4.

Benefits derived by Bank of America from the Six Sigma initiative and its contribution to the
company’s sustained superior financial performance and competitive advantage.

Improving quality has become an important business strategy for many organizations
including manufacturers, distributors, transportation companies, financial services
organizations, health care providers, and governmental agencies. Quality is a competitive
tool that can result in considerable advantages to organizations that effectively employ its
basic principles. A business that can delight customers by improving and controlling quality
has the potential to dominate its competitors. Developing an effective quality strategy is a
factor in long-term business success.

Six Sigma is a disciplined, project-oriented, statistically based approach for reducing

variability, removing defects, and eliminating waste from products, processes, and
transactions. The Six Sigma initiative is a major force in today’s business world for quality
and business improvement. Statistical methods and statisticians have a fundamentally
critical role to play in this process. As a Methodology, Six Sigma leads to business process
improvement by focusing on understanding and managing customer expectations and
requirements (Brewer & Eighme, 2005; Rudisill & Clary, 2004) . As a Management System,
Six Sigma is used to ensure that critical improvement opportunity efforts developed through
the Metrics and Methodology levels are aligned with the firm’s business strategy (Ansari,
Lockwood, Nino, Thies, & Modarress, 2011).

In the case of Bank of America, after the application of Six Sigma and other tools in
2001, benefits and gains started to show great promises. It was estimated that Bank of
America had gained more than $2 billion through significant cost savings and revenue
generated from 2001 to 2003. The initial Green Belt project in 2001 and 2002 was reduced
by 70% of errors and missing items in customer statements. It reduced errors in encoding
and the number of delays in posting customer transactions. Most of the initial Six Sigma
projects Bank of America was caused by ATM system failures and defects in telephone
banking and online banking, which was drastically reduced by 88% in 2002. The Green Belt
project became a huge success in 2002 when a strong focus on customer issues and
performance gaps were attended to.

In 2003, Bank of America achieved an increase in delighted customers of 50% and

more than 2.5 million new customers, a big leap from 2001 where it was only at 41%.
Account losses were reduced by 28% and more than a million number of account was

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increased in 2003. The company attained a 36% increase in the same-day payments
processing and 47% improvement in deposit processing in comparison in 2002. Time was
reduced to 100 days for Bank of America to open a new banking center and the online
banking enrollment processes improved tremendously too. Bank of America certified 5,000
Green Belts and 300 Black Belts in 2004. And when 2005 rolled in, 80% of its executives
were certified as Green Belts or Black Belts.

The merger process between Bank of America and Fleet Bank of Boston, which was
announced on October 27th, 2003, was sped up while using Six Sigma. The deal was closed
on April 1st, 2004. Bank of America made sales and service improvements at Fleet Bank and
eventually gained customers satisfaction and loyalty. The new checking accounts at Fleet
increased from 35,000 in 2003 to 1,74,000 in 2004 within the first three quarters after closing
the deal. Post-merger, Bank of America became the largest consumer bank in the United
States (U.S), post-merger, and it also enabled the bank to have a larger demeanor in the
Northeastern parts of US. It also became the chief lender to small and medium sized
companies. In 2005, the bank ran 5,800 banking centers and 16,700 ATMs in the US.

In 2004, Bank of America had revenues of $48,894 million compared to 2001 with
only $34,638 million. The company‘s profits stood at $14,143 million in 2004, compared with
$6,792 million in 2001. In June 2005, Bank of America entered into a merger agreement with
Maryland Bank National Association (MBNA). It was the world‘s largest independent credit
card issuer and MBNA earned $9.56 billion in revenues in 2004. An acquisition was
announced by Bank of America of the company on June 30, 2005 for a price of $35 billion.
MBNA would be renamed as Bank of America Card Services. After the acquisition, Bank of
America become the world’s biggest credit card provider after solidifying a partnership
agreement with China Construction Bank. It was the company‘s aim to become one of the
world‘s most admired companies. Bank of America was set to achieve higher standards by
increasing efficiency and productivity and it believed that Six Sigma could help achieve its
objective (Hills, 2006).

The biggest achievement for Bank of America that can be seen, which matters the
most to the organization was the fact that they are able to delight their customers with their
services. It was proven in the Six Sigma initiative, which has attracted 2.5 million new
customers in 2003. Customer delight is the long-lasting answer to success. Customer cannot
be delighted until satisfaction is achieved with the presented services. Pinpointing promoters
or eliminators of delight is the next step after consumer satisfaction. Delighted customer is

2
more valuable for the company as it will help the organization to compete with its
competitors in best fashion (Hasan, Raheem, & Subhani, 2011).

Speaking to financial analysts and Bank of America associates, then-new Bank of

America chairman and CEO, Kenneth D. Lewis said, he was “more proud of our
improvement in customer metrics” than he was of Bank of America’s record breaking
financial results. These tremendous financial and customer satisfaction results have
convinced leaders throughout Bank of America, that Six Sigma works and quality efforts are
critical to achieve their desire to become the world’s most admired company (Jones Jr.,
2004). The age of customer delight has now started where a customer’s satisfaction is no
longer considered to guarantee bank success for the services provided.

