Opportunities in Financial Services



Financial Services industry has been going through a turmoil for many years due to several factors – both global as well as local. However, there is also huge potential for growth due to vast untapped potential. Globalization, rapid advances in technology, increased competition and heightened customer expectations mean that there are both opportunities as well as challenges for financial services providers. Banks and Insurance companies are the primary providers in the financial services space and they compete primarily on customer service, availability, price and quality of products/services. However, there are some crucial differences between the two segments due to the nature of products and services provided by them.



Banks can adopt a multi-site or a multi-service strategy or both. In an under-penetrated market like India, banks have to adopt both – opening new branches and ATMs thus improving availability as well as introduce new products and services. Hence, two areas that immediately become important, are:

  • Speed of opening new branches/ATMs
  • Time to market for new products/services

 Both of these, opening new branches/ATMs and New Product Development requires project management. Both these areas can benefit immensely from TOC’s Critical Chain Project Management. (CCPM) solution.


Banks make money by consumer or corporate lending, investments in securities or stock and by charging fee for the services such as foreign exchange, money transfer and banker’s cheques. They use money raised through customer deposits to generate such revenue. Hence, there is a flow of money in a customer-bank-customer paradigm. To improve the throughput of the banking system, the banks must find out the constraint in the system that prevents it from increasing the flow. Once the constrained is found, banks can exploit the constraint by addressing the underlying inefficiencies. Theory of Constraints Lean Six Sigma (TLS) methodology would be very effective in helping banks increase their throughput to achieve more of the goal – i.e. make more money now and in the future.





Insurance industry makes money by charging premiums from the clients and investing part of the premium collected and thus generating investment income. The revenue generated by the insurance company is partially offset by the claims paid and by operating expenses. The throughput of the insurance company can be improved by

  • Speeding up the underwriting process and assumption of risk
  • Improving the quality of underwriting and hence charging higher premium for higher risks
  • Providing better customer service to enhance New Business – speed as well as quality
  • Offering competitively priced policies to enhance New Business
  • Reducing Work-in-Progress Insurance Proposals

Theory of Constraints (TOC) can help an insurance company identify the system constraint and exploit it to improve the flow and thus throughput. Lean and Six Sigma can be very helpful in exploiting the constraint. given the nature of business rules in insurance particularly in Rating, strategic use of Information Technology also plays an important role in enhancing the throughput. Principles of Drum Buffer Rope (DBR) such as buffer management can also be used to improve the throughput.


Insurance companies have a large number of relatively short projects. Critical Chain Project Management (CCPM)  is very effective in managing these projects and bringing down the various lead times. New Product Development, in particular, can be accelerated with CCPM and time to market reduced.


Finally, using the principles of Throughput Accounting, the inventory in the system should reduced. The Inventory, in the insurance industry, is the work-in-progress insurance proposals or work-in-progress claims. Strategic use of Information Technology also helps in “inventory” reduction as well as improvement in the quality of service.