FOCUS: Decrease mistakes and improve the cycle time for loan and lease applications.
A bank was experiencing a 60% rework rate on applications as a result of customers providing incomplete and/or inaccurate information on the application form. The rework requirement was increasing the cycle time for the loan and lease application process.
The improvement team looked at the factors that possibly impacted the proper completion of the application form. Using team tools and collecting data, the team determined that five factors should be investigated. The five quantitative factors were:
1. Type of application (Loan vs. Lease)
2. The region of the country (Midwest vs. Northeast)
3. The level of detail of instructions (Current vs. Enhanced)
4. The number of examples that were provided to the applicant (Current vs. Enhanced)
5. Negative examples provided (Yes vs. No)
A 16 Run Half Factorial Design of Experiments was accomplished (5 factors, 2 Level)
Two of the five factors proved to be significant. In addition, two interactions were shown to be significant. The improvement effort generated a new application form. This new form raised the first-time completion rate to 95%, thus reducing the overall cycle time for both the loan and lease application process.
For additional information see iSixSigma Magazine, Nov/Dec 2006, pgs 77-79, “Role for Design of Experiments in Financial Operations” by Kimberly Watson-Hemphill and Bill Kastle.