Six Sigma: A Tool to Increase Customer Satisfaction at Bank of America

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Case Details:

Case Code : OPER052
Case Length : 14 Pages
Period : -
Organization : -
Pub Date : 2005
Teaching Note :Not Available
Countries : -
Industry : -

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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"Bank of America, using its emphasis on the customer and Six Sigma, has been successful over the past three years in enhancing our ability to put the right customer in the right products at the right price. Bank of America is committed to continuing to improve service excellence, continuing to invest in our future and continuing to innovate to respond to customer needs."¹

- Kenneth D. Lewis, Chairman and CEO, Bank of America Corporation in 2004.

Introduction

In 2004, with revenues of $49.6 billion and profit of $14.1 billion, the California-based Bank of America Corporation (BoA) was the fifth most profitable company in the world and the second most profitable banking institution (Refer Exhibit I for facts about BoA)².

BoA provided full-service banking in 29 states and in Washington, D.C. in the US and had operations in 30 countries worldwide.

The company performed its banking activities under three subsidiaries - Bank of America National Association (Bank of America, N.A.), Bank of America, N.A. (USA), and Fleet National Bank³ (Fleet).

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BoA had four major business segments - Global Consumer and Small Business Banking, Global Business and Financial Services, Global Capital Markets and Investment Banking, and Global Wealth and Investment Management (Refer Exhibit II for more information on Business Segments).

BoA was formed in 1998 as a result of a series of mergers and acquisitions (Refer Exhibit III for Background of BoA). This inorganic growth strategy helped the company in enlarging its customer base but it failed to generate customer satisfaction and retention. As a result, the bank had been recording low customer delight scores⁴ which reflected the low quality of service being provided. On January 24, 2001, Kenneth D. Lewis (Lewis) was appointed as the Chairman and CEO of BoA. Under Lewis, BoA adopted an organic growth strategy. He focused on providing high-quality service to customers and enhancing their satisfaction and retention. Lewis adopted the Six Sigma quality initiative in the year 2001 (Refer Exhibit IV for a conceptual note on Six Sigma).

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1] Milton H. Jones Jr., "Six Sigma …At a Bank?" www.asq.org, February, 2004.

2] Annual Report 2004, www.bankofamerica.com, January 18, 2005.

3] FleetBoston Bank was the seventh largest bank in the US headquartered in Boston, Massachusetts. (measured by assets of $197 billion in 2003). It had 1,500 branches, 3,500 ATMs, 250 offices in 25 countries, about 50,000 employees, 20 million customers, $133 billion in deposits, and $12 billion per year in revenues. The bank was acquired by BoA in 2003.

4] On a 10-point scale to rate their experiences with the bank, satisfied customers showed a 6-8 score while delighted customers showed a 9 or 10; in BoA's case only 40% of customers were 'delighted'.