Managing Service Operations

Central Bank of India, Gulbai Tekra Branch

Instructor: Prof. Chetan Soman

Academic Associate: Mr. Sathish L M

Operations Management I (2012)

Group Assignment 2
December 13, 2012

Section - B, Group - 3
Aditi Sholapurkar
Aditya Kumar M.
Ankit Bhageria
Inshul Sahni
Vignesh Mani
Yatin Kamat

INDIAN INSTITUTE OF MANAGEMENT, AHMEDABAD

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Introduction
This report aims to analyse the service model of Central Bank of India, a retail bank and
provides an insight into the daily operations at a representative branch (Gulbai Tekra),
primarily from operations management perspective.
The report is based on primary data, observations of group members availing loan facilities
at the branch and from online resources available about Central Bank of India. Though the
branch offered multiple services, we have restricted the report to primary operations
Teller services, Loans and Locker operations.
A bank is a fitting example of service sector operations and represents most of the salient
features of a service delivery model. All the typical characteristics of a service firm customer management, waiting models and process optimization can be well observed at a
bank. This served as the motivation for the group to analyze Central Bank of India, which is
not only one of the largest and oldest commercial banks in India but also provided easy
access due to prior relations of group members as account holders.
We are thankful to Mr. Prakash Chandra Jain, manager of the Gulbai Tekra Branch and Mr.
Sanjay, loan officer for providing us valuable information for this project.

Service Classification
Service Process Matrix1

Low

Teller services
Locker services

High

Degree of labor
intensity

Degree of interaction & customization

Low
High

Cash
withdrawal/deposit

Loans

CS-Intro-to-Service Operations Management, Prof. Chetan Soman, IIM Ahmedabad

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Strategic Service Classification (Nature of Demand and Capacity)

Rarely

Teller services
Cash
transactions
Locker services

Loans

Regularly

Frequency of demand
exceeding capacity

Demand Fluctuation
Low
High

Strategic Service Classification (Customization and judgment)

High

Locker services
Teller services

Loans

Cash
withdrawal /
deposit

Low

Extent to which personnel

exercise judgment in servicing
customer

Degree of customization
High
Low

Strategic Service Classification (Relationship with customers)

Continuous
Discrete

Nature of service delivery

Type of relationship with

customer
Member
Informal
Locker services
Teller services
Cash
transactions

Loans

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System Description
The Gulbai Tekra branch of Central Bank of India is located in a commercial building housing
various other corporate offices. The presence of the bank right at the entrance of the tower
and prominent signage allow easy recognition of the location. However, the branch does
not have an ATM facility, which is one of the important aspects of banking services in
modern times.2

Fig. 1 Front entrance of Central Bank of India, Gulbai Tekra

2

All pictures have been taken and reproduced with the permission of the Branch manager

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CASH COUNTERS
TO LOCKER
FACILITY

TELLER

WAITING AREA

LOAN OFFICER

ACCOUNTS
OFFICER

BRANCH
MANAGERS
OFFICE

SECURITY GUARD

Fig. 2 Branch Layout

As seen above, the waiting area seems inadequate and its presence in front of teller counter
leads to crowding of the space immediately following the entrance. Also, the area housing
forms is obstructed by waiting area and hence, causes issues.

Recent Developments
Changing Customer Profile With the increase in number and effectiveness of
Internet Banking services offered by Central Bank of India, the number of customers
visiting the branch has reduced over the past few years. Also, more youth and young
professionals have been attracted to the branch due to the locational ease coupled

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with facilities like electronic transfer. Regular physical visitors are elderly and people
seeking loan from Central Bank of India

Electronic Banking services The bank has been increasing its presence in the ITES
space by providing electronic funds transfer facilities and online bill payment. This
has reduced the operational load and cut down on queuing up of customers during
peak periods by cutting down on the number of requests for DDs and cheque
deposits.

Service Package
The Gulbai Tekra branch of Central Bank of India services approximately 6000 customers per
month and is a pretty well-known branch in the locality. The branch manager is assisted by 1
loan officer, 1 accounts officer, 1 teller, 1 cashier and support staff (peons / clerks). The
branch manager indicated that the branch will soon shift to a new location which also
houses an ATM facility. The branch offers various services including teller services, loan
facility, cash transactions, locker services etc. Customer profile varies from individuals
opening savings account to small corporates with current accounts.
The number of employees in the branch is low due to the moderate size of customer base.
Customers are centrally employed and trained and put into speciality roles (Teller, loan
officer, accounts officer etc.) in various branches. There is no provision of scaling up the
employee base during peak seasons like festivals or when educational institutes invite
admissions (leading to increased demand for loans).
Characteristics of service package:

Supporting facility As seen in figure 2, the bank branch houses all important
functions within one facility. Though there is crowding during peak hours, balking
usually doesnt happen. Waiting area has been provided for customers; however it is
not very comfortable. The branch is electronically connected to the central network
and employs latest IT systems.

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Explicit services The bank provides various readily observable services like locker
service. In a retail bank, the service package has an integrated characteristic and
customers usually do not change loyalty because the service package lacks in one or
more services as long as the bank offers the commonly demanded services. This also
means that bank can gain on some services while lose on others.

Implicit services A retail bank needs to have friendly staff and offer adequate
security owing to the nature of service. It was observed that employees at CBIs
Gulbai Tekra branch are very cooperative and supportive in helping customers with
their banking needs.

Information There is huge amount of information with a bank in terms of

employee demographics, financial records and this needs to be processed at fast
pace both in real-time as well as in background to ensure smooth operation. CBI
offers a lot of information on its website to enable customers to quicken the process.

