Improving Service Performance in Banking using Quality Adjusted Data Envelopment Analysis

The goal of this research is to describe the application of data envelopment analysis (DEA) to the performance evaluations of bank branches. Special attention is focused on how to incorporate the quality dimension into branch efficiency. DEA will apply to a set of micro-data from a Czech commercial bank branch network. In the banking sector, providing services quality is one of the key focuses. Therefore, the quality dimension should be incorporated into the DEA model. The goal of the quality adjusted DEA model is to identify best practice branches that work efficiently and at the same time provide services with high quality. This model avoids productivity-quality tradeoff, which is present by the standard DEA model. The quality of services is measured by customer service, mystery shopping and calls, client information index, retention, and client product penetration. Main determinants of efficiency and quality level are branch size and region via purchasing power.quality adjusted DEA, branch performance, scale efficiency, return to scale

Inside the Black Box: What Makes a Bank Efficient?

A decade of econometric research has shown that X-efficiency dominates scale and scope as the drivers of inefficiency in the U.S. banking industry. However, this research falls short in explaining the causes of the high degree of X-efficiency in the industry. This paper summarizes a four-year research effort to understand the drivers of this inefficiency. Key findings from this research, based on the most comprehensive studies to date of management practices in the retail banking industry, give insight into the drivers of X-efficiency. The paper provides a comprehensive framework for the analysis of X-efficiency in financial services. This paper was presented at the Wharton Financial Institutions Center's conference onRetail Banking, Services, Efficiency, Technology Management, Human Resource Management

E-finance-lab at the House of Finance : about us

The financial services industry is believed to be on the verge of a dramatic [r]evolution. A substantial redesign of its value chains aimed at reducing costs, providing more efficient and flexible services and enabling new products and revenue streams is imminent. But there seems to be no clear migration path nor goal which can cast light on the question where the finance industry and its various players will be and should be in a decade from now. The mission of the E-Finance Lab is the development and application of research methodologies in the financial industry that promote and assess how business strategies and structures are shared and supported by strategies and structures of information systems. Important challenges include the design of smart production infrastructures, the development and evaluation of advantageous sourcing strategies and smart selling concepts to enable new revenue streams for financial service providers in the future. Overall, our goal is to contribute methods and views to the realignment of the E-Finance value chain. ..

Business process management tools as a measure of customer-centric maturity

In application of business process management (BPM) tools in European commercial sectors, this paper examines current maturity of customer centricity construct (CC) as an emerging dimension of competition and as a potential strategic management direction for the future of business. Processes are one of the key components of transformation in the CC roadmap. Particular departments are more customer orientated than others, and processes, customer-centric expertise, and approach can be built and utilized starting from them. Positive items within a current business process that only involve minor modification could be the basis for that. The evidence of movement on the customer-centric roadmap is found. BPM in European telecommunications, banking, utility and retail sector supports roadmap towards customer-centricity in process view, process alignment and process optimization. However, the movement is partial and not flawless, as BPM hasn’t been inquired for supporting many of customer-centric dimensions

Performance in Consumer Financial Services Organizations: Framework and Results from the Pilot Study

Financial services comprise over 4 percent of the gross domestic product of the United States and employ over 5.4 million people. By offering vehicles for investment of savings, extension of credit and risk management, they fuel the modern capitalistic society. While the essential functions performed by the organizations that make up the financial services industry have remained relatively constant over the past several decades, the structure of the industry has undergone dramatic change. Liberalized domestic regulation, intensified international competition, rapid innovations in new financial instruments and the explosive growth in information technology fuel this change. With this change has come increasing pressure on managers and workers to dramatically improve productivity and financial performance. This paper summarizes the first year of a multi-year effort to understand the drivers of performance in financial services organizations. Financial services are the largest single consumer of information technology in the economy, investing $38.7 billion dollars in 1991 (National Research Council, 1994). While this investment has had a profound effect on the structure of the industry and the products it provides, its effect on financial performance of the industry remains elusive. Why this "productivity paradox" (Brynjolfsson and Hitt,1993) exists is an important part of this project. The authors describe the differences in productivity in services from manufacturing. In the service world, the consumer co-produces the product with the firm, ofte nadding labor to the creation of the service. In addition, the scope of the service enterprise typically is quite vast, with components of the service production process being both producers and deliverers of the service. In addition, the quality of the services provided is forever changing. Thus, the authors suggest that productivity gains from human resource improvements or technology investments may not show up in standard performance measures, but may rather be used to improve the quality of the service provided. What appears to be a stagnation in productivity may actually be an increase in value delivered to the customer. Delivering value to the customer may provide the institution with sales opportunities and much needed information about the institution's customer base. The pilot survey conducted by the authors examines the relationship between technological advancement and the relational part of service delivery by studying time spent with the customer in relation to technological sophistication and time spent on the entire delivery process. The authors adopt the view that processes are the central "technology" of an organization. As with any technology, the process must be maintained. After a process has reached its useful life, it should be scrapped or rebuilt. Thus, the authors suggest that researchers should take a life-cycle view of processes when undertaking efficiency studies. The authors rely heavily on a process-oriented methodology in their analysis of performance drivers in financial services. The study does not focus on traditional measures of productivity or financial performance. Rather, the authors base comparisons on intermediary measures which evaluate the drivers of performance from the perspective of all participants in the co-productive process. This pilot study starts with consumer financial services and in particular, retail banking. The authors review the relevant literature on financial services performance and then propose a conceptual framework for the study. The framework assumes that industry conditions and firm strategy are given. The authors focus is to examine the components of performance that managers can affect, given a strategy and industry operating conditions. Thus, their initial focus is guided by their desire to direct attention to issues of implementation and their effects on performance. The authors attempt to bridge the gap between traditional productivity measures and difficult-to-measure financial performance by developing a set of value creation components as an intermediary set of performance indicators. Based on pilot interviews, these indicators reflect effective performance in ways that are more meaningful than the more traditionalmeasure of productivity, as they are the goals toward which bank management strives. The key values the study attempts to measure are customer convenience, precision, efficient cost structure, adaptability and market penetration. The survey conducted by the research team benchmarks two types of management decisions that are presumed to drive these outcomes. The first set of management choices are implementation choices, human resources choices, technology implementation processes and product/servicedelivery processes. The second set of choices relates to management infrastructure, resource management processes, the information architecture of the firm, the performance management and control systems and the organizational structure of the firm. Based on interviews and the work of previous productivity studies, the research team developed a pilot survey focused on the practices of the functional areas, business lines, product groups and the retail distribution network. The pilot measured the outcomes and choices made by managers in seven large commercial banks. The pilot results will lead to a large scale survey of practices for the entire retail banking sector. Based on early pilot results, the researchers concluded that managers in consumer financial services firms typically assume that improvement in one area of performance is largely at the expense of decreased performance in other areas. The authors believe this is only partly true. Based on the pilot results, the authors believe that better management practices can move outcomes in a number of areas simultaneously. Through effective process design, use of technology and management of human resources, institutions can improve performance in multiple categories. The successful financial services organizations will be those which find processes and practices that enhance multiple measures of performance. The results of the large scale survey of practices will be available in early 1996.

