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Six Sigma in Banking/Financial Institutions

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  • #24152

    Terry
    Member

    I started this thread because there isn’t much out there about Six Sigma in banking and financial institutions.  If you are an iSixsigma visitor from a bank or financial institution:1.  How did your organization get started in Six Sigma and which officer was the sponsor?2.  What are the highest impact opportunities for Six Sigma in banking and financial institutions?3.  What are the key barriers to success in banking and financial institutions?Hope this gets some interesting conversations going.Terry

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    #57818

    willow
    Member

    Terry,
    In response to your question we have been using SS for a little over 2 years. Our initial driver for implementation was based around Customer Satisfaction and our impleementation was group wide. In response to your specific questions:

    As we did not have a P&Q area to assume total responsibility, the CEO largely drove the implementation, with co-ordination falling under one of his direct reports.
    The highest impacts we have found is understanding where each division/ unit contributes to the bottom line and work you’re way backwards. The end output of any bank is income, which is generated through multiple sources ie: Interest Income – Fees et al. If you build measures around these areas you will understand where the income is being derived from.Once done, you can work your way back, linking each sales – support – service unit to the groups end outputs, understanding where they fit in and what they contribute. We did this by developing Productivity Metrics around all of the business activity drivers and were able to link and place every areas inputs to the companys outputs.This was a cumbersome task as we did not operate under a balanced score card and process management was something new to our sales areas, but not to the operational areas.Once implemented, projects at both ends of the spectrum were undertaken, with the greatest $ achieved through minimising missed income, and then tacking the productivity components.
    The key barriers are the same as in all organisations, people are resisitant to change, the leadership required for the process is patchy, the committment of staff to “want to make a difference” and bitting of more than you can chew in projects and expected results.
    Can elaborate in more detail off line.
    Pete

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    #57827

    Tuan
    Member

    I have a friend who is a black belt at a major re-insurance company.
    The biggest impact they searched for was multiple data entry and duplicate data.  They were able to eliminate a software program, reducing duplicate data entry and saving the company $300,000 from labor savings and the cost of the softwate and upgrades.

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    #57828

    Ralph Browning
    Participant

    I started this thread because there isn’t much out there about Six Sigma in banking and financial institutions.  If you are an iSixsigma visitor from a bank or financial institution:
    1.  How did your organization get started in Six Sigma and which officer was the sponsor?
    An Officer was Appointed, and given a direct line to the CEO. The company then set up a role down heirarchy including MBB (Master Black Belt), BB (Black Belt), and QE (Quality Engineer – Quality Mentor and Coach).
    2.  What are the highest impact opportunities for Six Sigma in banking and financial institutions?
    The same as they would be for any environment where human processes exist, automation, removal of process variation, streamlining, removal of redundancy, etc…
    3.  What are the key barriers to success in banking and financial institutions?
    Resources.
     
    Hope this gets some interesting conversations going.
    Terry

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    #57829

    Kurt Marttila
    Participant

    We have found that our clients in the financial services industry look to Six Sigma to, among other things, increase customer satisfaction, increase customer retention, increase investor confidence, improve collaterals, increase cross-selling ratios, decrease customer complaints and establish more “permanent” customer relationships.An analysis and prioritization of customer requirements and needs can lead to examining processes that might create needless obstacles, lengthen cycle times or insert unnecessary or unwanted decision points and reviews – that is, if there are clearly established processes to begin with.Examples include: identifying and then using Six Sigma to address customer requirements for more “human” contact, flexibility in hours, and accurate answers to questions the first time. Others include compressing the cycle time of a credit application review process, and developing a more efficient means of cross selling services.Attached is a white paper on the subject for those interested. Download: Financial Services [PDF file]Viewing Tip: Usually, you can click on a link to view the document — it may open within your browser using the application (in this case Adobe Acrobat). If you are having difficulty, try right clicking the link and selecting “Save Target As…” or “Save As…” to save it to your computer harddrive.

