Abstract

The banking industry has offshored various back-office centers in areas such as Mauritius, Singapore, India, the Bahamas, and the U.S. Virgin Islands. Global financial institutions mostly offshore repetitive, transaction-based processes and operations such as data entry, call center services, reconciliation, equity research and claim processing. By driving back-office efficiency, financial institutions seek to lower expenses and reduce business opportunity costs by being more responsive to market dynamics. However, quality of service can sometimes suffer as a result of offshoring. The overall service of the banks greatly depends on back-office operations. Hence, delivering defect-free, accurate output without compromising the turnaround time of delivery becomes critical for banks' offshore centers. If the underlying processes of these centers are fundamentally flawed, the conventional approach of making incremental changes and adding automation will not result in delivering the most benefits; hence, process improvements become an important aspect of banks' back-office operations. Though there are many process improvement methods, lean Six Sigma (LSS) is one of the most effective approaches, combining the principles of lean manufacturing and Six Sigma. This article explains how LSS helped improve the productivity of one retail bank's offshore operations.