1. BRANCH PERFORMANCE

2. Branch Types Rural Branches Urban Branches Large Branches
Medium Branches
Small Branches

3. Branch Banking
Branch banking leads to more stable banking systems by enabling banks to better diversify their assets and widen their depositor base.
Branch banking induces competition.
Competition forces marginally profitable banks to change either through merger or voluntary liquidation.
When these weaker banks close, the overall stability of banking system improves through consolidation.
Branch banking stabilizes banking systems by reducing their vulnerability to local economic shocks

4. Economic Factors Affecting Banking Activity
Average employment growth
Average population growth
Average per capita income
Average number of branches
Average population per branch

5. Benchmarking Efficiency of Bank Branches
Operational efficiency model
Quality efficiency model
Profitability efficiency model

6. Operational Efficiency Model
Operational efficiency model identifies branches that are group leaders and serve as yardsticks to guide the improvement of performance of inefficient branches
Managerial performance
Clerical performance
Management of computer terminals
Working space effectiveness
Number of current personal accounts
Number of savings accounts
Number of foreign currency current accounts
Number of credit applications
Output time

7. Operational Efficiency of a Branch

8. Quality Efficiency Model
Service quality as perceived by branch personnel
Service quality as perceived by branch customers

9. Perceived Dimensions of Service Quality
Reliability - Ability to perform the services accurately and dependably.
Responsiveness – Willingness to help customers and provide prompt service
Assurance – Knowledge and courtesy of employees and their ability to convey trust and confidence
Empathy – Caring, individualized attention provided to customers
Tangibles – Appearance of physical facilities, personnel and communication.

10. Objective and Perceived Measures of Quality

11. Profitability Efficiency Model
Consumable Resources
Clerical personnel
Supervisor personnel
Computer terminals
Working space
Revenue Generating Resources
Advances
Deposits
Commissions
Number of credit application accounts
Number of current personal accounts
Number of savings accounts
Number of foreign currency accounts
Number of inter-branch transactions

12. Profitability Efficiency Model

13. Service Quality and Profit Performance

14. Drivers of Branch Performance
Profit and growth are stimulated primarily by customer loyalty
Loyalty is a direct result of customer satisfaction
Satisfaction is largely influenced by the value of services provided to customers
Value is created by satisfied, loyal and productive employees;
Employee satisfaction results primarily from high-quality support services and policies that enable employees to deliver results to customers

15. Data Envelopment Analysis
Data from a single bank in a small and tightly regulated economy
Data Envelopment Analysis (DEA)
Used for measuring efficiency
Several decision making units are mapped
Mapping of inputs with respect to outputs
Uses linear programming formulations to fit the model
Branch units on the data envelopment by the model are efficient
Inefficient units can be projected onto the efficient frontier either by reducing their inputs or increasing their outputs
Virtual units that are close to the real ones but are on the efficient frontier (for the inefficient units)

16. DEA Example Inputs Branch A Branch B Branch C Managerial personnel 1
Clerical personnel 3 2
Computer terminals
Work space (Sq. m)
200 50
300
Current accounts
100
400
Savings account
800
500
Credit applications
150

17. Branch Quality Outputs Branch A Branch B Branch C Personal (Scores) 7075 60
Computer (usage %) 40 30 45
Working spare (comfort score) 90 80
Credit application process time (days) 6 5 2
Service quality
58.75
61.25

18. Branch Profitability Outputs Branch A Branch B Branch C
Revenue generation (%) 20 10 40
Deposit mobilization per employee
700
800
500
Fee income (%) 12 14 18
Interbranch transactions (number)
4000
3000
7000

19. Operational Efficiency and Profitability

20. Quality and Operational Efficiency

21. Service Quality and Profitability

22. Relative Efficiency