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 

Towards Improving Banking Services Quality - 15 - Waste Sensitization – Identifying Waste

Towards Improving Banking Services Quality 

15.

 Waste Sensitization – Identifying Waste

 

Introduction

 

In Lean management, waste refers to any activity or process that consumes resources without adding value to the customer. Identifying and eliminating waste is crucial for improving efficiency, reducing costs, and enhancing customer satisfaction in any organization, including the banking sector. Waste can take various forms, and understanding its root causes allows businesses to streamline operations effectively. This chapter explores the three categories of waste—Muda, Mura, and Muri—and the eight specific types of waste, providing relevant examples from the banking industry to help identify and address these inefficiencies.

 

Non-value-added non-essentials are waste.  Waste is unwanted or unusable materials or unwanted process. Let us understand three main points of Waste philosophy.

 

1.       Waste exists in all processes at all levels in an organization.

 

2.       Waste elimination is the key to successful implementation of Lean management.

 

3.       Waste reduction is an effective way to improve efficiency and profitability.

 

Three Categories of Waste

 

Three categories of Waste are:

 

1.       Muda – Any activity that is wasteful and does not add value to the process or is unproductive.

 

2.       Mura – Any variation leading to unbalanced situations.

 

3.       Muri – Any activity asking unreasonable stress or effort from personnel, material or equipment.

 

1. Muda

 

Muda refers to wastefulness, unproductive activities, or any process that consumes resources without creating customer value. It is further categorized into two types:

 

·       Muda Type 1 (Incidental Work): Non-value-added activities necessary for compliance or safety.

 

o   Example: In banks Compliance audits, such as Know Your Customer (KYC) checks, are necessary but do not directly add value for the customer.

 

·       Muda Type 2 (Non-value-added Work): Unnecessary activities that do not benefit the customer and should be eliminated.

 

o   Example: Manually reconciling accounts when an automated system can achieve the same result faster and with fewer errors in banks.

 

There are eight categories of waste under Muda Type 2 that follow the abbreviation TIMWOODS. The eight wastes are (1) Transport (excess movement of product), (2) Inventory (stocks of goods and raw materials), (3) Motion (excess movement of machine or people), (4) Waiting, (5) Overproduction, (6) Over-processing, (7) Defects, (8) Skills under-utilized. The eight categories of waste under Muda Type 2 are explained below by example:

 

·       Transportation:

Example: A bank branch requiring customers to visit multiple counters for banking related work. Consolidating these steps into a single service counter reduces unnecessary movement.

 

·       Inventory:

Example: Excessive physical forms stored in archives instead of digitized records, leading to inefficient space utilization.

 

·       Motion:

Example: Bank staff frequently moving between departments or branches to access records, files or printers. Setting up centralized printers or digital records can reduce this waste.

 

·       Waiting:

Example: Customers waiting in long queues for simple services like account inquiries. Introducing self-service kiosks or easy online platforms can address this issue.

 

·       Overproduction:

Example: Printing extra copies of financial statements for meetings when digital presentations would suffice.

 

·       Overprocessing:

Example: Requiring customers to fill out lengthy forms for minor account changes. Simplifying documentation would improve efficiency.

 

·       Defects:

Example: Errors in customer information, such as incorrect spelling of names on debit cards, requiring costly reissuance.

 

·       Skills (Under-utilized):

Example: Placing skilled employees in repetitive, low-value tasks instead of leveraging their expertise for innovation or process improvement.

 

2. Mura

 

Mura means unevenness, non-uniformity, and irregularity.  Mura is any variation leading to unbalanced situation. Mura is the reason for the existence of any of the wastes. In other words, Mura drives and leads to Muda.

 

For example, in a manufacturing line, products need to pass through several workstations during the assembly process. When the capacity of one station is greater than the other stations, you will see an accumulation of waste in the form of overproduction, waiting, etc. Likewise in banking services, particular activity may have several steps at various points that can be merged. The goal of a Lean system is to level out the workload so that there is no unevenness or waste accumulation.

 

Mura can be avoided through the Just-In-Time ‘Kanban’ systems and other pull-based strategies that limits overproduction and excess inventory. The key concept of a Just-In-Time system is delivering and producing the right part, at the right amount, and at the right time.

 

In short, Mura is variations and variability in work methods or the output of a machine’s capacity. In banking, Mura refers to unevenness or inconsistency in processes, leading to inefficiencies and bottlenecks.

 

·       Example: Inconsistent workloads in bank branches, where some employees handle a high volume of customer interactions while others remain underutilized. Implementing a workflow management system can balance workloads effectively.

 

Mura can be minimized through Just-In-Time (JIT) principles, such as introducing digital scheduling for customer appointments, ensuring resources are allocated efficiently based on real-time demand.

 

3. Muri

 

Muri means overburden, beyond one’s power, excessiveness, impossible or unreasonableness. Muri is any activity asking unreasonable stress or effort from personnel, material or equipment. Muri can result from Mura and in some cases be caused by excessive removal of Muda (waste) from the process.

 

Muri also exists when machines or operators are utilized for more than 100% capability to complete a task or in an unsustainable way. For machine, muri mean expecting a machine to do more than it is capable of or has been designed to do. For people, muri mean too heavy a mental or physical burden. Muri over a period of time can result in employee absenteeism, illness, and breakdowns of machines. Standardize work can help avoid Muri by designing the work processes to evenly distribute the workload and not overburden any particular employee or equipment. In short, Muri occurs when the load exceeds capacity – exertion and overworking of a person or machine.

