Process Variation as a Determinant of Bank Performance: Evidence from the Retail Banking Study

Frances X. Frei, Ravi Kalakota, Andrew Leone () and Leslie Marx
Additional contact information
Frances X. Frei: Harvard University, Cambridge, Massachusetts 02163
Ravi Kalakota: Georgia State University, Atlanta, Georgia 30303

Management Science, 1999, vol. 45, issue 9, 1210-1220

Abstract: This paper explores the relation between retail banks' branch-based processes and financial performance. There are 11 processes included in this study, which represent the bulk of the activities performed in a typical retail branch (e.g., opening checking accounts). The first finding of this study is that the financial performance of banks that perform better across these processes tend to be better than that of other banks. In addition to the variation in process performance across banks, there is also substantial variation across processes within banks. That is, banks that performed well in one process often performed quite badly in another. We present an analytical model that shows that improvement in process variation can be more important than improvement in aggregate process performance when dealing with certain customer segments. Empirical evidence from the Wharton Financial Institution Center Retail Banking Study of bank holding companies in the United States provides support.

Keywords: process management; retail banking; service management (search for similar items in EconPapers)
Date: 1999
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Citations: View citations in EconPapers (20)

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http://dx.doi.org/10.1287/mnsc.45.9.1210 (application/pdf)

Related works:
Working Paper: Process Variation as a Determinant of Bank Performance Evidence from the Retail Banking Study (1998)
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:45:y:1999:i:9:p:1210-1220

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