Why use Lean and Six Sigma in the finance sector?
Six Sigma is a comprehensive system driven by close understanding of customer needs, disciplined use of facts and statistical analysis, and diligent attention to managing, improving and reinventing business processes.
Some banking processes (mostly automated transactions like card settlement or internet banking) are performing at 4,5-5,5 sigma levels and further improvement could be achieved only with sophisticated statistical tools.
Six Sigma, however, is weak and dramatically improving process speed or dealing with internal process inefficiencies when smaller volumes and manual operations occur. Sadly enough, this is the case with most of banking operations. Also, as it is project based, it is les suitable for continuously and relentlessly developing processes.
LEAN is a principle driven, tool based philosophy that focuses on eliminating waste, so that all activities/steps add value from the customers perspective.
Lean is strong in dramatically reducing lead times of products and services like account opening or mortgage loans delivery. Also, is particularly suitable for producing localised and immediate results (in just 1-2 weeks) in case of low complexity problems like most branch transactions, consumer loan applications or loan monitoring. Lean, on the other hand, is weak on bringing a process under statistical control or redesign product characteristics like developing new products to customer demand.
Some banks like GE Money, Banks of America or Raiffeisen Bank have applied Six Sigma with succes. Many others, not ready or willing to invest in full-size quality initiatives have seen difficulties and frustrating returns. A few institutions tried to copy the excellent results of industrial Lean, under names like Office Lean. Although there are many success stories, some manufacturing Lean concepts were just not suitable for banking operations.
Many (mostly consulting) companies tried to combine the two methodologies. In most cases it means merely adding together the tools and increasing the length of the training. It does not only take employees off their tasks longer, but also confuses them with the huge number of tools.
"To lead uninstructed people to war is to throw them away."
- Confucius