 

In banking Muri refers to overburdening personnel, equipment, or processes, leading to stress, errors, or breakdowns.

 

·       Example: Requiring employees to process loan applications beyond reasonable working hours, increasing the risk of mistakes. Automating repetitive tasks or redistributing workloads can alleviate such pressure.

 

Muri also applies to systems or machines.

 

·       Example: An ATM overloaded with software beyond its processing capacity, resulting in frequent downtimes. Upgrading hardware and maintaining regular system checks can address this issue. 

Figure 6 – Three Categories of Waste

Relationship between Muda, Mura and Muri

 

The three categories of waste are interconnected. Addressing one often impacts the others. For instance, reducing Muda (waste) can inadvertently lead to Muri (overburden) if not managed properly. Similarly, addressing Mura (variations) can help prevent the emergence of Muda and Muri. In banking, identifying and balancing these interrelations is essential for building efficient and sustainable processes.

 

Eight Types of Waste – TIMWOODS or DOWNTIME

 

One corporate executive is fond of saying, “Waste is all around us, yet we walk by it every day.” There are two popular acronyms that are used to describe the eight most commonly identified wastes. The first is TIMWOODS and the other is DOWNTIME. The elements in both the acronyms are exactly the same in content but with slightly different terminology and order.

 

Figure 7 – Eight Types of Waste - TIMWOODS (Courtesy Source - Google Search – shmula.com)

 

Let us discuss these wastes looking to a service industry environment with a few examples.

 

Transportation: Unnecessary movement of people, products or information, multiple approvals or movement of paperwork – Too much physical back-and-forth movement is one of the problems that effected a process. Reduction of excess transportation is important because every move from one activity to another adds time to a process – and world-class organizations are passionate about reducing time. In many service processes, it is not uncommon for paperwork to loop back several times… waiting in queues in a virtual or actual in-box every time it goes through again. For a service industry, examples are movement of files / documents from one location to another, excessive e-mail attachments, multiple hand-offs. Examples – In a bank branch, if an officer concerned attached to lockers is sitting at a far place from the locker-room then there will be wastage of time, as the customer needs to first visit the officer concerned, sign the locker attendance register and then go to the locker-room. Such arrangement requires unnecessary movement of people. This unnecessary movement can be reduced by placing the officer concerned seat near the locker room. Customers or staff physically transporting documents between branches for approval. Introducing digital submission portals can eliminate this waste.

 

 

Inventory: Items and information not having value added to them. Inventory in service areas is just as big a problem, but more insidious because it is not as readily apparent. Look for physical piles of forms (in-boxes, for example), a list of pending requests in a computerized email program, callers on hold, people standing in line at a branch, and the like. This excess inventory is often the result of overproduction. The goal, from a Lean standpoint, is to have on hand only what is needed immediately or in the short-term. Some of the inventory problematic situations include excessive data storage, unnecessary historical records, overstocked store, over purchase of office supplies. Just-in-time (JIT) purchase is a solution, files / documents awaiting to be processed, excessive promotional material, more servers than required. Example: Stockpiling promotional brochures that quickly become outdated. Using on-demand printing or digital marketing materials is more efficient.

 

Motion: Motion waste is unnecessary movement of people within a workspace (or process). When movement of people does not add value. In a service industry, examples are switching between applications, looking for data and information, looking for files and documents, for filing, fax or xerox. It also includes transferring a customer to multiple points to resolve an issue. Example: Bank staff walking frequently to retrieve files from distant cabinets. Creating an organized workspace with accessible resources reduces motion waste.

 

Waiting (Wait time): Wait time waste is waste of time waiting for people, equipment, materials, and information to arrive. Example: Customers waiting for approvals due to system downtimes or waiting for information. Investing in reliable IT infrastructure ensures seamless operations. 

 

Overproduction: Producing too much, too early and/or too fast. Example: Printing numerous hard copies of reports, when electronic versions restrict overproduction.

 

Overprocessing: Doing more than the customer wants, needs, or is willing to pay for. Example: Verifying the same customer information at multiple steps during a mortgage approval process. Implementing centralized databases can streamline verification.

 

Defects: Production of a defective product or delivery of defective service. Defects are created not meeting requirements. For a service industry like banking, examples are software bugs, incorrect data entry, incorrect name printed on credit / debit card, email sent to wrong email-id. Other Examples: Processing errors in credit card applications, leading to customer dissatisfaction and rework. Training staff and automating checks can minimize defects. System not providing correct rate of interest to depositors, particularly senior citizens and ex-staff.

 

Skills (under-utilized): Skills (under-utilized) are the waste of not using people’s talent, knowledge and experience to improve the organization. This is a situation when employees are not leveraged to their own potential. For a service industry, examples are placing skilled staff on low value process, placing employees in roles that does not match with their skills, not empowering employees to innovate, not involving teams in improvement projects, skilled staff with limited authority and responsibility, not delegating powers.

 

Conclusion

 

Waste sensitization is vital for building an efficient, customer-focused banking system. By identifying and addressing the three categories of waste (Muda, Mura, and Muri) and the eight types of waste, banks can streamline operations, reduce costs, and enhance service quality. Practical examples from the banking industry demonstrate how even small adjustments can lead to significant improvements. Ultimately, waste reduction aligns with Lean management principles, fostering a culture of continuous improvement and delivering better value to customers. 

I welcome your comments, questions and suggestions.

Warm regards,

Keshav Ram Singhal