Continuous Improvement in Financial Services

When people think of structured continuous improvement methodologies like Lean and Six Sigma, they usually associate them with manufacturing. However, these days, financial services firms, under immense pressure to reduce operational costs and improve efficiencies and effectiveness, are embracing formal continuous improvement programs. Many of the most popular methodologies can easily be tailored to the needs of financial services firms. They can also take advantage of the technology leveraged in other sectors to support improvement.

Unique Traits of Financial Service Organizations

Financial services firms operate in an environment with distinct characteristics that influence the application of continuous improvement methodologies. These traits must be carefully considered when designing and implementing CI initiatives.

Complex Workflows

Financial services processes are often intricate, involving multiple departments, systems, and sometimes even geographical locations. This complexity can lead to inefficiencies if workflows are not well-coordinated.

Data Dependency

Unlike some industries like manufacturing, where tangible goods are produced, financial services rely heavily on data processing. This shift in focus requires tools and methodologies that can handle large volumes of information accurately and efficiently.

Perishability

Unlike an inventory of physical products, financial services are usually consumed when they are offered; they can not be made ahead and stored for future use.

Non-standardization

Each customer interaction is unique, even when similar services are provided. This variability makes standardizing processes challenging but necessary to ensure consistent quality and efficiency.

Common Key Challenges Financial Service Organizations Face

These unique features of financial services organizations result in some common challenges in the industry.

Quality Assessment

The outcome of many transactions is intangible and unique to each customer, creating challenges to define parameters to measure the quality of financial services.

Wait Times

Since financial services are perishable and must be consumed when they are created, customers can experience long wait times if resources are not appropriately allocated. For example, call centers can become overwhelmed in times of peak demand.

Process Inefficiency

The separation of outcomes and production means that work in progress (WIP) represents a significant portion of the overall cycle time for financial services. This results in low process efficiency.

Rework

Much resource demand in financial services is rework or “failure demand.” A large portion of call center inquiries, for example, are related to previous questions or data inaccuracy.

Examples of Waste in Financial Services

Organizations dedicated to the Lean Six Sigma approach to improvement focus on identifying and minimizing eight types of waste. This is no different for financial services firms.

Waste	Description	Financial Services Examples
Inventory	Unused items or information	Paper forms and documents Requests pending processing
Transportation	Avoidable movement of items or information	Paper statements
Motion	Unnecessary movement of people	Poorly organized workspaces Forms that aren't located where they are needed.
Waiting	Process delays due to missing inputs	Call center customers on hold Applications pending processing
Overprocessing	Work to add more value than is required by the customer	Redundant questions on applications Failing to leverage existing customer data
Overproduction	Producing more than what is required by the customer	Multiple payment reminders Unnecessary printed documents
Defects	Errors and mistakes	Data missing from forms Data entry errors
Human Potential	Failure to capitalize on employee skills and ideas	Using people to share information that could be automated. Requiring duplicate entry of the same data into multiple systems.

Key Improvement Opportunities for Financial Services Firms

The existence of so much variation and waste means that financial services organizations can gain much by using a process improvement method like Lean or Six Sigma:

Reducing Error Rates

Automated forms, custom workflows, and revised data permissions reduce the likelihood of human error, minimizing failure demand and enhancing accuracy.

Accelerating Processing Times

Identifying and eliminating redundant steps, automating repetitive tasks, and streamlining workflows can significantly improve processing speeds.

Cost Reduction

Automation and process optimization reduce manual intervention, lowering operational costs while maintaining or improving service quality.

Employee Engagement

Empowering employees to identify, document, and resolve inefficiencies fosters a culture of continuous improvement. Tools like KaiNexus provide a centralized platform to track and sustain these efforts.

Building a Sustainable Continuous Improvement Culture in Financial Services

Establishing and sustaining a CI culture in financial services involves actionable steps that deliver both immediate and long-term benefits. Key strategies include:

Foster Leadership Commitment

Leaders must actively support CI efforts by allocating resources, setting clear goals, and consistently communicating the value of improvement initiatives. Leadership engagement ensures CI becomes a strategic priority.

Develop a Structured Training Program

Investing in employee training helps build a knowledgeable workforce capable of identifying and implementing improvements. Equip staff with CI tools and methodologies to empower them in driving change.

Emphasize Continuous Feedback Loops

Create systems for regular feedback, such as performance reviews and retrospectives, to evaluate CI efforts. Use this data to refine processes, align goals, and ensure that improvements are sustainable.

Recognize and Reward Contributions

Highlighting employee achievements reinforces the value of CI initiatives. Recognition programs encourage continued participation and innovation.

Leverage Technology for Sustained Impact

Platforms like KaiNexus provide the tools necessary to track, analyze, and standardize CI efforts across teams. Use dashboards and analytics to monitor progress and sustain momentum.

The financial services industry certainly faces some unique challenges, but the fundamentals of continuous improvement still apply. Organizations should build a program that builds improvement in every aspect of management and day-to-day operations. With the right tools and planning, your organization can start, spread, and sustain positive change.