Operational Effectiveness: A leading Australian Mortgage Provider

In this case study the organisation’s culture had a significant impact on the selection of the methodology used to improve operational efficiency. Even though Six Sigma’s DMAIC approach or Lean may successfully identify the root causes and identified solutions to the problem, the cultural environment of the organisation could have prevented the solution being accepted and therefore lead to project failure.

A leading Australian mortgage provider with an extensive retail distribution network was receiving strong and consistent feedback from customers and stakeholders in terms of the unsatisfactory mortgage approval process. Three particular areas were highlighted by the feedback:

• Time Consuming: The time taken to provide an answer was well above the industry benchmark.
• Complex: The process was highly manual, with multiple hand-offs, no workflow system and completed over multiple floors within the business.
• Expensive: The process was highly inefficient, resulting in inflated costs which were passed onto to applicants. (An application was worked on for only 2% of the time taken to pass through the approval process)

Given the inefficient nature of the process, the Lean approach appeared to be most appropriate to drive improvements. A high-level stakeholder analysis highlighted that a large number of stakeholders across various departments were involved in the approval process, including Legal, Compliance, Sales, Operations, Finance and Technology.

The highly complex environment within the organisation had led to the failure of several previous attempts to improve the process. One of the major issues that needed overcoming was to obtain consensus regarding the problem and its causes, a potential solution and the timeframe to have the solution implemented. As such, Lean as a stand-alone approach would not have been sufficient. Instead, a combination of GE’s Work-Out and Lean tools was applied. This approach was able to get all stakeholders in the one room and have them identify the problem and develop the solution as a collective group. The Lean tools focused on highlighting process inefficiencies, while this fast and effective approach basically achieved process improvement through engagement.

Cycle time has significantly been reduced through the project: During the 11-week project implementation, the cycle time for processing a loan application was reduced from 55 h to 11 h.