Lean Six Sigma in Investment Services?
Though originally developed for the manufacturing sector, Lean Six Sigma has shown that it can be part of the formula for success in a range of different industries. Thousands of businesses that have reduced waste and increased profits after implementation of Lean Six Sigma demonstrate the success of this methodology for a diverse range of projects and business models. One industry where Lean Six Sigma training was slow to catch on was in the investment services sector. Some of the business leaders in the investment world have had a hard time seeing how it can translate to financial services and as a result, they have been skeptical as to its applicability. Let’s understand the role of Lean Six Sigma in Investment Services
What can Lean Six Sigma offer investment services?
You probably have some understanding of the principles behind the Lean and Six Sigma process improvement methods. The combination of the two leading methodologies viz Lean and Six Sigma is intended to improve resource allocation, reduce the time of processes, improve and maintain the quality of products, provide the analytical tools to identify the places where a project is coming up short and reduce waste and variation. As you can imagine, this can be applied to investment services by translating the manufacturing goals of the original Six Sigma program to the goals of the investment world.
The tools that Lean Six Sigma provides a project manager with will help them to identify areas where they are coming up short. Are they experiencing too many trading errors? Is the process of asset allocation taking too much time and costing the company more than it should? Do you have the right personnel on the right projects? Are you marketing the right investment instruments to the right clients? When two or more teams within the company have to work on a project, are the methods of cooperation and interaction efficient or wasteful? Being able to break all of these factors down and analyze them can significantly improve processes within the company and increase profits.
An example of Six Sigma success for investment services
The application of Six Sigma helped HSBC improve the operation of its U.S. futures operation. Believing that Six Sigma could be a tool for turning an underperforming unit around, the management at HSBC decided to see how it could apply to their business model. The team at HSBC focused their efforts on analyzing and improving the cost to income ratio. They gathered all of the relevant data and through the analysis process, they were able to find and address several problems. A report from HSBC shows the many steps that were taken throughout the improvement process and that the result was a 274% increase of net income to the unit that the method was applied to.
With one of the world leaders in investment banking showing that great success is possible with the use of Lean Six Sigma, it is likely that it will start to catch on even further. The success story of HSBC is just an example of one way that these methods can improve processes in the investment services sector. As professionals find new ways to translate Lean Six Sigma to finance, these stories of success will become more and more common.
