In today’s economic world, financial organizations are struggling to remain profitable when escalating costs are the norm.  Design for Six Sigma (DFSS) is one way to bridge the gap between profitability and cumbersome processes, often legacy ones, that no longer operate at peak efficiency.

Lean Six Sigma has been used within the financial community for more than a decade, particularly in the area of continuous process improvement.  It is still a popular and effective tool to improve financial services operational efficiency; however, many organizations are finding that identifying and reducing incremental defect variability does not fully maximize the full spectrum of improvement opportunities. To achieve a larger return on investment, many organizations are discovering how DFSS can help them re-examine, radically recreate and often build entirely new processes.

DFSS is a separate and emerging business process management methodology (process generation rather than process improvement) that helps organizations determine its customers’ needs and to use that information to create a solution.  These techniques include tools and processes to predict, model and simulate the product delivery system (the processes/tools, personnel and organization, training, facilities, and logistics to produce the product/service) as well as the analysis of the developing system life cycle itself.

Financial organizations rely on a complex network of interrelated processes and systems to deliver quality products and services for their customers.  New levels of performance and quality can be achieved using DFSS tools to take an end-to-end view and create a new design that crosses existing functional boundaries.

Case in point: we worked with a national bank with thousands of branches across the U.S. to solve its increasing Suspicious Activity Report (SAR) workload.  While SARs play a significant role in reducing the country’s vulnerability to terrorist threats by identifying potentially fraudulent activities, the process was causing an increased financial burden on the financial organization.  Specifically, the bank was experiencing an unanticipated related cost of $40 million in vendor and contracting expenses.

Alacer partnered with existing bank vendors to develop a multiphase approach that focused on expense controls, end-to-end process reviews and the identification of high variability areas.  Using DFSS principles, Alacer developed new processing and staffing models to address work backlog and to mitigate operational impact.  As a result, the bank realized $36 million in savings over three years, and $16 million in savings through vendor contract reductions.  The result outperformed regulatory expectations and was designated “Best in Class” by government agencies.

Going forward, DFSS principles can help future-proof banking systems.  While sales, fulfillment and service functions will remain the same, what will differentiate a financial institution will be the way it delivers the products and services customers want, in the way they want it and at a level of efficiency that makes sense for the business. When used in conventional and unconventional ways, DFSS can help organizations deliver this value to customers and, simultaneously, increase the bottom line.

For more information, check out our new white paper, “Design for Six Sigma Drives Increased Revenue for Financial Services Firms.”

 by Richard Paxton