Sterling Savings Banks Ezra Eckhardt is seeking to sharpen the Spokane institutions competitive edge by implementing process-improvement strategies he helped launch at Microsoft Corp. while he was an executive with the software giant in continuous improvement.


Continuous-improvement strategies concentrate on increasing the speed of a business process and decreasing variations in that process, says Eckhardt, Sterlings executive vice president of corporate technical services. In other words, every process, whether its building an automobile or clearing a check, requires a certain number of steps to complete, and the potential for an error or malfunction exists with each step, he says. By reducing the number of steps, a business can minimize potential mistakes or defects and complete a process more quickly and efficiently.


Continuous improvement breaks things down to the simplest level, says Eckhardt. People tend to make things more complicated than they actually are.


Although the philosophy of continuous improvement has been employed most widely by manufacturers, Eckhardt contends that service industries, such as the financial sector, stand the most to gain in customer satisfaction from implementing such strategies.


Its invisible to the customer, but theres a huge amount of infrastructure involved in making a bank work, Eckhardt says. Theres a competitive advantage to banks that are improving those processes.


Check clearing is one of the processes Eckhardt says hes been working with bank employees to improve. Sterling has an investment of roughly $5 million in check-clearing equipment and an annual budget of $3 million devoted to clearing checks, he says. Its administrative department employs 80 workers, four of whom used to work on resolving discrepancies in checks, called check-dispute resolution, he says. Those employees printed off about 2,000 pages of documents a day.


Check disputes can arise when an employee cant discern what a customer has written on a check, or a check has been damaged, among other things, he says. Improving the check dispute-resolution process involved consolidating dispute-related information into one software application, rather than several, and reducing the number of people who work to solve the problems, he says. Instead of four people working a collective 32 hours a day on the problems, two people now spend a total of 12 hours, he says. Improving the process has enabled employees to work on other tasks, has reduced the amount of paper used, and is saving the bank roughly $250,000 a year, he says.


I trust the people who do processing on a daily basis, Eckhardt says. I just have the tools to help them be more efficient.


Other processes Sterling is seeking to improve include deposit and credit operations, credit administration, loan approval and processing, and hiring, he says. The bank hopes that improvement in those processes will decrease the variations customers encounter at branches.


Customers can get frustrated with variations, such as different loan applications, he says. Keeping customers happy is important particularly in banking, because its all about repeat business.


Eckhardts duties at Sterling include managing the banks information-technology systems. He says the bank recently has implemented or plans to start using several technological features that will help improve its processes.


For example, the bank set up a remote deposit capture system that allows commercial customers to pass checks through scanners to deposit the checks into their Sterling accounts without leaving the premises of their own businesses. The dollar amount of the checks is transferred to a customers account electronically from the accounts of the people or businesses who wrote the checks. Eckhardt says roughly 10 percent of Sterlings deposits from commercial customers now come via the remote capture method, and the bank adds five to 10 large businesses to its remote capture program a week.


The bank plans to roll out soon a similar electronic deposit feature, called a teller capture system, at its branches. Tellers will scan checks, and those checks will be cleared in electronic form via a computer system. The system will save employees from having to send paper checks to the banks of the people or businesses that wrote them, and also will reduce the amount of paper a bank must track, he says.


The new technology systems the bank is implementing are the result of a federal banking law that was enacted in 2004. Informally called Check 21, the law allows institutions to exchange customer checks electronically through digital imaging and establishes substitute checks, made from digital copies of the original checks, as legal equivalents of the originals.


Although technology can help a bank improve its processes, it isnt the solution to all of the efficiency-improving challenges Sterling faces, he says.


Technology isnt going to shrink, but were not going to be slamming technology into a problem area, Eckhardt says. We tailor our response to meet each specific need.


For instance, the bank was considering improving the printing of customers account statements by buying larger printers that could print higher volumes of paper at faster speeds, he says. Instead, Eckhardt helped employees rearrange the physical layout of the printers to allow workers to manage the equipment easier, he says. The bank was able to eliminate 50 percent of the equipment it used to print statements, and now two-thirds fewer employees are involved, he says.


Eckhardt honed his skills first at Morristown, N.J.-based Honeywell International Inc., where he was a continuous-improvement leader and managed multiple Honeywell factories, including one based in Spokane Valley. He then worked at Redmond-based Microsoft, where he helped the company prepare and launch its continuous-improvement program. He says he decided to join Sterling in 2004 because he saw a lot of growth potential at the bank and was able to combine his operational management experience at Honeywell with his continuous-improvement background at Microsoft.


Sterlings size makes it an ideal candidate for process-improvement initiatives, because smaller banks typically focus on expense management and cant devote many resources to efficiency upgrades, Eckhardt says. His impression is that larger banks have achieved varying degrees of success while dabbling in continuous-improvement programs.


For Sterling, he says, the goal of continuous improvement is to reduce operational costs so it can turn more attention to improving customer service.


If another bank needs $10 million in equipment and 50 people for a process, and I can do it with $10 million and 10 people, I can price my loans better and go after different market segments, he says.


Businesses in many other industries, such as health care, technology, and hospitality, also are implementing, or have implemented, continuous-improvement strategies, he says.


Its not a question of if other organizations are going to do it, Eckhardt says. Its going to be when, because they have to keep a competitive advantage.


Contact Emily Brandler at (509) 344-1265 or via e-mail at emilyb@spokanejournal.com.