Bank Deposits: A Black Belt Case Study

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ntuition led the leaders of the business to set up a system that locally collected deposits for express reshipment to a centralized, national location for processing. How could mailing to a centralized, national location be quicker than mailing locally and express reshipping? Why wouldn't customers feel more comfortable mailing locally than to a centralized, national location?

Data and Root Causes
Data collection, however, revealed a few flaws that weren't originally identified:

• The express reshipment process was manual. Manual processes that are not reinforced daily and that do not have adequate control plans tend to break down. That is exactly what occurred with the local deposit locations. Some locations wouldn't receive deposits on a daily basis. When deposits were received, they sometimes wouldn't be express reshipped that night because of a lack of engrained process.
  
  
• For deposits that were received during the week, the express reshipment process functioned properly. On the weekend, however, express reshipment wasn't possible, so deposits arriving on Saturday were not express reshipped until Monday evening.
  
  
• Because of USPS processes, some deposit mailings to 'local' deposit locations took as long as three days. Tack on a weekend stay for the above listed bullet, and you can see how a deposit made via mail to a 'local' deposit location may take longer than five days just to be received by the bank.

Additional Findings
An additional analysis of deposits made to a 'local' deposit location with express reshipment to a national location versus mailing directly to a centralized, national location yielded the following results:

• The 'local' process operates at a 2.1 sigma level, while the centralized, national process operates at a 2.5 sigma.
  
  
• A 2 sample t-test indicated that there is a statistically significant difference between the two process means (p=0.0013).
  
  
• The centralized, national process is faster (2.6 average days) than the local express reshipment process (4.6 average days).
  
  
• An additional survey conducted with focus groups indicated that the deposit mailing location is not a significant factor for a majority of respondents. As an aside, the original data indicating that customers were more comfortable mailing deposits within their state could not be found.
  
  
• A benchmarking analysis of direct competitors indicated that all utilized a centralized, national deposit process.

Project Conclusions
It didn't take further data collection to convince the leaders of the business to modify their deposit process and move to a centralized, national process. The facts spoke for themselves. Cost savings resulting from only printing one address envelopes (instead of numerous local), reduced overhead associated with processing, fewer customer inquiry calls and investigations, and a more stable process resulted in savings of $4MM per year. Not bad for a six month Black Belt project.

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