Towards Improving Banking Services Quality - 18 - A Bank Related Case Study and A Lean Banking Insight

Towards Improving Banking Services Quality 

18.

A Bank Related Case Study and A Lean Banking Insight

 

Introduction

 

Efficiency and customer satisfaction are cornerstones of successful banking operations. However, traditional banking processes often suffer from inefficiencies, leading to customer dissatisfaction and operational delays. This chapter examines a case study of a banking process, identifies inefficiencies from the customer's perspective, and explores solutions using Lean Banking principles. By reflecting on an insightful experience from 1975, we also uncover the enduring relevance of streamlining banking operations to achieve faster service and greater satisfaction.

 

Case Study Overview

A customer visits a bank branch for two purposes: withdrawing cash and submitting an internet banking application. While the customer eventually completes both tasks, the process takes approximately 30 minutes, leading to dissatisfaction due to long waiting times and multiple interactions with different staff members. The original process is depicted in Figure 12, which highlights its inefficiencies.

 

Customer’s Perspective

From the customer’s viewpoint, the primary concern is the prolonged time spent at the bank. The need to visit multiple counters exacerbates the waiting time, making the experience tedious.

 

Identified Wastage

 

·       Unnecessary movement: The customer must visit different counters for cheque validation, payment, and application submission.

 

·       Redundant processes: Multiple staff members handle tasks that could be consolidated.

 

Proposed Solution: Single-Window Service

Introducing a single-window system eliminates the need for the customer to move between counters. A bank official handles all tasks, including cheque validation, payment, and application submission. The revised process, shown in Figure 13, reduces the lead time to less than five minutes, resulting in a satisfied customer. 

Figure 12- Banking Process Cross-functional Flowchart

Figure 12 – Original Process Flowchart:

This flowchart demonstrates the conventional banking process, where the customer interacts with multiple staff members (SB Clerk, Officer 1, Officer 2, and Cashier). Each step introduces waiting time and delays. 

Figure 13 – Banking Process Revised Flowchart

Figure 13 – Revised Process Flowchart:

The revised flowchart demonstrates a simplified banking process where a single bank official performs all tasks, such as cheque validation, payment, and processing the internet banking application. This eliminates redundancies and unnecessary customer movement within the bank.

In the original flowchart (Figure 12), the customer is required to visit multiple places, interacting with different staff members, which increases waiting time and causes frustration. In contrast, the revised process (Figure 13) streamlines operations by consolidating all tasks into a single point of interaction. This reduces the lead time significantly, allowing the customer to complete their work in under five minutes and leave the bank satisfied.

 

A Lean Banking Insight - An Old Experience 

 

It is an old experience of the author that speaks about a Lean Banking insight. In 1975, the author was working as a Foreign Exchange Counter Clerk at a PSU bank in Jaipur, India. His role involved assisting foreign tourists with the exchange of foreign currency and travellers' cheques. However, the bank's procedure was cumbersome, requiring approximately 30 minutes per transaction. This process involved multiple steps:

 

1.       The tourist filled out an application and submitted it with their currency or travellers' cheque.

2.       Their passport was inspected, and a token was issued.

3.       As a clerk, I calculated the exchange amount and prepared a voucher.

4.       The voucher was then checked and approved by an officer.

5.       Finally, the cashier processed the payment.

 

This multi-step process required the involvement of three staff members: a clerk, an officer, and a cashier.

 

Later that year, during a visit to Sri Lanka, the author experienced a striking contrast at a bank counter in Talaimannar. The entire currency exchange process was handled by a single individual and completed within a few minutes. Not only was the exchange fast, but the person also provided him with the necessary certificate of exchange.

 

This efficiency demonstrated a practical application of what we now recognize as Lean Banking. The Sri Lankan bank's streamlined process minimized delays, reduced redundancies, and empowered a single staff member to handle the transaction end-to-end. This comparison remains a vivid example of how simplified and customer-focused procedures can enhance operational efficiency.

 

Conclusion 

The transition from traditional banking practices to leaner, customer-focused systems offer immense potential for enhancing efficiency and satisfaction. By learning from past insights and reimagining existing workflows, banks can minimize waste, empower employees, and deliver seamless experiences to their customers. As illustrated by the case study and the 1975 anecdote, Lean Banking is not just a methodology but a transformative mindset for modern banking. 

I welcome your comments, questions and suggestions. 

Warm regards,

Keshav Ram Singhal 

Next - Lean Banking: A Roadmap to Efficiency and Excellence 

 

 

Towards Improving Banking Services Quality - 17 - Flowchart and Value Stream Mapping

Towards Improving Banking Services Quality

17.

