Lean Six Sigma In Banking

Lean Six Sigma In Banking

The Principle Of Lean Six Sigma In Banking

By increasing productivity in their operations, banks aim to keep operating costs to a minimum. Lean Six Sigma is one methodology or approach that can be used for cost reduction. The aim of a lean banking approach is to identify areas of waste and inefficiency within your company and then apply established methodologies to generate solutions. Lean middle-market banks enjoy enhanced customer experiences, get so much out of their employees, strengthen operational controls and, wherever possible, minimize monetary waste.

In all facets of the banking organization, lean banking is a low-cost technique to eliminate non-value-added operations. When lean banking activities take shape, you set up the workers to build corporate culture with the mentality of constant streamlining of processes and operational quality improvements.

Lean Six Sigma Applied To The Banking Loan Process

One of the banking processes with very high operating costs is loan processing. The introduction of Lean six sigma in loan processing eliminates the inefficiencies to a greater degree.  Lean six sigma assists in achieving maximum efficiency.

Banks must recognize and understand the existence of inefficiencies in loan processing to get rid of them. Documenting and comparing the time taken for processing each loan with the next loan processed is significant. If the time is on the heavy side for each loan processed, then it is a clear indication that there are inefficiencies. One key explanation for this dispersion in the time taken is not following a fixed procedure. So to guarantee minimum dispersion and maximum performance, loan processing can be defined and set using six sigma.

For instance, when an employee leaves, there are delays in customer paperwork, or a specific ‘busy’ time in the year impacts the processing of loans. These cases also indicate that inefficiencies exist. With the introduction of lean six sigma, all delaying variables are taken care of. It includes pooling extra resources and reducing unnecessary documentation or requirements. Collecting only relevant information would help to make the documentation simpler and quicker. Also, it would be convenient for potential customers, as well.


Lean banking is all about enhancing the productivity of the operation, performance management, organizational skills, and the employees’ attitude and behaviors. One great example of how lean six sigma banking can be applied in the banking sector is through the loan process.  The low performance of a bank’s loan processing relative to its peers is also an obvious sign of the existence of inefficiencies. Implementation of the lean six sigma technique for greater performance in loan management can be drastically beneficial. It can contribute to decreased costs and time.

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Lean can help achieve a high-performing organization and deliver excellent customer service. Learn about lean six sigma and how banks can benefit from it.



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