The most efficient bank networks require 30 percent fewer staff – or two FTEs per branch – than the average. This equates to an annual saving per bank of around $60 to $80 million, depending on the size of the branch network.
The Branch Productivity – Decision Time report highlights the gap in bank productivity (as measured by staff utilization levels) as between 45 percent for the poor performers and 83 percent for the best banks. Top-performing banks should aim to achieve 65 percent to 75 percent staff utilization, according to the authors of the report.
“To improve profitability, the branch networks of retail banks need to generate higher product sales, as well as reduce the costs of routine transactions,” says Arabella Volkers of Compass Management Consulting. “Automation is a major driver of performance improvement in branches, but some banks remain cautious about the impact of higher productivity on the customer experience.”
Compass says the main drivers of higher costs in under-performing banks include:
- Higher task times for processing counter transactions
- Lower levels of staff utilization
- Lower levels of branch self-service for basic transactions such as cash/check deposits
According to the report, while some banks remain reluctant to introduce self-service and automation in check processing and other areas, customer satisfaction levels can actually increase as a direct result of such initiatives. Similarly, cash management and recycling using Teller Assist Units (TAU) can reduce branch cash management costs by 10 percent or more, but TAUs are only used in around 20 percent of branches.
“The appetite for self-service and automation technologies in the branch varies by regions and between banks in a region. Asia, for example, has seen widespread and successful introduction of teller and self-service automation,” says Volkers. “Significant opportunities exist in Europe and North America to use technology to reduce the costs of transaction processing. Typical European banks, for example, are leaving potential savings of 30 percent on the table.”
Top quartile banks perform basic transactions 42 seconds faster than the average, mainly due to investment in technologies to assist counter operations, according to Compass. Self-service transactions account for 70 percent to 80 percent of all branch business in the top-performing banks.
“The cost of involving staff in the processing of a counter transaction is five times the equivalent of the self-service process,” says Volkers. “This cost differential makes a compelling case for migration to self service for the majority of banks.”
The Branch Productivity – Decision Time report is the first phase of an ongoing global cluster study of branch banking. The report is based on eight in-depth analyses of branch operations in banks in Europe and North America over the last 18 months and 32 broader studies of retail banks worldwide. The full report is only available to banks participating in the detailed cluster study, but the findings are summarized in a new Compass article, “Raising the Stakes: Improving Branch Counter Productivity.”
About Compass
Founded in 1980, Compass is a global management consulting firm specializing in business and IT operational improvement. Compass' fact-based approach enables clients to achieve world-class operational performance, optimized sourcing, alignment between systems and business processes, enhanced process maturity, and maximum value from investment in information technology.
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