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Electronic Cheque Clearance E-Processing Time Reduction Electronic Cheque Clearance e-Processing Time Reduction Electronic Cheque Clearance e-Processing Time Reduction Wipro Infotech, Bangalore Key words: Electronic Cheque Clearance, Lean, Value Stream Mapping, Mistake Proofing ABSTRAcT This paper is based on the project which was aimed at improving the efficiency of Electronic Cheque Clearance e-Processing Time Reduction for one of our clients, a leading private sector Bank in India who is into a full service commercial banking and serves Corporate and Retail Customers in Financial Markets, Corporate Finance, Branch Banking, Investment Banking, Business Transaction Banking and Wealth Management for clients across the country. Cheque processing is one of the critical activities in our client’s day to day business as it has a direct impact on end user satisfaction. Electronic Cheque Processing is one of the most cost effective and hassle free solutions. Security and reliability are the greatest benefits. However, the Electronic Cheque Clearance Processing was inconsistent and was not up to the expectations of our client’s customers. Lean tenets like Value Stream Mapping, 5 Why, Cause and Effect Diagram and Mistake Proofing were used to mitigate the challenges noticed in Electronic Cheque Clearance. Lean approach ensured significant process improvement. Post this improvement initiative, it is noticed that Electronic Cheque Clearance time is significantly reduced. This led to reduction in revenue leakage and improved customer satisfaction. Also the time spent on resolving Electronic Cheque Clearance related queries was completely eliminated. Introduction This case study delves into the detailed investigation of Electronics Cheque Clearance process and the approach taken towards application of lean tools and techniques to address the business challenges. It explains how the team brainstormed to arrive at key areas where lean principles could be leveraged to optimize efforts, reduce number of transaction delays, maximize process efficiency, compress cycle time and achieve end user satisfaction. What follows is a brief introduction of five steps of creating a lean flow that leads to problem solving and organizational learning, for further details the reader is referred to Liker (2004). The first step of lean flow is to identify who are the customers and what added value they want to be delivered. After this, the repetitive processes from the unique, one- of-a-kind processes are taken apart and knowledge is gained as to how we can apply lean to the repetitive processes. Step two is followed by mapping the flow to determine value added and non-value added activities. Thereafter, creative thinking leads to applying the broad principles of lean to these processes using the future-state value stream map. Finally, we start doing it and learn by doing the same using a PDCA-Plan, Do, Check, Act cycle and then expand it to the less repetitive processes. While implementing the lean flow, the team’s focus was to look at the timeline from the moment the customer is requesting Cheque clearance to the point the when the transaction is executed successfully. The main goal was to enable concurrent multiple Cheque clearance * Arti Rajesh, Wipro Infotech, Bangalore 65 Wipro Infotech transactions while maintaining overall consistency of data. The team strived to reduce this timeline by eliminating the non-value added process steps. The team fixed Electronic Cheque Clearance transaction delay and redesigned fast and flexible processes that enabled customers to have what they want and when they want it with the highest quality. Process Background and Identification of Problem Electronic Cheque Clearance is one of the important elements of End Customers’ Banking Experience. Bank is obligated to offer the maximum level of technology and innovation in end-user banking process in order to sustain its customers. Electronic Cheque Clearance is one among such improved end-user banking platform. Electronic Cheque processing is the crucial element of economy. In this the bank runs customers’ paper Cheque through an electronic scanner system. The scanner system captures customer’s banking details and the payment amount. The information is then transferred electronically over the Reserve Bank of India network which takes the fund from customer’s account and deposits the same into the drawee’s account. Cheque Truncation System (CTS) helps stopping the flow of physical Cheque. CTS is based on a Cheque Truncation or Online Image-Based Cheque Clearing System where Cheque images and Magnetic Ink Character Recognition (MICR) data are captured at the collecting bank and transmitted electronically. In a Cheque Truncation System, the Cheques are scanned through the scanners to capture the image of the Cheque. The application displays the details of Cheque scanned and updates the required information of each Cheque. Bank executive enters the Cheque details of the scanned Cheque in the system. Before Clearing Lodgment time, the teller updates mandatory details of Cheque in an excel sheet for records. Teller gives all Cheques to vendor for creating unloadable flatfile of Cheque details. Vendor creates unloadable files in uploadable format. Vendor gives the uploadable files to branch. The application team enters amount of Cheque and Cheque payee name in the application. The system validates the details. Post validation the batch is processed and confirmation message is displayed on screen. Once the batch is processed, the data goes to main table of database. Post authorization, the authorizer runs late clearing and outward clearing modules. Now unclear funds are reflected in customer account. All Cheque details are updated in CTS application by clearing team in batches. At 2.30 PM CTS application service for sending outward Cheque data is active and the data is automatically sent to NPCI (National Payment Corporation of India). Next day NPCI confirms the status of the Cheques logged on the previous date and Cheque returns are marked by clearing team. VDC (Value Date Clearing) module is run by clearing team authorizer and funds are transferred from unclear bucket to available balance. Value Date in banking is the delivery date of funds traded. There was a delay observed in Cheque processing which is a critical banking business process. The team realized that Electronic Cheque Processing system is far from lean. Based on the success stories across banking sector that had implemented lean, the project team felt that “lean” here was about straightforward waste reduction and it was the way to go to address the business challenges of Electronic Cheque Processing delay. 66 Electronic Cheque Clearance e-Processing Time Reduction Lean Implementation Problem Solving Approach A lean implementation team was formed to identify with and explore various lean tools and techniques. The team believed in creating superior customer experience which essentially depends on how the team members are involved at each level in the ‘Customer First Way of Life’. Hence, the team ensured the involvement of stakeholders from various functions and levels in the organization to address the challenges and improve the process. The problem solving approach adopted was as follows; the team assessed the process as it is and checked if it was stable. After confirming the stability, time and motion study was conducted to understand time spent on each activity involved in Electronic Cheque Clearance process. Measurement system analysis was performed to validate the data captured. The team then performed value stream mapping to identify value added and non-value added activities. Project goal was set and validated using Statistical techniques. The team performed 5 Why analysis and collected data against the root causes identified to determine the relationship between X values and Y value and then valid X’s were chosen for solution implementation. Post this; the issue was resolved using lean doctrine like Mistake Proofing and Automation. Objectives The main objectives that were expected out of this project were to: ² Eliminate the time delay in Cheque processing ² Improve customer satisfaction by delivering clearing Cheque without any delay ² Improve process efficiency Tenet Implementation Details Tenet 1 – Value Stream Mapping The first tenet taken up for implementation was Value Stream Mapping. Value Stream Mapping helped analyze every step of the process and flow of information in high detail. The team created diagram of the current state that explained the current process. It created visibility on the actions taken place. During multiple brainstorming sessions, team identified the actions that take place during Electronics Cheque Clearance process and the amount of time each action takes. The team figured out how much time was spent in waiting. During this time and motion study, the team used stick notes on white board which enabled them to shuffle boxes around quickly. Visual work flow of various steps involved in Electronic Cheque Clearance transaction process was created with the requisite inputs from the team. This helped in identifying waste and loop backs in the process and prioritizing area of improvements. The team created current state map of how the Electronic Cheque Clearance transaction takes place. It then created the future state map indicating waste reduction and its effect and finally developed and implemented the plan to reach the future state. 67 Wipro Infotech Figure 1: The current state map There was a significant waste and loop back observed
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