U.S. Bancorp Seeks Savings Via Branch-Analysis System
U.S. Bancorp is looking to improve branch management and reduce operating costs by hundreds of thousands of dollars per year with software that helps measure branch productivity.
With the system, called Data Envelopment Analysis, the Portland, Ore.-based banking company hopes to improve productivity by 10% to 20% next year.
"We've always been interested to find that a person, when transferred, often says something like, |This place isn't as busy' or |This place is twice as busy'" as the branch the employee came from, said Pete Sinclair, senior vice president in branch distribution at U.S. Bancorp.
"We've determined that we've got significantly different paces of activity taking place in our branch distribution system," Mr. Sinclair said, "and we want to understand why."
The system, marketed by H. David Sherman, an associate professor of business administration at Northeastern University in Boston, grew out of a doctoral dissertation by one of Mr. Sherman's professors. Mr. Sherman helps a bank customer collect data, then interprets it with the help of sophisticated software algorithms.
Mr. Sherman said the software and his services cost a bank $20,000 to $80,000. "We're looking at a 20-to-1 payback in the first year," said Mr. Sinclair.
U.S. Bancorp recently completed an analysis of data about its products and operations culled from the first quarter of 1991. The data have now been turned over to divisional managers, who are developing plans for the branches they oversee.
The company has $18 billion in assets, 371 branches, and a staff of 12,000 in Washington and Oregon. It is trying to find which branches are most productive and se them as models. New employees will be trained at the model branches.
The bank also wants to be able to readjust resources so they are more equitably distributed. And it wants to monitor productivity closely in areas of high growth, where extra people have been assigned.
For example, some operations might be shifted out of the branches to headquarters, Mr. Sinclair said.
Operational, sales, and expense data were fed into the system for Mr. Sherman. He then did a number of comparisons, comparing branches in Oregon with those in Washington; rural, community, and urban banks; and banks of different sizes and with extended operating hours.
Some branches emerge as "best-practice" banks. U.S. Bancorp reviews the branches not in this group and goes into them to monitor the work pace, operating costs, and factors such as the relationship between number of employees and number of customers served.
District managers are now developing plans that follow guidelines for expense control and productivity, and the plans will be carried out in all 371 branches in early 1992.