Financial Institutions Center Measuring the Efficiency of Service Delivery Processes : With Application to Retail Banking

This article presents a methodology that determines the role of design in calculating the efficiency of service delivery processes. The efficiency of these processes is first determined by using a variation of frontier estimation (data envelopment analysis [DEA]-like) techniques. The methodology is then applied to a particular service delivery process in retail banking. The methodology allows one to address the question of how much inefficiency in a business process is due to process-design choice and how much is due to process execution. In addition, the methodology determines which policy group offers the most potential for improvement for a particular firm. Consistent with expectations, the results show that no single process design dominates. However, the methodology demonstrates the trade-offs for a particular institution and offers specific recommendations for either improving an existing process or radically changing to a different design.

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