Service quality measurement in the internet context: A proposed model

The survival of any organisation in a highly competitive environment depends on its ability to provide the best service quality to its existing customers as the quality of service is a key factor in the success of any organisation. It is well established that the measurement of service quality is an important procedure for the improvement of the success and performance of any organisation. Facts indicate that more attention is needed toward developing an industry-specific scale for measuring customer service quality within the still-developing sector of Internet-based self-service technologies. The main objectives of this research paper are two-fold; firstly, to review comprehensively previous and contemporary literature on service quality measurement and to discuss the key issues on the development of an industry-specific scale for measuring customer service quality in the specific context of Internet-based self-service technologies, secondly, to propose a conceptual model for service quality perceptions of Internet-based self-service technologies through identifying its key antecedents and consequences. The findings of this study will be significant for both scholars and practitioners in this area as it provides a deep understanding of the way customers evaluate services provided via self-service technologies

Corporate entrepreneurship: Linking strategic roles to multiple dimensions of performance

Using data from a large European financial services firm which engaged in an entrepreneurial initiative to enhance its competitiveness, this paper explores the strategic role of middle managers in the context of corporate entrepreneurship and its link to multiple dimensions of performance. The findings indicate that middle managers’ role can be decomposed along four reliable and stable dimensions that are consistent with those suggested by the literature. Building on a stakeholder approach, the paper relates the identified roles to multiple dimensions of performance, namely to financial performance, customer satisfaction and employee satisfaction. Canonical correlation analysis –a useful and powerful method to explore relations among multidimensional variables– indicates a significant but weak relationship.corporate entrepreneurship; strategic roles; middle managers;

Technology and Service Quality in the Banking Industry: An Empirical Study of Various Factors in Electronic Banking Services

Technology-based self service has greatly changed the way that service Firms and consumers interact and are raising a host of research and practice issues relating to the delivery of e-service which has become increasingly important not only in determining the success or failure of electronic commerce but also in providing consumers with a superior experience with respect to the interactive flow of information. The purpose of this research study was to establish the relationship between technology and service quality in the banking industry in Nigeria. The research was carried out through a cross sectional smvey design which questioned respondents one e-banking services. The population of study mainly constituted of customers of Oceanic bank within Lagos metropolis and its environs. The respondents of the study were customers of banks using e-banking services (internet banking, mobile banking and AIM). The sample in this study consisted of 120 respondents who are users of thee-banking services. The data collected was analyzed by use of frequency, percentage, means and correlation analysis. The findings revealed that secure services as the most important dimension, followed by convenient location of AIM, efficiency (not need to wait, ability to set up accounts so that the customer can perform transactions immediately, accurately of records, user friendly, ease of user, complaint satisfaction, accurate transactions and operation in 24 h)

Measuring the effect of customer relationship management (CRM) components on the non financial performance of commercial banks: Egypt case

This paper presents customer relationship management (CRM) components as applied on the Egyptian Commercial Banks, examined from the bankers' point of view. Then, it intends to measure their effect on the level of customer satisfaction and loyalty from the customers’ point of view as examples of the non financial performance measures. The paper is quantitative in nature and consists of two different structured questionnaires using convenience/quota sampling. The first involved 180 employees in order to measure CRM applicability, and the second involved 270 customers to measure the level of customer satisfaction and loyalty and their effect on the Egyptian Commercial Banks' financial performance The findings show that the selected banks apply CRM components but the level of application differs from one bank to another. The results showed a significant positive relationship between CRM and customer satisfaction in the Egyptian Commercial Banks, when applying them together and not separately. In addition, there is a strong positive effect between customer satisfaction and loyalty which was reflected on the Commercial Banks' financial performance. The findings confirm the importance of studying and implementing CRM to achieve customer loyalty and improve the Egyptian Commercial Banks financial performance. Banks wishing to improve their relationships with customers need to focus on the CRM components to develop relevant and effective marketing strategies and tactics. The paper measures the CRM as a multidimensional construct as applied on the Egyptian Commercial Banks and relate it to the achievement of the ultimate goal of retaining customers to gaining a sustainable competitive advantage and achieve more profits