Refocusing on Member Value: Increased Member Satisfaction with Six Sigma Principles

Though traditionally a manufacturing management strategy, Six Sigma has proven successful in the financial services industry. What benefits can credit unions realize from these principles?

 
 

Six Sigma principles have been around since the 1980s, perfected by manufacturers and adopted by various other industries. Aiding in productivity and efficiency, this management strategy has been implemented by financial institutions to increase customer satisfaction through more productive and cost-effective processes.

Starting with management and working down to individual practices, Six Sigma improves customer satisfaction by reducing defective processes. The results are higher product/service quality, reliable processing times, and cost minimization.

Measurable Impact

Here are some results from a financial institution that implemented a Six Sigma program*:

  • Reduced processing time from application to closing of mortgages by 15 days
  • Trimmed response time for account maintenance requests from three days to less than 10 minutes
  • Reduced missing items from customer statements by 70% - which in turn lowered the number of late posted customer transactions
  • Increased customer satisfaction by 25% - which created customers who were 3 times as likely to open new accounts and four times as likely to recommend the institution

In one example of reevaluating processes and efficiencies, Bank of America revamped the reliability of its automatic and electronic channels. Inaccessible accounts are a major issue for unsatisfied customers in today’s technological environment. By creating Six Sigma projects and eliminating inefficiencies, Bank of America reduced overall defects in this area by 88%.

The important factor here is that no matter how big the institution, all of these results were driven by strategic initiatives which were translated into goals and then measured through evaluating processes and eliminating those that are unnecessary. Such an initiative can be implemented by institutions of all sizes. Of course, resources and budgets are needed to implement full Six Sigma initiatives. Although these results are from Bank of America, the steps that they took in evaluating the processes and creating efficiencies are the same processes that credit unions should be focused on.

Credit Unions and Six Sigma

Credit unions’ sole responsibility is to their members. Therefore, one could argue that the goal of increased member satisfaction is of special importance to cooperatives. Credit unions can start the process towards Six Sigma by minimizing costs, stricter adherence to schedules, and improving service quality. Creating quantitative measures for these Six Sigma factors can lead to greater loyalty and higher return to members.  Credit unions may not have the resources to implement all Six Sigma principles like larger organizations, but they can take part in improving processes and creating a culture of increased service with higher productivity and efficiencies.

To see how credit unions are refocusing on their members by using Six Sigma principles, attend the webinar on Increasing Productivity and Return to Members through Six Sigma Principles, brought to you by Callahan and Associates.

* “Six Sigma…at a Bank?” by Milton H. Jones Jr., Bank of America

 

 

 

Sept. 4, 2006


Comments

 
 
 
  • What's the significance of "six" sigma factors?
    Anonymous
     
     
     
  • I think Six Sigma or some variant can be an effective tool for credit unions to identify weaknesses in their processes. Some members will have patience with lower efficiency than they can get from a bank, but others think credit unions are banks, so we have to strive to combine the efficiency of a large for-profit institution with the ethos of a cooperative. A tall order for sure, but will ultimately benefit the members.
    Anonymous
     
     
     
  • Six Sigma is a management philosophy with a customer based approach that focuses on reducing costly errors. More formally, it is a statistic that allows only 3.4 errors per one million opportunities when serving members. This reduction in errors equates to lower costs and improved customer loyalty. In order to do this effectively, a six sigma process is put into place.
    Molly Francis, Callahan & Associates
     
     
     
  • U
    Jose G Luevano