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.
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.
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.
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.
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.
These unique features of financial services organizations result in some common challenges in the industry.
The outcome of many transactions is intangible and unique to each customer, creating challenges to define parameters to measure the quality of financial services.
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.
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.
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.
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.
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Waste |
Description |
Financial Services Examples |
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Inventory |
Unused items or information |
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Transportation |
Avoidable movement of items or information |
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Motion |
Unnecessary movement of people |
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Waiting |
Process delays due to missing inputs |
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Overprocessing |
Work to add more value than is required by the customer |
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Overproduction |
Producing more than what is required by the customer |
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Defects |
Errors and mistakes |
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Human Potential |
Failure to capitalize on employee skills and ideas |
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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:
Automated forms, custom workflows, and revised data permissions reduce the likelihood of human error, minimizing failure demand and enhancing accuracy.
Identifying and eliminating redundant steps, automating repetitive tasks, and streamlining workflows can significantly improve processing speeds.
Automation and process optimization reduce manual intervention, lowering operational costs while maintaining or improving service quality.
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.
Establishing and sustaining a CI culture in financial services involves actionable steps that deliver both immediate and long-term benefits. Key strategies include:
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.
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.
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.
Highlighting employee achievements reinforces the value of CI initiatives. Recognition programs encourage continued participation and innovation.
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.