Study findings: "How lean are financial service providers?"

Summary

Lean management is a long-established concept in the manufacturing industry. In essence the idea is to create value without waste. Consequently, lean management is designed to optimally align all activities along the entire company value chain and avoid all superfluous ones.

In the finance sector, lean management has been around for nearly twenty years. Since it was first introduced, banks and insurance companies have gone through lean programs in regular cycles. Now lean management has once again become a hot topic for financial service providers, in part due to the banking crisis and associated sales and cost pressures.

This renewed interest prompted ProcessLab, a research center at the Frankfurt School of Finance & Management, to join forces with UMS Consulting GmbH and conduct a study on lean management. The study explored just how "lean" banks and insurers are today, concentrating on German-speaking regions.

Having analyzed data provided by more than 3,600 respondents, the study findings confirmed that lean management is now widespread throughout the finance sector. However, it was also clear that the degree of lean in finance – measured using typical lean indicators – is on average 30% less than what is the true potential. One-quarter of those surveyed revealed a gap of 40%. This discrepancy is also obvious in the difference between how companies perceive the degree of lean and its actual implementation, which is far lower. No doubt there is a "lean Fata Morgana" at work. Above all, managers believe their organizations are much leaner than do their employees – the further away you are from the front line, the leaner things appear. And this is true for almost all lean relevant dimensions, starting with establishing value streams with an end-to-end perspective, through to applying the pull principle, to the degree of autonomy afforded to employees. There is only one lean relevant dimension where financial service providers fare better than average: the focus on short lead times for customer orders.