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 

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