In 2008 Washington Mutual was the biggest housing thrift loan originator in the United States with over 2080 Financial Centers across the country. In addition to offering home loans to customers, WAMU also held consumer automobile, credit card, line of credit, equity, business and personal loans.
The issue; consumers were able to walk into any of the 2080 Financial Centers within any US city and make payments to their respective account and assume the transaction was complete. After paying on their account WAMU personnel were to route the payment over night by currier to one of the 13 back office operations across the country to complete transaction and post to consumers account. Approximately 1500 payments were routed to the wrong back office operation creating a negative impact to consumers. Most accounts were processed late creating a late payment fee, negative report to credit scoring agencies and the lowering of consumer credit FICA scores. The goal was to apply Lean Six Sigma Master Black level tools and methods to reduce to misrouted FC items from 1500 per day to 150.
Misrouted WAMU FC Items Project Executive Presentation
Cost and benefit analysis summary
- FTE Hours spent at 13 Back Office Operations re-routing daily misrouted items 2 FTE’s @ 40.00 per hour each = 160.00 X 13 locations = 2080 X 260 days per year = $540,800
- UPS & FedEx overnight shipping to re-route items @ $80.00 per X 13 locations = 1040.00 X 260 days per year = $270,400
- Projected savings after solution implementation = $811,200
- Undocumented residual savings from project:
- Re-gain 5 days of float for misrouted payments
- Customer fee reversals, interest hikes & credit bureau reports
- Risk issues; legal, SEC & growth / revenue