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    #57831

    Ginny
    Participant

    There is a good article from Nov. 2001 located here at the
    site. The article talks about deployment of a Six Sigma
    initiative at AMEX Corp. Here is the link:https://www.isixsigma.com/offsite.asp?A=Fr&Url=http://
    http://www.asq.org/pub/sixsigma/past/vol1_issue1/driving.htmlThe title of the article is “Driving Performance Results at
    American Express” by Janet Young, AMEX Corp.Hope this helps!Ginny

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    #57832

    Tierradentro
    Participant

    Gee Terry, banks are sooo different. They don’t have processes that can be mapped and measured. They also don’t need the guys at the top to drive. Probably started with some teller at your local bank.

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    #57833

    BFR
    Participant

    John:
    There are plenty of processes in banking/finance.  Everything has a process, even if you’re not making widgets.  There are the obvious ones like statement rendering, check processing and encoding.  There are call centers and VRUs.  Then there’s all the behind the scenes stuff like data feeds between information systems, loan processing and filling ATMs with cash.
    Plenty o’ work to be done here.

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    #57834

    BenR
    Participant

    Check with the Bank of America headquartered in Charlotte, NC.
    I have a good friend there who is in the middle of master black belt training for them. Send me an e-mail and I will forward it to him.
     
    BenR
     

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    #57835

    Pete Seavor
    Participant

    BenR:
    This is in response to the suggestion you made when responding to Terry’s recent Forum message. You indicated that you could forward an email to someone you knew who is involved in Bank of America’s Six Sigma project. Terry and I and one other business partner are combining our banking, manufacturing, consulting and Six Sigma experience and skills to focus on bringing Six Sigma to a greater segment of the banking industry, hopefully to regional institutions and even those of smaller asset size. Our initial interest is in learning more about what (and who) was behind the decision to bring the Six Sigma process into their Bank, where did the Bank officers go to get information about Six Sigma and identify resources available to implement the process, and how has Six Sigma been communicated within the institution and how has it been received to-date.
    There is much more that we would like to dicuss but we know that there is a line of priviledged information that we do not want to cross.. The opportunity to initiate some dialogue will be most valuable and appreciated.
    Thanks for your willingness to help,
     
    Pete   

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    #57836

    Steve G
    Member

    Terry,
    I have worked applying Six Sigma in three insurance companies.  There are plenty of opportunities here… 
    My current business CEO (ex-GE) kicked off Six Sigma and had the Organisational Development director to run the programme.  This followed three years after adopting GE’s WorkOut approach. 
    Potential improvements to core processes are:
    Acquiring Customers: Improving the effectiveness of customer targetting so more and better business comes in through the door and less business is rejected.  
    Assessing and Underwriting Risk: Identify where time is wasted within the new business or renewal processes.  This allows time to be spend improving the accurate assessment and pricing of risk (where insurers can really lose their shirts!).  This can be very hard and may be DFSS. 
    Collect Premium:  Collect it faster!  Always a good place to start as it generates additional investment income. 
    Service Policy:  Contact reason analysis identifies problems in internal processes and allows a reduction in NVA contact and thus headcount. 
    Settle Claims: Effectiveness of the claims assessment and recoveries from third parties.   
    The relative importance of these and other improvements does vary greatly depending on the market segments insured and competitive positioning. 
    Key Barriers: 
    Culture – “We don’t have processes, every risk is different.”, “We don’t have internal customers…”
    Lack of leadership engagement.  Build dashboards and scorecards to show Y=f(x).
    Resource constraints until people see the returns made.
    Identifying the right projects and the right GBs/BBs. 
    Balancing the need to achieve financial impact whilst also making cultural changes and end-to-end improvements in processes. 
    Hope that this helped. 
    Steve G

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    #57837

    Sam Aborne
    Member

    Steve,
    Can I get your contact information I work for a major insurance company and would love to have an offline about sixsigma?
    Sam

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    #57855

    G. Taylor
    Participant

    At SunTrust, Six Sigma Is Middle Management’s Baby American Banker  Wednesday, June 12, 2002By Chris Costanzo