Flowchart and Value Stream Mapping

 

Introduction

 

Processes in banking institutions are multifaceted, requiring precision, efficiency, and adaptability to meet customer expectations and regulatory standards. Tools like flowcharts and value stream mapping (VSM) provide structured methods to visualize, analyze, and optimize these processes. This chapter introduces these tools, emphasizing their role in identifying inefficiencies, reducing waste, and improving service delivery. By leveraging these methodologies, banks can streamline operations and enhance customer satisfaction while adhering to Lean principles.

 

First, we should understand a flowchart. A flowchart (also called workflow or process map) is a picture of separate steps of a process in sequential order. A flowchart is a generic tool that can be adapted for a wide variety of purposes, and can be used to describe various processes, such as a manufacturing process, an administrative process, service process, or a project plan. Banking flowcharts capture the sequence of work activities that occur when performing tasks in banks, such as encashing a customer’s cheque, processing of loan application, or account opening process. Banks use flow charts as tools to improve employee productivity, customer service and profitability.

 

Figure 9 - Flowchart Common Symbols

Flow chart shows the steps as boxes connected by arrows and decision boxes. It helps in understanding the process flow and interrelationship between various steps. Flowchart common symbols are shown in the Figure 9. A typical flowchart for payment of a customer’s cheque is shown in Figure 10. Ovel represents a start or end of a process. In the banking context it can be when customer visits the bank branch or leaves the bank branch. Parallelogram represents input or output, such as check input / output in banking. Rectangle represents a process, such as transaction processing in banking. Diamond indicates taking decision, such as taking decision to make payment against the presented check or not in banking.

 

Rationale Behind Each Decision Step in Figure 10

 

Here is the rationale for each decision step in the flowchart for cheque payment:

 

1.       Cheque Valid? Balance Available?

o   Ensures that the cheque is not fraudulent or expired and that sufficient funds are available in the account to honour the cheque.

 

2.       Verify Signature of Drawer:

o   Cross-checks the drawer's signature to detect unauthorized alterations or fraud. While cheque validity checks structural details, signature verification ensures identity authentication.

 

3.       Reject Request:

o   Provides a safeguard against progressing invalid transactions, ensuring compliance with bank policies and preventing unauthorized access to funds.

 

A flowchart may be drawn by using a website or software. A Cross-functional Flowchart reveals who does what and when. This chart is organized into sections. It goes beyond a basic flowchart to show relationships between functions (such as a stakeholder or department) and phases in a process. A Cross-functional flowchart is illustrated in the Figure 11. Figure 12 shows a Cross-functional flowchart of banking activities.

 

Figure 10 - Flowchart for payment process in a bank

Cross-Functional Flowchart

 

Importance in Collaborative Settings:

Cross-functional flowcharts are essential in banking to visualize interdepartmental interactions, such as loan approvals, where multiple teams (e.g., underwriting, risk assessment, and compliance) collaborate. By mapping responsibilities and handoffs, these charts reveal inefficiencies and ensure smooth coordination.

 

Highlighting Bottlenecks:

Cross-functional charts expose delays, redundancies, or miscommunications between departments. For instance, if document verification is pending at multiple desks, the chart pinpoints bottlenecks, enabling targeted solutions like parallel processing or task prioritization.

 

Figure 11 - A Typical Cross-functional Flowchart (Courtesy Source - Google Search - https://creately.com/)

 

Cross-functional flowchart can be prepared with the help of Microsoft website https://support.microsoft.com/, other website or other software. 

 

Value Stream Map

 

Value Stream Map is a typical flowchart that shows flow of value including materials and information through an organization. Value stream mapping is a method to develop the current state map of product (or service) and information flows within the organization. Value stream mapping is a process that helps identify waste and streamline the organization’s processes. It can be applied to both the product and customer delivery flows. It focuses on steps required to optimize product or service delivery and completion. 

 

Value Stream = Processes with an extra focus on continual improvement

 

Value stream mapping for a bank may include following three steps:

 

Step 1 – Create a list of all services and products the bank offers to its customers

 

Step 2 – Define the most important / critical business services

 

Step 3 – Identify stakeholders and start the value streaming exercise

 

After completing first two steps, bank will have an understanding of what services and products the bank offers and which the most important ones are out of those. Now the bank can identify relevant stakeholders for each service or product. Put all information into a Value Stream Mapping Exercise.

 

Practical Banking Example:

Considering a loan approval process:

 

·       Map the journey from loan application to disbursement, identifying steps such as document collection, credit evaluation, and approval.

 

·       Highlight redundancies (e.g., repetitive verifications) and delays (e.g., waiting for credit score reports).

 

·       Streamline the process by eliminating non-value-adding steps, such as manual data entry when automation is possible.

