Towards Improving Banking Services Quality
22.
Other Lean Tools for Lean Banking
Introduction
Lean tools are instrumental in
driving operational excellence and efficiency across industries, including the
banking sector. In an era of digital transformation, these tools also align
with technological advancements, enabling banks to remain agile and innovative.
By implementing these tools, banks can reduce waste, improve processes, and
enhance customer satisfaction. The tools discussed in this chapter—Poka-Yoke,
SMED, Kanban, TPM, JIT, Kaizen, Gemba, and Standard Work—serve as powerful
enablers for creating a streamlined and customer-focused banking environment.
Each of these tools, while rooted in manufacturing, finds valuable applications
in the context of Lean Banking, fostering innovation and agility. For more
information and detailed study, readers are encouraged to refer to relevant
publications and sources.
Poka-Yoke
Poka-Yoke is a Japanese term
that means ‘mistake-proofing’. It also means ‘inadvertent error prevention’. It
is a mechanism in a process that helps an operator avoid mistakes and defects
by preventing, correcting, or drawing attention to human errors as they occur.
Poka = Mistakes (Defects)
Yoke = Avoid (Remove)
The Poka-Yoke concept was
formalized, and the term adopted, by Shigeo Shingo as part of the Toyota
Production System. A good example of Poka-Yoke in banking industry is that when
a customer using an ATM, the customer receives back his/her ATM card first,
before the ATM machine issues the desired money. This sequence prevents the
customer from walking away with money and forgetting his/her card.
Example: Automating account
number validation during transactions in banking software prevents data entry
errors, ensuring accurate processing.
Digital error-proofing
mechanisms in online banking minimize manual mistakes by using automated
checks, validations, and intelligent systems. Key features include:
1.
Input Validation: Ensures correct formats
for account numbers and codes.
2.
Dropdown Menus and Auto-Fill: Reduces
typos and repetitive entries.
3.
Confirmation Prompts: Displays
transaction summaries for user review.
4.
Error Messages and Alerts: Guides users
to correct mistakes in real-time.
5.
Dual Authentication: Adds security layers
to prevent unauthorized actions.
6.
Tooltips and Assistance: Provides
on-screen guidance for accurate inputs.
7.
AI and Automation: Predicts and flags
anomalies based on user behaviour.
These mechanisms streamline
operations, enhance security, and align with Lean principles by reducing waste
and improving efficiency.
SMED
SMED = Single-Minute Exchange
of Die
SMED is a lean tool used to
reduce the time it takes to change from running one process in operation to
running another. The essence of the SMED system is to convert as many
changeover steps as possible to ‘external’ (performed while the equipment is
running), and to simplify and streamline the remaining steps. The name SMED
(Single-Minute Exchange of Die) comes from the goal of reducing changeover
times to the ‘single’ digit (less than ten minutes). SMED’s utility is not
limited to manufacturing industry, it can be used by service industry too.
Example: Simplifying the loan
application approval process by converting verification steps into parallel
activities (e.g., document scanning while background checks run). Simplifying
the loan application approval process will reduce the time required for
interdepartmental handovers in banks.
Kanban
Kanban is a workflow
management method for defining, managing, and improving services that deliver
work. Kanban aims to help visualize work, maximise efficiency, and improve
continuously.
Kanban offers the flexibility
to use the method on top of existing workflows, systems and processes without
disrupting what is already in place. This method recognizes that existing
processes, roles, responsibilities, and titles have value and are, generally,
worth preserving. It highlights issues that need to be addressed and help
assess and plan changes so their implementation is as non-disruptive as
possible.
Example: Implementing a
digital Kanban board for managing loan applications or customer service
requests ensures real-time tracking and prioritization. Banks should include
visual tools like dashboards in maintaining smooth workflows.
TPM
TPM = Total Productivity
Maintenance
Total productivity maintenance
(TPM) aims to minimize downtime. It is a systematic execution of maintenance by
all employees through small group activities. The goals of TPM are zero
breakdowns and zero defects. TPM is an approach to equipment maintenance that
aims to achieve a perfect production or service process by increasing
productivity, efficiency, and safety of equipment. This process involves
participation of employees in setting workplace safety standards and
maintaining a safe work environment.
TPM can be suitably applied in
banking for maintenance of equipment (such as computer systems, Note-counting
machines, ATMs, security alarms, printers, display systems, pass-book printing
machines, fire extinguisher devices etc).
Example: Establishing regular
maintenance schedules for ATMs and other banking equipment ensures
uninterrupted service. Proactive equipment maintenance reduces downtime and
enhances customer trust.
JIT
JIT = Just in Time
Due to globalization and
continuously changing business environment, concept of 'Just in Time (JIT)' has
emerged and is playing intensive role in business environment including banking.
Just-in-time (JIT) financing is an approach adopted by banking industry.
Example: Just-in-Time cash
replenishment in ATMs ensures availability while minimizing excess cash storage
risks. Real-time monitoring systems will enable banks to implement JIT
principles effectively.
Kaizen
Kaizen = Change for better
Kaizen is a Sino-Japanese word
for ‘improvement’. It is a concept referring to business activities that
continuously improve all functions and involve all employees from top level to
junior level.
Kaizen sees improvement in
productivity as a gradual and methodical process.
Example: Regular team (staff)
meetings in a bank branch to brainstorm small process improvements, such as
simplifying customer onboarding. When ground staff is involved in continual improvement
exercise, it will have cumulative impact on customer experience and operational
efficiency.
Gemba
Gemba is a Japanese term
meaning the ‘actual place’. In Lean management, the idea of Gemba is that the
problems are visible, and the best improvement ideas will come from going to
the Gemba. The Gemba walk is an activity that makes management to the front
lines to look for waste and opportunities to practice Gemba kaizen, or
practical shop floor improvement. The Gemba walk is much like MBWA (Management
By Walking Around). The objective of the Gemba Walk is to understand the value
stream and problems rather than review results or make superficial view,
comments or opinion. The Gemba Walk denotes the action to see the actual
process, understand the work, ask questions, and learn. Taiichi Ohno, an
executive at Toyota, led the development of the concept of the Gemba Walk. The
Gemba Walk is an opportunity for employees to stand back from their day-to-day
talks to walk the floor of their workplace to identify wasteful activities.
Example: Managers visiting
customer-facing operations, such as bank tellers or call centers, to identify
and resolve inefficiencies in real-time. Engaging frontline employees in
problem-solving during Gemba walks will resolve many issues.
Standard Work
In Lean management,
standardized work is a means of establishing precise procedure(s) to make
product or service in the safest, easiest, and most effective way based on
current technologies. Fifth principle of Lean management is to seek perfection,
which is similar to Standardized work. Standardized work requires three
elements: (1) Takt time – The rate at which parts, products, or services must
be produced or delivered to meet customer demand, calculated as the available
production time divided by the customer demand within that time frame. (2) Work
Sequence – The step operators (the persons performing the processes) need to
perform within Takt time, in the order in which the processes must be
completed. (3) Standard inventory (or in-process stock) – Minimum quantity of
parts and raw materials needed to run operations. For service sector, the
safest and fastest work process. Standardization is the key to reducing errors and reducing risks.
Example: Standardizing the
workflow for opening accounts to ensure consistent and efficient customer
service across branches. Standardized work process reduces risks and enhance compliance
with regulatory norms, such as banking regulations.
Conclusion
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