    SunTrust Banks Inc. says it has proven that you need not follow every tenet of the Six Sigma quality improvement technique to get results.
    General Electric Co., Motorola Inc., and other major companies use Six Sigma to drive responsibility for quality improvement upward. The most valuable senior-level employees are put in charge of boosting quality through full-time assignments that can last up to two years.
    But in 1995, when SunTrust began laying the foundation for using Six Sigma in its checking and deposit-processing operations, it knew it wanted to put the spotlight on middle managers.
    The company figured that to get higher quality at the lowest possible cost it would have to “elevate the skills of front-line managers to empower them to make changes and really run the business,” said Susan Peryam, first vice president of quality management.
    The bet on middle management was a good one, Ms. Peryam said. “It’s amazing what happens when you unleash the power of the front line and engage the employees in solving day-to-day issues in their work environment.”
    About the only drawback SunTrust has uncovered in its move to Six Sigma is that it no longer uses the same terminology as other financial institutions, Ms. Peryam said. This creates problems for corporate customers seeking to compare the performance of potential service providers. (SunTrust actually has to produce two sets of data: one that shows its processing performance in terms of the standard banking metric of errors per ten thousand and another that describes it in the Six Sigma measure of errors per million.)
    And SunTrust is far enough along the Six Sigma track to have discovered one seemingly counterintuitive aspect, Ms. Peryam said. “There may be some point where for competitive reasons, client needs, or cost-benefit it’s not worth going after the ultimate Six Sigma.”
    In the beginning, however, Six Sigma was an easy sell to middle managers, once they saw how it could ease their day-to-day burdens, she said. With their participation, the “real power” of Six Sigma kicked in, she said.
    Ms. Peryam said that a particularly valuable component of Six Sigma has been the procedures it offers to help employees change the way they approach their jobs.
    In two years starting in 1995 SunTrust trained about 200 managers and supervisors to use a performance management tool. They sat through five days of classroom training and 16 to 24 hours of one-to-one coaching over four months.
    The goal was to give them more insight into the various facets of their processing businesses, including how to measure success and how to keep customers foremost on their minds. The company is now training about 400 people with this method, Ms. Peryam said.
    Once the front line was equipped with this knowledge, SunTrust began a second phase of training — again lasting about two years — on ways to implement change and improve processes. This phase included setting five-year “stretch goals,” which Ms. Peryam described as goals that “seem unbelievable at the time but prove to be attainable.”
    After this segment of training began, SunTrust found that the role of the middle manager began to change. Instead of being problem-solvers, front-line supervisors evolved into coaches, with a heavy focus on rewarding employees.
    SunTrust had made sure to build into its program tools that middle managers could use to recognize employees. In effect, by changing the nature of the front-line managers’ job, SunTrust “pushed problem-solving down” to the employee level, Ms. Peryam said.
    “We wanted to make quality a way of life,” she said.
    With the reorientation complete, SunTrust slowly began moving toward Six Sigma. It created an index to track its item-processing performance by 14 measures, such as sending out statements on time, responding to research requests in a timely manner, and encoding checks accurately.
    Some measures began hitting Six Sigma performance levels in the fourth year, others still are closing in on the five-year goal. Across all 14 deposit processes, SunTrust currently is recording fewer than 20 errors per million, Ms. Peryam said. Before the Six Sigma initiative, some processes had error rates in the thousands, and some in the hundreds.
    By now, SunTrust has completed so many Six Sigma-related improvement projects — about 500 — that it has decided to no longer track them at the corporate level, though they will continue to be recognized by individual departments.
    SunTrust is getting savings and generating revenue through Six Sigma, Ms. Peryam said, though she declined to provide specifics. She added that SunTrust has kept its investment in Six Sigma to a minimum by not spending a lot of money on consulting or hiring many experts in the technique.
    SunTrust also has a centralized quality team whose role is to coach departments on how to use quality tools as well as to track their progress. Each of SunTrust’s item-processing centers has a quality administrator who reports to the central quality team.
    Senior managers get involved in Six Sigma through their support of the program as well as an annual banquet held each March to recognize front-line managers who have completed outstanding quality improvement projects. The managers behind 15 of this year’s more than 100 projects were recognized that way.
    Copyright c 2002 Thomson Media. All Rights Reserved. http://www.americanbanker.com
    See The Performance Management Group LLC

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    #57821

    Dr. Steve W.
    Participant

    Terry,
    Six Sigma suits  Banking/Financial Industry very well as they are process-oriented business. You can use SS to reduce error rate in your service, reduce turn around time in your mortgage approval process, reduce wait time in your banking/call centers, re-design various process in banking/insurance businesses.
    I am a lead MBB for a major bank and we have made great stride in getting the most out of SS. There are several major banks that embarked on SS. Among these banks are The Citigroup, JP Morgan, Bank of America, Merril Lynnch and American Express. I heard Wachovia will be launching SS initiatives in a couple of months.
    I did find that talent pool in banking industry is not nearly as good as in manufacturing industry.
    The key to success is to make sure the CEO and HR head are really supportive; otherwise, it is going to be tough journey.
    Good lucy, Terry.

