A SIMULATION AND ANALYSIS OF BANK TELLER MANNING
Donald Hammond Sathi Mahesh Department of Management The University of New Orleans New Orleans, Louisiana U.S.A.
This paper presents an application study to find cost effective bank teller management policies for providing high quality service levels at reasonable costs in a modern banking system. Two models are developed. The first is a spreadsheet model to calculate desired teller manning levels from mathematical queuing models, and the second is a simulation model for testing new management policies. Manning heuristics are tested and found to provide the desired level of services.
In the highly competitive banking business, customers now demand many custom fit products from interest paying checking accounts and free traveler’s checks to “no annual fee“ VISA cards. The local branch bank has become a financial center for a wide variety of these services. Deregulation in the banking industry has led to numerous mergers and stiff competition for the existing customer base. Bank management at one major metropolitan bank found that in the new market after deregulation they were the fourth largest bank in a larger market, rather than the largest in their previous smaller market. Increasing the productivity of banking operations has become a major issue in bank management, and tellers and lobby services have been identified as two of five major areas for productivity improvement at regional banks. This fact has highlighted the need for establishing staffing levels based on standards of customer service (Pihl and Wambay 1990). Customers demand higher levels of service and now have numerous choices in how to get service. In spite of the availability of automated service, many customers still prefer to use human teller services, but long waits for service are perceived as a major source of customer dissatisfaction. Customers demand, and the banks have attempted to provide, quick service whether in the bank’s lobby or in the outside drive through facility. Providing the demanded service while holding teller manning costs 1077
to a competitive level has become one of the prime tasks for bank managers. Careful application of queuing theory can alleviate the actual time spent in line and how long it seems the customer has spent in line (Wayne and DiSotto 1994). In addition, work design leading to simplification of teller procedures and the development of staffing levels and work schedules based on customer requirements have been effective in reducing manpower costs. The use of microcomputer-based scheduling and staffing decision support systems are very useful tools for this purpose (McDonell and Klipsch 1988). A banking institution in the New Orleans area requested assistance in building a banking teller management model. Teller personnel have many tasks to accomplish during the business day besides direct contact with the banking customer. Management’s task is to have enough teller stations open to provide quick service while ensuring productive work time is not wasted by having idle tellers. This bank, like many consolidated companies today, has ten branch locations with varying capacities in both the lobby and the drive through facility. The consistent factor among the branches was the bank’s desired policy to provide service to 95% of the customers within three minutes. While many banks have used operations research models (Cheng 1990), the majority of the simulation models studied were for asset management or for management training (Krut 1990, Thompson 1994). Our paper deals with a two step modeling process which begins with a spreadsheet-based queuing theory model for determining ideal staffing levels, followed by a simulation model that illustrates the expected results of management policies under a variety of conditions.