 

Simplified Steps in Value Stream Mapping:

 

1.       Identify key services / products offered by the bank (e.g., personal loans).

 

2.       Define critical processes tied to these services (e.g., approval, disbursement).

 

3.       Map current workflows, noting steps, delays, and bottlenecks.

 

4.       Design an ideal future-state map with minimal waste and optimized lead times.

 

5.       Implement changes and measure improvement.

 

Value stream Exercise can be effectively done by using value stream management (VSM) as per ISO 22468:2020, an international standard on Value Stream Management (VSM). The value stream management (VSM) method is an effective tool for the collection, evaluation and continuous improvement of product and information flows within an organization. The VSM methodology includes the analysis, design and planning of value streams. In consideration of an ideal state, the current state of the value stream is mapped according to the gathered data and subsequently analysed to design a future state with less waste and a reduced lead time. VSM leads to a reduction or elimination of waste. With the help of a defined procedure in terms of a unique VSM method, value streams of different sectors and process types are holistically improved. A common understanding of value streams will enable a bank to streamline its internal and external processes. A study of international standard ISO 22468:2020 will be beneficial in this regard. A copy of this standard may be obtained from the sales counter of International Organization for Standardization (ISO) or national standards body member of ISO. In India, Bureau of Indian Standards (BIS) is the national standards body, who is a member of ISO.

 

Reviewing an Existing Process

 

A study of international standard will be helpful in reviewing an existing process, however when analysing a flowchart or value stream map look for the customer pain points and following:

 

-          What is customer’s perspective?

 

-          What are the wastes in the process?

 

-          How to shorten the lead time?

 

-          How would the process look if there were no constraints?

 

-          Is the task subject to periodic loops or rework cycles?

 

-          Are there any redundancies? Highlight inefficiencies caused by redundant approvals.

 

-          Can series steps be converted to parallel steps to make things faster?

 

-          Is there a process that is creating a bottleneck? (Too many items / documents as input waiting to get processed.

 

-          Is there pain point? Delays in cheque clearance due to manual verification. Introducing automated cheque-scanning system integrated with core banking platform will expedite the process.

 

-          Are there any opportunities to reduce the lot size?

 

Reviewing an existing process will lead to improvement in the process. Bank should explore opportunities for customer self-service, such as online status tracking for loan processing. Bank should assess periodic delays caused by peak-hour workloads and introduce staggered timings or additional counters.

 

How Flowcharts and Value Stream Maps Differ in Scope and Application

 

Flowcharts and Value Stream Maps (VSM) serve distinct purposes, though both aim to streamline processes:

 

·       Flowcharts focus on process steps, mapping sequential activities to complete a task. They are ideal for visualizing workflows and understanding interdependencies, such as cheque processing or account opening.

 

·       Value Stream Maps, on the other hand, emphasize value creation and waste elimination, analyzing the flow of materials, information, and time. For example, a VSM for loan processing might track every touchpoint to identify delays or redundancies.

 

Key Difference:

 

·       Flowcharts provide detailed, step-by-step visualizations of tasks, while VSM captures the broader flow of value to optimize efficiency.

 

Conclusion

 

Flowcharts and value stream mapping are indispensable tools for banks aiming to achieve operational excellence. By visualizing processes and identifying inefficiencies, these tools empower teams to eliminate waste, streamline workflows, and enhance service delivery. Incorporating Lean principles into banking processes ensures that institutions remain customer-centric and adaptable in a dynamic financial landscape. As banks continue to evolve, these methodologies will serve as key enablers of innovation and continuous improvement. 

I welcome your comments, questions and suggestions. 

Warm regards,

Keshav Ram Singhal 

Next - A Bank Related Case Study and A Lean Banking Insight 

Towards Improving Banking Services Quality - 16 - Waste Walk

Towards Improving Banking Services Quality 

16.

Waste Walk

 

Introduction to Waste Walk

 

A waste walk is a structured approach to observe work processes, identify waste, and propose actionable solutions to improve efficiency. It is a cornerstone activity in Lean management, emphasizing the importance of "going to the Gemba" (the actual place where work happens) to uncover inefficiencies. Often, individuals working within a system become desensitized to waste over time. A waste walk provides a fresh perspective, making waste visible again. By actively involving a team and methodically observing processes, organizations can systematically eliminate waste, enhance value delivery, and foster a culture of continuous improvement.

 

A waste walk is simply a planned visit to where work is being performed to observe what's happening and to note the waste. It is a maxim in lean thinking that to fix any problem you must first see the waste. However, the longer you have worked in a system, the harder it is to see the waste around you. Taking a “waste walk” is one way to make the waste visible again.

 

A waste walk is a primarily a group activity to identify wasteful practices taking place within a business process. First gather a group together; agree on a route and then walk the process. On the way round look for the common wastes associated with the business, as described above. Depending on the group's size it is better to choose to have some people focusing on specific wastes types, which can certainly improve the rate of spotting wastes. A waste walk supports Lean management. A waste walk can be effective if following points are take due care.

