In the fast-paced world of financial services, accuracy and efficiency are extremely important, and statistical tools can help. These tools include control charts that can help leaders of financial services firms looking to monitor performance and navigate the tricky terrain of process improvement.

We’ll explore two use cases in this blog post that show how control charts can improve team performance and reduce the risk of certain time-consuming processes.

 CASE USE #1: MONITOR TEAM PERFORMANCE

There are several statistical tools located within Minitab that can help you monitor your team's performance and streamline your compliance operations.

Control charts can be used to monitor financial metrics or performance indicators to ensure they are in compliance with the latest regulatory requirements. For example, control charts can track key financial ratios such as capital adequacy ratios or liquidity ratios to ensure they remain within control limits. Additionally, they can provide important information about error rates for compliance purposes. 

The NP Chart of errors at this financial institution revealed crucial insights into the organization’s performance over a 31-month period. Since sending wires, answering emails, and moving capital often require the human touch, it’s reasonable to assume that some errors will inevitably be made. But for compliance purposes, we want to keep those errors to a minimum.

While the total number of errors per sample size (the sample size depended on the number of transactions performed in each time period, or “events” such as emails, money movements or transfers) showed a promising downward trend, it is important to address the specific failure points at 1, 10 and 16.

These failure points indicate deviations from expected patterns and warrant further investigation. In this case, more errors were made than should have been possible based on the sample size. To ensure compliance and sustain improvement in error rates, it is essential to conduct a thorough analysis of these points. This analysis may involve examining the underlying causes, identifying possible process variations or external factors that contributed to the failures, and implementing appropriate corrective actions. Perhaps the team was understaffed, implementing a new process, or was overly fatigued. Understanding these underlying factors can help inform future corrective actions, such as adding additional staff or improving training.

By addressing the root causes of test failures and proactively taking necessary action, the financial institution can refine its compliance efforts, minimize errors, and maintain a consistent trend of improvement over time.

USE CASE #2: LOAN APPROVAL RISK MANAGEMENT AND PROCESS IMPROVEMENT

Risk mitigation is extremely important in the financial sector. A prime example of this involves loan approval turnaround times, where control charts offer a powerful solution for reducing risk and streamlining processes. Slow turnaround times can jeopardize business opportunities and can lead to customer dissatisfaction.

Imagine the leader of a financial services firm focused on optimizing the loan approval process. Their goal is twofold: to ensure timely processing of applications and, more critically, to adhere to regulatory requirements. To achieve this, they leverage control charts to monitor response time.

While compiling the initial data and setting up the control charts, the team maintains the chart with new data (this can be done automatically with Minitab Connect). During the analysis, the team detects a recurring trend of approval times consistently exceeding the upper control limit.

As mentioned earlier, this signals a risk: persistent delays in approvals for specific loan categories can trigger customer dissatisfaction, lost business prospects, and potential breaches of regulatory deadlines.

Through a comprehensive analysis, the manager identifies that specific loan application documents require additional verification steps, causing notable delays. In addition, an uneven distribution of the workload among processors becomes known.

Empowered by this insight, they can choose to implement process improvements. This includes streamlining document verification, redistributing workload, and providing extra training to loan processors.

As you make changes to your process, your control limits will change. After these changes are made, your team will continually track the changes to the control chart at a new stage with updated control limits. As the adjustments take effect, your team will see a gradual return of loan approval times within the control limits. This is evidence of effective risk management and increased operational efficiency.

CONCLUSION

Through the lens of two impactful examples, we witness how control charts enhance team performance and mitigate risk. By leveraging data-driven insights, financial institutions can navigate the complexities of compliance, minimize errors, and drive continuous improvement, aiding their journey toward optimal efficiency and resilience.

 Content originally published in: Minitab Blog

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