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    #57838

    Steve G
    Member

    Sam,
    Sure; as long as you are not working for a direct competitor!  What is your contact e-mail? 
    Cheers,  
    Steve

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    #57822

    Tracee B.
    Member

    Hello, everyone! I’ve been reading this thread of discussions and would like to chat with folks with interest in Lean Six Sigma in banking, insurance, etc.I’m trying to pull together some case studies on how Lean Six Sigma has worked in insurance. Am currently involved in banking side of the house.

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    #57823

    Steve G
    Member

    Tracee, I want if I can use Lean Six Sigma in insurance.  I haven’t any case studies yet but I would be interested in sharing experiences going forward.  Steve G

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    #57824

    Tracee B.
    Member

    Steve,Thanks. I’d love to share experiences, too. I’ve already developed some first-hand experience cases in banking and am looking to add to our repertoire.Please keep me posted on anything you come across, and I’ll be glad to share what I find.Right now, I’m seeing some specific correlations in the area of IT, where insurance companies are now catching up to what the banks have been doing forever in converting legacy systems. We’re preparing for a roundtable discussion where this audience is invited.

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    #57839

    Sam Aborne
    Member
    #57842

    Terry
    Member

    Thanks, Steve and everyone else who replied – Very helpful insights and experiences. 
    We have had several inquiries from a few smaller regional banks (Good size but not the Citicorps) about Six Sigma.  But they seem to be very conservative and risk averse, and point to “the regulators” for reasons why it can’t work here.  Some are plain afraid because they really got burned from a previous improvement initiative (“Reengineering”=Layoffs).  A visit to some of these places gives you the feeling that their internal processes haven’t changed much since the days of Charles Dickens.  Well, maybe Charles Dickens with computers. 
    Look, those of us who practice Six Sigma every day know that there’s more similarities than differences from industry to industry.  The barriers are the barriers, leadership is leadership, and waste is waste.  I think a few larger banks and financial institutions have discovered Six Sigma and are well on their way to achieving the benefits.  The next tiers need to step up to the plate because they have the same competitive issues, operating issues/challenges, and profitability pressures.  But they’re hunkered down, waiting for things like the economy to fix their problems. 
     
     

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    #57840

    Sinnicks
    Participant

    Steve,
     
    I would love to have an offline with you as well.  I work for a large insurance company in their Quality Assurance unit. 
     
    Regards,
    Mark
    (860)277-2171 [email protected]

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    #57819

    torres
    Participant

    Hi TerryI was reading with interest your thoughts and progress to date with SS. We are putting together a conference in San Francisco in June, would you consider joining the panel of speakers?Please let me know your views?Thanks very much
    Julia
    0044 1638 720339

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    #57830

    Bill W. Langley
    Participant

    Kurt,
    Thanks for the white paper.
    As a receivable management consultant, I have used SS for several years on projects. Although each project is unique with the diverse manufacturing and service industries, the root causes are very similar in each case. Interactive management support with follow-up is a key factor while implementing a new program.
    Oftentimes, I must disguise the SS approach in order to avoid the “here we go again” attitude which can doom the success of the project before it leaves the ground. Management announces the new initiative only to stand passively on the sidelines expecting a turnkey fix. I have found that, as the group reaches specific initial goals and buy into the program, it is easier to have others join the parade. Consequently, objectives are met and reinforcement breeds success.
    Of course, I am always open to better approaches to the problem.
    Thanks,
    Bill  

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    #57843

    Claude
    Participant

    Steve-
     
    I am doing a BB Projectr around Insurance Policy Renewal Verification (i..e. we lease eqpt and we require that our customers have liability insurance).  Hence the condundrum- a third party (the Insurance Carrier) holds the Certificate that WE need to SEE. 
     
