Financial institutions, like most businesses, can benefit greatly from the application of Six Sigma practices. Although Six Sigma was originally developed as a tool for streamlining the manufacturing process, it can be applied just as effectively within a service-oriented industry like finance.
However, it is important to recognize that the nature of financial services firms presents special challenges to Six Sigma implementations. Those charged with managing Six Sigma in a finance setting will find that specialized training can significantly enhance their success.
Basics of Six Sigma for Finance
Six Sigma is a methodology that helps businesses reduce costs and inefficiencies by finding and eliminating any wasteful steps in a process. Because financial organizations typically have many moving parts and intricate processes, identifying problem areas can be just as complicated as fixing them.
Proven Six Sigma tools and strategies can greatly simplify this procedure.
Six Sigma practitioners use a variety of techniques to define the scope of a project or process, break it down into its constituent parts and examine each of those parts for some defect or variation. Once that has been accomplished, the next step is to identify and track relevant metrics, and determine how changes to the process will impact efficiency and costs. Careful tracking and reporting are a vital part of Six Sigma practices, as they establish progress in relation to the specified objectives.
By utilizing Six Sigma tactics within a customer-oriented, results-based approach, a finance company can maintain the proper focus and potentially increase profitability.
Challenges of Applying Six Sigma to Finance
The cost savings Six Sigma can generate are, of course, quite attractive to companies that operate in the finance sector. However, there are certain challenges that need to be addressed when implementing Six Sigma projects in these types of companies.
Financial institutions do not deal with the same types of products and processes as manufacturing organizations, so their areas of opportunity can be more difficult to identify and measure.
The good news is that with some minor modifications, the principles of Six Sigma can be effectively put to use by finance institutions and other service providers. Six Sigma practices have already proven to be highly successful when applied to a firm’s operations, and they are rapidly proving their value within other functional areas such as sales, marketing and technology.
Using Key Performance Indicators (KPI) to Achieve Measurable Results
For Six Sigma metrics to be effective, they must be directed at measuring the right thing. Establishing appropriate key performance indicators (KPI) is one of the most important hurdles to overcome when integrating Six Sigma within finance.
A KPI shouldn’t be too subjective, as that makes it difficult to measure and evaluate in any meaningful way. Ideally, KPIs should be concrete and as detailed as possible. A good rule of thumb for KPIs is to put them to the “SMART” test, which assesses whether they are specific, measurable, attainable, realistic and timely. The best KPIs generate usable data that can be applied to bring about substantial positive change.
Mastering the Applications of Six Sigma in Finance
With so many specific challenges to incorporating Six Sigma within a finance setting, there is a rapidly growing demand for Six Sigma Green and Black Belts with specialized training in this area. That’s why now is the ideal time to obtain training and certification in this burgeoning field, as it can significantly enhance your job prospects and earnings potential.
To meet the needs of companies and individuals within the finance sector, universities and other for-profit companies are offering top-quality training programs online. These convenient, flexible programs cover everything a finance professional should know to achieve Six Sigma certification while providing valuable insights into the specific challenges and opportunities of financial institutions.
