Six Sigma In The Banking Industry

Six Sigma was developed in the 1980's to reduce defects that were quite common in the manufacturing industry. However, with the development of new concepts and methodologies, Six Sigma is now being used in the service sector as well. It helps to improve the quality of the services rendered. The  Six Sigma methodology used in the banking industry is referred to as the DMAIC process. It denotes:  define, measure, analyze, improve and control.

Define:

In the ‘define’ phase of DMAIC, Six Sigma professionals define the objectives and boundaries of a particular business process, in consultation with the employees and senior management. In most banks, customer satisfaction is the main objective, making it necessary to define all the processes that involve customer interactions and directly affect customer satisfaction. Some of the processes that involve customer interaction include address change request processing, new account openings, teller window transactions and CD rollovers.

Measure

In the ‘measure’ phase of DMAIC,  Six Sigma professionals deploy quantitative procedures to collect statistical data in consultation with the business managers. The statistical data is then used for measuring the impact of the various business processes on customer satisfaction. Different processes have different impact on customer satisfaction. It is financially not viable to improve every business process. The measurement of impact of the individual processes helps the banks to concentrate on improving the processes that have the maximum impact on customer satisfaction. In the banking industry, wait times are said to have the maximum impact on customer satisfaction. Banks can employ observers at their different branches to measure the average wait time, under different work conditions.

Analyze

In the ‘analyze’ phase of DMAIC, Six Sigma professionals analyze the collected data according to predefined parameters to identify the processes that can be improved at minimum costs. The analysis covers every aspect of a business process that directly affects customer satisfaction. For example, a check cashing transaction involves the customer coming to the teller window, the teller receiving the customer’s request and the teller seeking a manager’s approval for processing the request. These three different, single transactions need to be analyzed individually to ascertain which one has the maximum impact on the overall transaction time.

 

Improve

 

In the ‘improve’ phase of DMAIC, Six Sigma professionals apply corrective measures to improve processes that cause problems in consultation with the bank staff and the branch manager. All improvement measures are based on facts and statistics. Advanced simulation tools can also be employed to study the impact of the proposed improvement initiative on business processes.

Control

In the control phase of DMAIC, control systems are put in place to monitor the impact of the improvement initiatives. If a business process is still not performing in accordance to the desired Six Sigma levels, the process is referred back to the ‘define’ phase. However, if a small problem is affecting the performance, then corrective measures are taken and the whole process is not referred back.

Six Sigma methodology has been successfully implemented by banks in last few decades to improve service delivery and customer satisfaction.


 


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