, we discuss 3 ways banks can greatly benefit from the use of Lean Six Sigma strategy.

Better Communication among Employees  ​

​Banks are usually big entities. A huge amount of capital and resources are required to operate them. The smallest of the banks have operation in several different cities of a country. Bigger ones, such as Societe Generale, ING Group and Deutsche Bank exist on a global scale. In such a situation the company needs to install effective channels of communication between employees. Especially because the processes are interrelated and the success of the entire company depends on how closely each of its function communicates.  

​Connection between Employees and Customers

Banks have a structural gap between its customers and its decision makers. A branch is the face of the bank; it is the place where customers meet Bank representatives whereas head office can be thought of as its brain, the place where departmental heads and chief executives are placed.
​
Since departments do not face the customer directly, Banks need to introduce the idea of internal customers. This will allow banks to create a customer centric environment at all levels in the bank. So even it there’s a physical distance, Lean Six Sigma can act as a bridge and help to view its decision from customer’s perspective.

​Quicker Delivery of Services

Process intensiveness in Banks can at times cause delays in the dispersal of their deliveries such as Loan Processing or opening of accounts. To beat competition a bank not only has to offer better interest rates but a timely service as well.

Applying Lean Six Sigma can help in this regard by preventing process wastes. Such wastes include process loopbacks, repeating the process due to errors, duplicates of information storage and delivering unwanted services to the clients. If you eliminate these wastes, you will be able to spend more resources in taking actions that create more value for the customer.

If you wish to learn more about the system of Lean Six Sigma, please check out LearningManager Lean Six Sigma.