    Seeing that you worked w/ 3 insurance companies- (excerpt from your  posted messageAssessing and Underwriting Risk: Identify where time is wasted within the new business or renewal processes)- I thought you might have some ideas to share on how we can Quickly and Efficiently verify proof of insurance when having to go thru 3rd parties….
     
    Thank you for any ideas!
     
    Kind regards,
    Claude

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    #57825

    Sorour
    Participant

    Hi,
    I work in an internet bank and have found the biggest benefits have come out of the following projects:
    1. Improve acquisition cycle times for key products in line with customer requirements.
    2. Reduce the number of referrals to credit underwriting depts.(reduces manual intervention and duplication of work)
    3. Maximise cross sales processes within the key acquisistion routes
    4. Scale applications throughput so that value to the lending book is maximised.
    We have done extensive baselining and dashboard work within BB projects which have become the revised business KPI’s.  Customer satisfaction has increased and business efficiencies .
    The work has been sponsored by the UK Head of Programme Development who reports directly into the board which has ensured progress but this has not always been smooth.
     
    Paul

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    #57820

    Larry Yovanoff
    Participant

    Julia, Can you tell me more about the conference you are referring to?
    My company is just getting started in the Quality Improvement process. We are aligned with the Banking/Financial category and we are looking for measurement and benchmark criteria to compare against.
    Larry

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    #57844

    raveendra
    Participant

    hi steve
    could you share your case studies with the data?
    im looking for how 6sigma can be implemented in banking sectors (service sector)
    thanks in advance
    raveendra

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    #57845

    Steve G
    Member

    Raveendra,
    My specifics would be insurance related & I’m afraid that the data would be company confidential.   
    If you post your e-mail I would be happy to discuss your opportunities off-line but I think that these would vary by your company’s situation and strategy. 
    Nonetheless, there are obvious opportunities and a lot of people start in accounts receivable; in one SBU we’ve just reduced the cycle time of our premium collection by 30 days at no additional cost…   
    Cheers,
    Steve G

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    #57846

    raveendra
    Participant

    hi Steve
    im reachable at [email protected]
    im looking for some input as regard to how you have used six sigma in transaction proces.i need to use the methodology for banking transaction
    throw some lights on this
    thanks
    raveendra

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    #57847

    vidyut bapat
    Member

    icici  bank in india is implementing ss
    you may contact them for thier experience.
    Vidyut Bapat

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    #57848

    raveendra
    Participant

    Mr.Bapat
    do you have any known person in that firm?raveendra

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    #57849

    Amar Rathor
    Participant

    Raveendra,
    In the service industry, especially on transactions processes there are a number of projects that have been done. These would be on increasing Transactional Productivity, Conduct ABC and reduce costs, Improve process effectiveness in terms of accurate and timely delivery, Use of Lean Manufacturing concept for higher efficiencies, use DFT, Introduce volume forecasting and capacity methodolgy, Digitization.
    In case you are interested in discussing these offline, please contact at 9811227678 or mail me at [email protected] 

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    #57850

    rice
    Member

    Hi, I’m new to this six sigma area.  I only know that there are 6 levels, with different number of defects per unit for each level.  But is there any industry standard or common practice about the acceptable sigma level for the Banking/Financial software development?
    For example, I would expect the piloting industry to require a sigma level 6, but a free web game may require a lower sigma level, say, 3.  So, is there any standard for the Banking/Financial industry?
     

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    #57841

    PETER FOONG
    Participant

    Dear SteveI am Peter Foong from Singapore. I would like to know more about your services (if you are a Six Sigma Consultant). Please email your contact email address to :[email protected]

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    #57852

    Steve G
    Member

    Peter,
    Post your e-mail and I’ll contact you… 
    Cheers,
    Steve

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    #57853

    PETER FOONG
    Participant

    Dear SteveMy email address is [email protected] FOONG

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    #57851

    Terry
    Member

    No, there is no standard. The standard in Banking/Finance (as well as any other industry) is get better, faster than your competition. Six Sigma is one way to get there.

