For all the effort placed on moving transactions to automated delivery mechanisms, most institutions still recognize the need to improve branch productivity.

As evidence of this fact, many financial institutions, from credit unions and community banks to regional giants, have gone so far in recent years as to enlist service sendors to track teller productivity across their branches.

By tracing the varying levels of activity at individual branches and comparing teller productivity against the performance at other institutions, bankers hope to gain insights that can save money on what remains one of the industry's largest cost centers.

Companies like Atlanta-based Financial Management Solutions Inc., which counts First Chicago Corp. and BankSouth Corp. as clients, monitor and set schedules for bank tellers on a monthly basis.

Financial Management's PC-based system gauges the number of transactions each teller handles and provides each bank with a performance comparison to the company's other bank customers.

Bankers can use these benchmarks to make rational decisions about moving tellers to part-time schedules, cutting back or extending specific branch hours, or even closing down particularly unproductive or untrafficked branches.

Industry observers said such comparisons provide a helpful illustration of what types of staffing strategies pay off.

For example, First Chicago was running about 2.5 million teller transactions at the cost of 67 cents per transaction when the bank became a customer of Financial Management in 1992, according to the vendor's president, W. Michael Scott.

Although this seemed a fairly favorable showing, bank officials were able to better gauge the effectiveness of First Chicago's tellers when they stacked their numbers up against the performance of Financial Management's other clients.

At that time, the company's most productive client was running transactions at 27 cents each, and the least productive was spending $1.02 per transaction, Mr. Scott said.

Now, thanks to a variety of cost-cutting measures, First Chicago spends an average 43 cents per teller transaction, Mr. Scott said.

"If you can lower the cost of each teller transaction by a nickel or a dime, that's worth quite a bit over a significant amount of transactions," said Charles W. Shoemaker, a senior vice president at First Chicago.

Although Mr. Shoemaker said the findings of this service did not compel First Chicago to close any branches or make any other such radical changes, it did "focus our attention on low performance areas."

One change made as a result of the service was a shift toward more part- time teller scheduling as part of a general reengineering.

Since most of Financial Management's other clients are predominantly small to midsize institutions outside of the Chicago area, Mr. Shoemaker said the benchmarking does not always provide a true picture of First Chicago's performance. He nonetheless believes that this type of analysis is necessary to running an efficient branch system.

"Frankly," he said, "without a system like this, it's hard to see if you're doing well or not."

A recent study from Arthur Andersen and Andersen Consulting suggests that more banks need to revisit the way they evaluate branch staffing and profitability.

The study, called Strategies for High Performance, indicated that, given comparably sized teller staffs, the best banks - defined as those among the top 25% in productivity - would support 65% more transactions than the worst-performing 25%.

Maintaining a more-effective teller staff can save the average bank with $5 billion of assets as much as $7 million in annual costs, the study found.

Financial Management provides its tracking and consulting services to 35 banks, most of which are centered in the Southeast.

In addition to providing raw data on transaction costs, peak business times, and individual teller productivity, the firm also forecasts an outlook for a coming month based on its analysis, builds specific branch- by-branch teller schedules, and offers a teller incentive program.

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