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Continuous Improvement in Financial Services

Posted by Clint Corley

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Sep 15, 2020 10:00:00 AM

Close up Happy Young Couple Listening to a Businesswoman Talking About Plans at the Worktable Inside the Office.When people think of structured continuous improvement methodologies like Lean and Six Sigma, they usually associate it 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.

Traits of Financial Service Organizations

Financial services firms, much like manufacturing ones, have plenty of opportunities for operational process improvement. Still, they have some unique characteristics that must be considered when rolling out a CI plan.

  • Complicated: Financial service operations typically include complicated workflows that cross multiple departments and sometimes even multiple physical locations.
  • Data-reliant: Most financial services processes involve processing data, not tangible artifacts.
  • Perishable: 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-standard: Each service event is unique to the customer that experiences it. Even if the same service is offered to multiple customers, there will be a large amount of variation.



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

  • Quality assessment: Because the outcome of so many transactions is intangible and unique to each customer, it's challenging to define parameters to measure the quality of financial services.
  • Wait times: Because 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.



 Financial Services Examples


 Unused items or information

  • Paper forms and documents

  • Requests pending processing


 Avoidable movement of items or information

  • Paper statements


 Unnecessary movement of people

  • Poorly organized workspaces

  • Forms that aren't located where they are needed.


 Process delays due to missing inputs

  • Call center customers on hold

  • Applications pending processing


 Work to add more value than is required by the customer

  • Redundant questions on applications

  • Failing to leverage existing customer data


 Producing more than what is required by the customer

  • Multiple payment reminders

  • Unnecessary printed documents


 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.

Free eBook: Guide to the 8 Wastes of Lean


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.

  • Reduce the error rate: By utilizing simple interventions such as automated forms, custom workflows, and revised data permissions, financial services firms can reduce the likelihood of human error contributing to failure demand.
  • Increase processing speed: This finance process improvement is possible by identifying and eliminating redundant tasks, automating as much as possible, and simultaneously performing some activities.
  • Reduce costs: Financial services organizations can reduce costs by implementing automated processes that require less human intervention.
  • Engage employees: Employees at all levels of the organization should be empowered and equipped with the tools necessary to document, resolve, and maintain improvement opportunities. Whether your organization practices Lean, Six Sigma, or some other improvement methodology, a software platform designed to support daily improvement is a powerful ally.


Continuous Improvement Software eBook


Potential Targets for Improvement

  • Payment processing cycle time
  • Lead time for application processing and approval
  • Policy renewal lead time
  • Cost of inquiry
  • Collection and recovery practices and process
  • First-time issue resolution
  • Visual management
  • IT workflow automation
  • Duplicate data entry


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 into every aspect of management and day-to-day operations. With the right tools and planning, your organization can start, spread, and sustain positive change.


Topics: Improvement Culture, Spread Continuous Improvement

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