Competitive edge is no longer applicable as almost every bank is providing the same
services in terms of both quality and quantity. The difference which makes the bank
distinctive is successful fulfillment of its customer requirements at the time when they are
desired most. According to Sinatrya and Iskandar (2016), customer delight creates the
everlasting edge for the banking sector. In this condition, the traditional goal of “satisfying
customers” does not seem to be enough to ensure loyalty. Instead, service firms must
skillfully and clearly differentiate themselves from their competitors in order to obtain a
competitive advantage. In short, customers must receive the highest noteworthy level of
satisfaction: they must be “delighted.”

Customer satisfaction “is the feeling of a person of pleasure or disappointment which

is resulting by comparing the perceived performance of a product in relation to the
expectations of the person." But now the concept of Customer delight has taken place which
involves “the moving of business above and beyond the customer relations in order to
administer an experience which is resulting from generally having the expectations of one
person exceeded to a surprising degree. For the success of the banking sector it is
imperative to fulfill the requirement of the customers at the time when they are desired most
(Rani, 2016).

In a study by Coetzee (2014) he recommends that banks intensify their efforts of

creating satisfied customers, and aim to achieve heightened levels of customer satisfaction
known as customer delight. Rather than meeting customer expectations, banks should
consider implementing official measures that aim at exceeding customer expectations.
Exceeding customers’ expectations speaks to their emotions and has longer-lasting positive
effects than when customers’ basic expectations are met.

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 In a nutshell, having a Six Sigma Certification in an organization benefits not just the
organization or employers but also the employees (individuals).

For Employers
 Eliminate organizations errors and impacting company’s revenue
 Improve organization business process
 Cost reduction
 Waste optimization
 Improving customer relationships.

For Employees (Individuals)

 Nature managerial and leadership skills
 Prioritize efforts based on impact of action
 Preparing proper planning and strategy
 Better chances of getting promoted
 Helps to finding job in any industry.

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5. Conclusion

By implementing the Six Sigma concept, banks give the priority to increase their
clients’ satisfaction, which, in turn, results in the reduction of time cycle needed for the
perfect service to be produced and delivered to the client. Also, they enhance the processes
related to the bank’s risk management at all levels, resulting in increased profit and reduced
costs. Stoiljkovic, Milosavljevic, and Randjelovic (2010) mentioned that Six Sigma is a
powerful system. Basically, it is measuring of quality that longs for perfection (6 Sigma = 3.4
defects/million = 99.999997% accurate).

The main factors of successful Six Sigma implementation are: commitment to

leadership, full engagement of Six Sigma team leaders, integration with the top management
strategy, business process frameworks, intelligent network of clients and markets, real cost
reductions, revenue and profit, motivation and incentives to all employees, program
infrastructure, corporate culture, etc.

The success of Six Sigma concept implementation depends on the readiness of the
employees themselves to participate in it. Therefore, they should: learn about the objectives
of Six Sigma (be able to see ‘the big picture’), be prepared for the chaos, start viewing their
work within the context of the entire service delivery process, seize the opportunity to learn
about the new possibilities, avoid paranoia, expect changes and challenges, accept
responsibility for their education, be patient, never give up, and be ready to embark on an
endless journey.

The role of marketing today is as much about delighting existing customers as it is

attracting new ones. Organizations want to make sure customers have a great experience
using their product or services so they not only buy again, but ideally, spread the word
through referrals or social media. Customer loyalty should also be an organizations ultimate
goal. Customer loyalty is when customers are willing to turn down a better product or price
because they would want to continue doing business with the same organization. The only
way to achieve that if the organizations are in good standing with them.

Bank of America, emphasizing on their customers and Six Sigma, have proven to be
successful over the past three years by enhancing their abilities to put the right customer in

5
the right products at the right price. They are committed to continue to improve in service
excellence, continuing to invest in the future and to innovate respond to customer needs.

6
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Sigma in finance: a case study. Journal of Case Research in Business and Economics, 3,
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Coetzee, A. (2014). Customer Delight as an Antecedent of Customer Loyalty in the South
African Banking Industry, (July).
Hasan, S. A., Raheem, S., & Subhani, M. I. (2011). Measuring Customer Delight: A Model
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Rani, A. (2016). Customer delight among the public and private sector banks of India-a
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Rudisill, F., & Clary, D. (2004). The management accountant’s role in Six Sigma. Strategic
Finance, 86(5), 34.
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Festival: A Case Study of Focal Point 2015, 5(1), 188–200.
Stoiljkovic, V., Milosavljevic, P., & Randjelovic, S. (2010). Six sigma concepts within
banking system. African Journal of Business Management, 4(8), 1480–1493.

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 Six Sigma Green Belts
 are employees who spend some of their time on process improvement teams. They
analyze and solve quality problems, and are involved with Six Sigma, lean or other
quality improvement projects.