 

Before the Walk

 

To ensure the effectiveness of a waste walk, certain preparations are essential:

 

·       Understand the Process:
Team members should familiarize themselves with the process being observed, including key steps and objectives.

 

·       Have a Process Flow Diagram Handy:
A flow diagram serves as a visual guide for understanding the workflow and identifying bottlenecks.

 

·       Keep a Waste Walk Form:
The Waste Walk Form is a tool to record observations of waste and suggested solutions systematically.

 

During the Walk

 

The waste walk itself is an interactive process involving team members, operators, and managers. The following practices ensure a successful observation:

 

·       Introduction:
Begin by explaining the purpose of the visit to the process operators. A respectful approach builds trust and cooperation.

 

·       Ask Relevant Questions:
Engage the operators with thoughtful questions about their workflow and challenges they encounter.

 

·       Listen Actively:
Carefully note the operators’ inputs and perspectives, which can provide unique insights into hidden inefficiencies.

 

·       Document Findings:
Record all observations, including types of waste and possible solutions, in the Waste Walk Form.

 

·       Express Gratitude:
At the end of the walk, thank the operators for their time and input.

 

Types of Waste Identified

 

During the walk, the team may encounter various forms of waste, such as:

 

·       Poor layouts affecting process flow.

 

·       Ineffective maintenance causing delays.

 

·       Bureaucratic processes that add no value.

 

·       Excessive reporting or redundant documentation.

 

These issues reduce performance and profitability and must be documented for further analysis.

 

After the Walk

 

The waste walk does not end with observations. Post-walk activities ensure the findings translate into actionable improvements:

 

·       Share Observations:
Discuss findings with the process operators to validate observations and refine proposed solutions.

 

·       Mark Wastes on Visual Tools:
Update the flow chart or value stream map to highlight wasteful areas and track improvement opportunities.

 

·       Plan and Prioritize Improvements:
Develop an action plan to implement changes and monitor their impact on the process.

 

 

After the Walk

 

-          Team should share observations and findings with the operators

-          Mark wastes on the flow chart / value stream map

 

Waste Walk Form

 

A Waste Walk Form is illustrated in the Figure 10. 

Figure 8 - Waste Walk Form

Waste Walk in Banks

 

In banks, waste walks should ideally be conducted by a cross-functional team comprising individuals from different levels of the organization. The key participants may include:

 

1.       Process Owners

 

·       These should be managers or officers responsible for specific processes (e.g., loan processing, customer service, account management).

 

·       They should have in-depth knowledge of the process and can provide valuable insights during the walk.

 

2.       Lean Experts

 

·       Lean expert professionals are trained in Lean principles and can guide the team in identifying and categorizing waste effectively.

 

·       They are able to bring a structured approach to spotting inefficiencies and proposing solutions.

 

3.       Senior Management Representatives

 

·       Involvement of senior officers (e.g., department heads or branch managers) may demonstrate commitment to Lean principles.

 

·       They can ensure that identified improvements align with the bank’s strategic goals.

 

4.       Frontline Staff / Process Operators

 

·       Employees who perform the actual work (e.g., tellers, loan officers, customer service agents) are critical participants.

 

·       They have firsthand experience with inefficiencies and can provide practical insights.

 

5.       Internal Auditors   

 

·       These team members bring an objective perspective to the walk and ensure compliance with regulatory requirements.

 

6.       IT and Support Team

 

·       Banking processes often rely heavily on technology. Including IT professionals helps identify waste related to systems, such as software inefficiencies or bottlenecks in digital workflows.

 

7.       External Consultant

 

·       If the bank lacks in-house Lean expertise, hiring external consultant can provide a fresh perspective and expert guidance.

 

Key Considerations:

 

·       Team Size: Keep the group manageable (4–7 participants) to ensure focus and efficiency during the walk. The team should not be too big.

 

·       Training: All participants should have basic training in Lean principles and waste identification.

 

·       Collaboration: Promote open communication and teamwork to ensure a comprehensive view of the process.

 

By involving the right mix of individuals, banks can conduct effective waste walks that identify inefficiencies and drive meaningful improvements in customer satisfaction, compliance, and operational efficiency. During the waste walk team members should also interact with customers to understand their needs and expectations.

 

Conclusion

 

A waste walk is more than a diagnostic activity—it is a collaborative exercise that strengthens team awareness and involvement in continuous improvement efforts. By using tools like the Waste Walk Form and adhering to Lean principles, organizations can identify inefficiencies, engage employees in problem-solving, and achieve operational excellence. For the banking sector, where precision and customer satisfaction are paramount, the waste walk provides a pathway to leaner, more efficient processes that directly benefit customers and stakeholders alike. 

I welcome your comments, questions and suggestions.

Warm regards,

Keshav Ram Singhal