TQM Application in Financial
Services
CEM 515
By
Ali Al Mansour
January 6, 2007
Outline
Introduction
 Service vs. Manufacturing
 Key Financial Services
 Elements to Successful TQM
Implementation in Financial Services
 Benefits from TQM Implementation
 Barriers to Implementing TQM
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Introduction
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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.
Service vs. Manufacturing
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Intangibility
Difficult to measure and standardize
Delivery and consumption happen
simultaneously
Customers sensitivity to quality.
Service vs. Manufacturing
Literature Review
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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.
Literature Review cont’d
Study conducted by Daniel Prajogo,
Monash University, Australia. 194
managers in service and
manufacturing companies:
Variables
Leadership
Strategic planning
Customer focus
Information and analysis
People management
Process management
Product quality
Note: *Significant at p < 0.05
Manufacturing (n=102)
Mean SD
3.69
3.55
3.87
3.55
3.31
3.63
4.22
0.76
0.88
0.72
0.84
0.79
0.71
0.51
Service (n=92)
Mean SD
3.82
3.59
3.97
3.53
3.57
3.56
4.17
Mean difference
0.89
0.93
0.65
0.92
0.80
0.70
0.59
Source: Daniel I. Prajogo, International Journal of Service
-0.13
-0.04
-0.10
-0.02
-0.26*
0.07
0.05
Industry Management
Key Financial Services
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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.
Elements for Successful TQM
Implementation in Financial
Services (“Soft” Aspects)
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Customer focus- needs, loyalty
Professional skills through well designed
training programs.
New technology
Process Innovation
Top management commitment
Communication
Empowerment
Attitudes and behaviors
Benefits from TQM to Financial
Organizations
Quality awareness in the organization
 Higher quality services & products
 Skillful employees
 Satisfied employees-> satisfied customers
 Cost effectiveness
 Profitability
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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
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Questions?
Thanks!