Banking With Lean Six Sigma


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Strategy officer says methodology can streamline loan processing, information gathering
Lean six sigma is gaining credibility and should be taken seriously by banks who want their process to reach optimal productivity, according to one chief strategy officer.

Bank officers report savings of between 20 percent and 40 percent in their re-engineered loan processing, with 70 percent not out of the question.

Nichols said “the reality is that banks are notoriously poor at formalizing and adhering to a set loan processing methodology. So the reality is a combination of both disciplines works best when applied to banking.”

Banks can figure out whether they need the improvement methods by recording the time and effort expended on processing every credit. If processing time varies widely from loan to loan, improvement is needed.

Lean Six Sigma would look at each delay and methodically approach the process of “manufacturing” credit to remove variability and waste. If the process suffers from vacations, backlogs or bottlenecks, Nichols wrote, the bank might create centralized “work cell” with cross-trained personnel that can fill in for other members. Loan files might be rotated to other areas or branches.

Many banks spend a lot of time gathering, analyzing and presenting information that doesn’t pertain to credit assessments, according to Nichols. Weeding out the waste and restructuring such processes can save a bank 35 percent in processing time.