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    #57854

    laura filangieri
    Participant

    I read a lot about Six Sigma, and I’d like to apply it to the Italian Insurance industry, promoting focused projects to leading companies.
    Could you give me any hints on experiences, best practices, examples matured in other countries?
    Laura
     
     
     

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    #57826

    Johncox
    Participant

    Does anyone have results in the financial industry?  ROI, Cost, Savings, etc.?

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    #58029

    RR
    Member

    Earlier in this thread, someone noted that the “talent” in financial Six Sigma was much weaker than Six Sigma in manufacturing.  Unfortunately, chat forums encourage those kinds of comments, and that notion is sad and ridiculous. 
    I am not a big fan of these kinds of generalizations.  From my own experience, I have interviewed numerous MBBs & BBs from both backgrounds and I have been impressed, and disappointed, by both.  
    I would strongly recommend anyone with Six Sigma experience, who is interested, to pursue a career in financial services – it is an exciting and rewarding industry. 
    However, I would advise that you not assume that just because you know how to “do” Six Sigma that your experience and education is enough to be successful in financial services.
    Relationship and communication skills, strategic vision and polish are also needed.  It is, however, a great place to be.  

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    #58030

    Hill
    Member

    1.  Our organization became involved in Six Sigma after new management was put in place.  We are a captive finance company and were experiencing heavy losses due to the recession and poor business practices.  The new management had used Six Sigma previously and believed (rightly so) that it could help to improve not only our financial results (by cutting costs and improving processes) but by improving customer satisfaction as well.
     
    Our Quality Dept. & OD department rests underneath HR, so the HR VP is our official Sponsor.  However, each project we run is headed by a Sponsor (VP) from that function.
     
    2.  For our organization it is standardizing and streamlining of processes.  Due to rapid growth we implemented many processes that did not scale well.  In addition, there was no focus of continual improvement so things remained very segregated.  By refocusing the organization on items that were critical to the customer we hope to eliminate non-valued-added steps. 
     
    3.  One of the biggest challenges we faced initially was getting buy-in.  But I guess everyone has that problem. However with strong management support we have conquered this problem.  However, now we suffer from the opposite, everyone thinks that a Six Sigma Project can solve everything.  Keeping the organization aligned as to what is a Six Sigma project, verses a Just Do It or a Work Out project is ongoing.
     
    Another challenge we face is getting the organization to recognize what an error is.  For example, if we have to continually go back and revaluate a credit decision we have made, each of those reworks should count as an error.  However, our Credit Department will be quick to argue to the contrary. 
     
     In regards to the comment that the talent pool is not as good I am mixed.  I think the majority of the issues rise as we all learn how to apply the Six Sigma rigor within any service industry.  It really requires you to be creative at times.  Unlike a manufacturing facility, you do not always have tons of data around specifications and logs of machine run time.  Even somewhat simple tasks such as obtaining a turn around time on a credit underwriting can be difficult.  Any time you have more human contact in any process I think you are more prone to error and for incentive to not report on the error, particularly since safety is generally not an issue within Financial Services (unless you get caught in the stapler!).
     

    I would love to hear about other peoples experiences within the Financial Services Industry. Hope this helps someone!
     
    Sarah

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    #58100

    Louis
    Participant

    I am currently working with a client in the insurance industry. I would recommend the following:
    1) This needs to start with the CEO a great sponsor would be the COO or the CUO.
    2) Highest impact is the ability to cut processing expenses per contract as it relates to processing, underwriting and rating.
    3)The key barriers to success in the insurance arena is the regulations put on companies (differ by state).
    In insurance stats are everything so the 6sigma concept plays well; however, the entrenched environment of underwriters and actuaries will be a tough nut to crack.

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    #58435

    Ajesh
    Participant

    Its been over two yeras since you posted this message, so i am not sure if my messag ereaches you. In the hope it does, i wanted torequest if you could share with me the
    project storyboards / ideas / areas of improvement you focussed on/ KPI’s you used etc
    in the banking / financial istitution area.
    I have had exposure to six sigma but as a team member. I am currently with  an investment company, having portfolio management services & corportae finance, and am  on the look out of implementing the six sigma rigour . But to do that i need to identify / complete one project which can highlight SS benefits.
    Your guidance would be highly appreciated.
    Regards,
    Ajesh
    Email: [email protected]

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