- Posted by Joe Crandall
- On December 28, 2015
- Solution: Governance, Solution: Implementation, Solution: Lean, Solution: PMO, Solution: Process Improvement, Solution: Project Management
Lean Six Sigma increases monthly orders by 1,000%
Studies from the last twenty years prove that the frequency of loan applications that a bank receives directly correlates with higher loan approvals and, as a result, higher profits. In 1999, GE Capital realized this and sought to get ahead of its competitors by reengineering its loan process to facilitate a larger number of monthly orders. Using a Lean Six Sigma approach, Greencastle implemented a custom redesign of GE Capital’s data collections and utilization of loan sales staff.
After comprehensive industry research, the team concluded that there were easy, low-cost methods to increase the likelihood of a customer’s application reaching the approval stage. It became evident that a customer was more likely to apply for a loan when he or she had a simplified understanding of the bank’s credit products, making it easier to match consumer needs with an appropriate product. Another tactic was to speed up communication regarding credit decisions, thus preventing the customer from having to wait weeks or months for an answer from the creditor. A third goal was to understand the bank’s policies regarding consumer credit, especially how the bank would review applications and keep the client up to date with the process.
Turning inward, research also illustrated that banks lose market share due to a lack of sales confidence, i.e. the ability to sell consumer credit effectively. In order to enable GE to dramatically increase loan volume, three-phase Lean Six Sigma was applied to employee training. Work cells were utilized to cross-train personnel to fill in for each other, sidestep bottlenecked workflow and leverage the processing structure during increased application volume. In some instances, three or four approval signatures were being obtained when only two were actually necessary, creating significant waste in redundant face-to-face appointments. Implementing a concerted program of workshops and management reinforcement corrected these deficiencies.
Another advantage of the Lean Six Sigma approach was the analysis of application data. This highlighted a significant amount of loan information being collected which had no correlation to actual decision-making. Building a backstory for each individual applicant made no sense if his or her credit score and income already provided the necessary information. This bogging down of the loan application process offered many opportunities to improve turnaround speed. After designing a tighter system, Greencastle began testing and training employees. They enacted an efficient information collection mechanism which allowed GE Capital to change the way data was analyzed and presented, utilizing the Lean approach to continue project improvement throughout and beyond the rollout.
Streamlining the workflow structure and correlating risk and effort showed a reduction of up to 40% in loan process time. With new business rules for customers and suppliers, and a stronger customer service approach, GE Capital was able to provide services in accordance with existing quality standards and performance measures. Within just two months, the loan process improved from a projected rate of 120,000 to 1,500,000 orders annually.