1. Copyright 2006. Alvarez & Marsal Business Consulting Services, LLC. All Rights Reserved.
Applying Six Sigma Principles to NetBank’s Project
Management Methodology
Case Study

2. 2What We Will Look at Today
• Electronic Bill Pay (EBP) Market Drivers
• Applying Six Sigma to NetBank’s Project Management Structure
• Failure Mode & Effects Analysis (FMEA)
• Wrapping Our Discussion Up

3. Copyright 2006. Alvarez & Marsal Business Consulting Services, LLC. All Rights Reserved.
Electronic Bill Pay (EBP) Market Drivers

4. 4Blame the Internet!
• The Internet has created “customer disintermediation”
• The Internet has empowered customers with information, choice and a
medium to share experiences (both positive & negative)
• “High Market Transparency” is the result of this customer disintermediation
• Social networks and communities are being created that cross
geographical, political, religious and racial boundaries

5. 5What Is So Unique About Today’s Banking Customer?
• Early adopters were considered tech savvy, time-starved, and craved
convenience
• There are still significant opportunities for mainstream banking customers
• Banks must ease growing security concerns and protection of sensitive
financial data
• Better marketing of EBP that is relevant and drive value for the customer
• Offer an easy to use interface that is reliable
• Offer incentives that benefit the customer
• Banking customers are starting to commoditize their side of the
relationship with banks & financial institutions
• The name of the game is “customer authenticity”

6. 6Why Is Customer Adoption Growing So Fast?
Demographics
• 74% of Americans Use the Internet
• Age: 60% of 28-39 yr olds with
Internet tried online banking; 38% of
18-27 yr olds; 25% over 60
• Gender: Half of men with Internet
use online banking vs. 40% of women
• Edu vs. Income: Online banking
more common households with $75K
in annual income; college educated
Services
• 44% of Internet users, or about 63
million Americans bank online
• On a typical day, 13 million
Americans perform banking activities
online
• Online banking growth relates to
spread of high-speed broadband
connections & Internet experience
• 42% of U.S. households have
broadband
Online Commerce
• Growth in e-Commerce has driven
new online payment “front-ends”
Source: “Payment Stats & Trends: What Do They Mean to Me?”
Jim McKee, SVP, Federal Reserve Payments Office
Delivered January 9th
, 2007 at the Atlanta Electronic Commerce Forum

7. 7

8. 8Why Is Customer Adoption Growing So Fast?
The 2007 Consumer Bill Payment Trends Survey: Volume of Electronic
Payments
• Bill Pay Reach – 39%; Check Bill Payments Decline to 34%
• Record 74% of U.S. Online Households Pay at least 1 bill online
• Paperless bills appears to be catching on with mainstream customers
Macroeconomic Drivers for Customer Adoption
• Rising postal rates are encouraging consumers to switch to lower cost
alternatives
• Environmental concerns are also a key driver for EBP adoption

9. 9

10. Copyright 2006. Alvarez & Marsal Business Consulting Services, LLC. All Rights Reserved.
Applying Six Sigma Principles to Project Management
Methodology

11. 11Challenges & Opportunities
The Challenges
• Six Sigma Champion….GONE
• Intellectual Capital…….ADIOS
• Six Sigma principles not
previously applied to project
management structure
• Required “intellectual
horsepower” – tough to change the
institutionalized thinking!
The Opportunities
• Voice of the Customer was
previously never taken into
consideration
• Proactively allowed us to identify
potential failures prior to go-live
• Enhancing our EBP offering
allowed us to be at parity with our
competitors

12. Copyright 2006. Alvarez & Marsal Business Consulting Services, LLC. All Rights Reserved.
Failure Mode & Effects Analysis (FMEA)

13. 13Failure Mode & Effects Analysis (FMEA)
• A method that first examines potential failures in products or processes
• FMEA is evaluated by three criteria and associated risk indices:
– Severity
– Likelihood of Occurrence or Probability
– Inability of controls to detect it
• The overall risk of each failure is called a Risk Priority Number (RPN)
• NetBank’s FMEA for the Bill Payment Implementation/Upgrade

14. 14Results
• Only 9% of customer calls received were related to the implementation
– Customer concern was mostly around the change in processing
models (Good Funds to Risk)
• Identified only 1 critical issue that impacted customers
– MS Money, QuickBooks & Quicken Integration Issues
• The first project that we implemented where there were no major
catastrophes
– FMEA was a definitely a MAJOR enabler; other change management
practices also helped (i.e. constant communication, onsite training of
customer service agents, vendor onsite for implementation & post
implementation)

15. 15Wrapping Our Discussion Up
• Implementing Six Sigma tools during the project management life-
cycle can eliminate unnecessary reworks or failures
• Whatever project that your financial services is considering, it’s
good to know the customer and competitive landscape and apply
that learning to the project management lifecycle

16. 16Let’s Keep In Touch
Art Hall
Alvarez & Marsal Business Consulting
3399 Peachtree Road, Suite 1900
Atlanta, Georgia 30326
ahall@alvarezandmarsal.com
Direct: 404-260-4152
Mobile: 404-759-9158

17. Copyright 2006. Alvarez & Marsal Business Consulting Services, LLC. All Rights Reserved.
Applying Six Sigma Principles to Project Management
Methodology
NetBank Case Study