TQM Application in Financial Services

1. TQM Application in Financial Services By Ali Al Mansour January 6, 2007 CEM 515

2. Outline • Introduction • Service vs. Manufacturing • Key Financial Services • Elements to Successful TQM Implementation in Financial Services • Benefits from TQM Implementation • Barriers to Implementing TQM

3. Introduction • Born in early 1980, Japanese Manufacturing Companies • Defined : “a quest for excellence, creating the right attitudes and controls to make prevention of defects/errors possible and optimize customer satisfaction by increased efficiency and effectiveness.” • Studies support TQM applicability in the service industry • Applicability in the financial institutions.

4. Service vs. Manufacturing • Intangibility • Difficult to measure and standardize • Delivery and consumption happen simultaneously • Customers sensitivity to quality.

5. Service vs. Manufacturing Literature Review • Beamount et al (1997) found that service firms use fewer quality management tools. • Woon (2000) found lower level of TQM implementation • Hug and Stolen (1998) found that service companies apply TQM selectively as opposed to manufacturing.

6. Literature Review cont’d Study conducted by Daniel Prajogo, Monash University, Australia. 194 managers in service and manufacturing companies: Manufacturing (n=102) Service (n=92) Variables Mean SD Mean SD Mean difference Leadership 3.69 0.76 3.82 0.89 -0.13 Strategic planning 3.55 0.88 3.59 0.93 -0.04 Customer focus 3.87 0.72 3.97 0.65 -0.10 Information and analysis 3.55 0.84 3.53 0.92 -0.02 People management 3.31 0.79 3.57 0.80 -0.26* Process management 3.63 0.71 3.56 0.70 0.07 Product quality 4.22 0.51 4.17 0.59 0.05 Note: *Significant at p < 0.05 Source: Daniel I. Prajogo, International Journal of Service Industry Management

7. Key Financial Services • Processing time of key products e.g. loans, new accounts, ATM cards, credit cards, cheque encashment • Waiting time in a queue, downtime • Handling customer complaints • Staff friendliness and efficiency • Diversity of products • Hidden charges reasonability • Accuracy and timeliness of statements and accounts records • Promptness in answering customers inquires through phone, email, etc. • Online system availability • Diversity of investment products e.g. mutual funds, thrift plans, trusts, mortgages, etc.

8. Elements for Successful TQM Implementation in Financial Services (“Soft” Aspects) • Customer focus- needs, loyalty • Professional skills through well designed training programs. • New technology • Process Innovation • Top management commitment • Communication • Empowerment • Attitudes and behaviors

9. Benefits from TQM to Financial Organizations • Quality awareness in the organization • Higher quality services & products • Skillful employees • Satisfied employees-> satisfied customers • Cost effectiveness • Profitability

10. Barriers to Successful TQM Implementation In Financial Services • Subjectivity • External uncertainty • Intangibility of products • Lack of recourses • Short term goals • Lack of training • Lack of communication

11. Questions?Thanks!