Six Sigma for Banks

BY BILL COONS

ProcessArc wants to establish a reputation for expertise in bringing the principles of Six Sigma to the financial sector. “Banks can find significant returns on their investment into Six Sigma,” said Sheila Shaffie, one of the Milwaukee company’s principal partners. “We guarantee at least a 200 percent return for our clients, and we’ve always been able to find $1 million to $1.5. million for a bank.”

Six Sigma is a process of continuous improvement of business practices and efficiencies.

“Our platform for financial institutions is an integration of Six Sigma and lean manufacturing because fundamentally, Six Sigma for manufacturing doesn’t work in the financial sector,” Shaffie said. “It’s like putting a round peg in a square hole.”

Six Sigma is about making great institutions better, Shaffie said. Contrary to what some believe, Six Sigma is not about just slashing jobs and programs to reduce costs, she said. It is actually a finer process that focuses on revenue enhancement.

“People think that Six Sigma invariably reduces head count, when in fact it does not,” said Shahbaz Shahbazi, the other principal partner of ProcessArc. “America, I think, has had enough of cost reduction, layoffs and outsourcing, and that isn’t what Six Sigma is.”

Many banks are having problems with service proliferation, Shaffie and Shahbazi said.

“Every bank is now offering credit cards with rewards and free checking accounts, so their products have become commoditized,” Shaffie said. “The only way for banks to differentiate themselves is through service excellence. To have service excellence, they need robust processes, and to have robust processes they need us and Six Sigma. Having excellent service is what really helps customer retention.”

ProcessArc can also help banks improve their business practices while conforming to the Sarbanes-Oxley Act.

“Sarbanes-Oxley is the true value provider for Six Sigma in the banking sector,” Shaffie said. “Section 404 is an edict that banks need to process map their entire existence.”

“With Sarbanes-Oxley, the government is saying, ‘Give us a picture of your process, your accounting, your business, everything you do,'” said Shahbazi. “But it does not say to fix it if there are inefficiencies. You can have a picture of a broken process, and nothing gets fixed. We help banks to improve their processes.”

“Most banks see Sarbanes-Oxley as a sunk cost, that they’ll have to spend X amount of dollars to conform,” said Shaffie. “However, we work with clients to get an unbiased view of their documentation and figure out how to do it better. Sarbanes-Oxley is a documentation exercise, which can mean a return on investment at the end.

“Until Sarbanes-Oxley, banks never thought about their cost per transaction, because it wasn’t a part of their industry-wide way of thinking. Banks have always been god at calculating their portfolio risk, but have never considered their process risk, which is what we can help to minimize,” Shaffie said.

Shaffie and Shahbazi say Six Sigma and the emphasis on quality it provides can be integral for the success of any business.

“Very few companies are running a ‘quality’ business,” said Shahbazi. “They aren’t asking, ‘Are we doing it well? Do we give our customers what they want?’ Without a quality emphasis in your business, it’s like you’re driving at night with no headlights, and just hoping you don’t run into anything.”

From the July 8, 2005, edition of the Small Business Times