Organizational Vision
Corporate vision3
To emerge as a strong, vibrant and pro-active Bank/Financial Super Market and to
positively contribute to the emerging needs of the economy through consistent
harmonization of human, financial and technological resources and effective risk control
systems.
Salient Features of Corporate Mission

To transform the customer banking experience into a fruitful and enjoyable one.

To leverage technology for efficient and effective delivery of all banking services.

To have bouquet of product and services tailor-made to meet customers aspirations.

https://www.centralbankofindia.co.in/site/MainSite.aspx?status=2&menu_id=148

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From the banks corporate vision and mission statement, it can be inferred that the bank
realizes the importance of customers and utilizes social models and technology to tailor
services to customer needs and to provide an enjoyable experience.

Skills and Attitude of Service Personnel

Friendly nature A bank officer / teller needs to be attentive, responsive and
friendly in his demeanour. Often, the customer might come across as unfriendly and
rude, but the service personnel need to be patient, show appreciation to the issue
and effectively assist the customer to his banking needs. As a famous quote goes, It
never fails to amazes me how the most simple gestures, such as a smile, hand-shake
or a kind word, can change or brighten up someone elses world.4

Communication Skills In a state like Gujarat, where there is diversity in terms of

Gujarati, Hindi and English speaking people, the bank personnel need to be
multilingual so as to effectively communicate with customers, colleagues and other
stakeholders. In addition, a bank officers appearance, articulation (to explain
banking procedures in simple terms) and the ability to prevent inundation of
technical banking jargon to customer can improve the communication
effectiveness.5

Relationship building By engaging a customer through friendly talk, a bank

manager or officer can develop a long term relationship with the customer. This
establishes trust and builds customer confidence in services and solutions offered by
the bank. This helps in customer retention and increasing customer base through
word of mouth publicity.6

Solution Oriented The service personnel should be thorough with the products
and services of the bank so that he can effectively assist the customers with their

http://www.searchquotes.com/quotation/It_never_fails_to_amazes_me_how_the_most_simple_gestures%2
C_such_as_a_smile%2C_hand-shake_or_a_kind_word/413240/
5
http://www.ehow.com/way_5766818_customer-service-skills-bank-employees.html
6
http://work.chron.com/customer-service-skills-bank-employees-6700.html

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needs. Regular training programs and working with managers to keep oneself up to
date can arm a service personnel with an arsenal of information.

Customer Demand and Alteration

The bank typically operates from 10:30 AM to 3:30 PM and employees observe a half hour
lunch break between 1:30 PM and 2:00 PM. On an average, 60-70 customers visit the
branch every day with customer aggregation happening between 10:30 AM to 1:30 PM.
Demand surges significantly near lunch hours as customers are free from work and business
customers typically visit the branch at this time. The following diagram shows the average
customer build-up.

Customer Buildup Diagram

12

Customer Buildup

10

Customer arrival at 10/hr

Service at 20/hr

Customer arrival at 20/hr

Service at 15/hr

8
6
4
Lunch

2
0
10.00

11.00

12.00

13.00

Customer arrival at 10/hr

Service at 15/hr

14.00

15.00

16.00

Time (In 24 hour duration)

Fig. 3 Customer buildup (Inventory) diagram

As specified above, the profile of customers physically visiting the branch is changing due to
arrival of internet banking services. However, elderly are skeptical in utilizing these services
and they require greater attention and engagement from service personnel leading to
increased service times.
Even with considerable utilization of technology and ITES, influencing demand remains a
challenge for the bank. To reduce operational workload at the branch, the bank can provide

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lower service rates to online customers. For e.g. a customer requesting for funds transfer at
the branch will be charged much more than a NEFT transaction. This will lead to self-service.
Also, by scheduling appointments for services like loans and locker services, the bank can
reduce waiting times.

Delivery System Analysis

Teller Transactions

The bank has one teller for cash requests, preparing financial instruments like DD,
Bank draft and pass book update. The average number of customers availing teller
services per day is 60.

The average processing time is 4 minutes leading to 15 customers being served per
hour. From customer buildup diagram, it can be inferred that there is a waiting
capacity of 10 customers (balking doesnt happen till then).

Queuing Model = M / M / 1 / 10 / / FCFS

Appendix A provides average queue length and waiting time for cash transactions.

Customer fills
deposit or
withdrawal form

Queue

Customer receives /
deposits cash

Teller verifies
details

Cash
counter
queue

Fig. 4 Process flow diagram for cash transactions

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Customer fills
cheque deposit
form

Queue

Teller verifies
cheque details

Money credited to
beneficiary

Cheque
returned

Local / Outstation
clearing

Fig. 5 Process flow diagram for cheque processing

Locker Transactions

A customer is accompanied to locker area by bank employee and there is one server

On an average, the bank sees 4 customers per hour for locker transactions and they
spend 20 minutes in the locker area leading to a service rate of 3 customers per hour

Locker customers have to wait in same queue as other customers

Queuing Model = M / M / 1 / 10 / / FCFS

Verification

Locker
queue

Customer leaves

Fig. 6 Process flow diagram for locker transactions

Officer
accompanies
customer

Customer uses
Locker

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Loan transactions

Loan is a high-engagement service and is handled by a loans officer and branch

manager. There is significant due diligence involved in verifying the customer details
leading to an average service time of 3 to 15 days depending on nature of the loan.

On an average the bank sees 15 loan customers per month which amounts to an
arrival rate of 0.5 customers / day

Queuing Model = M / M / 1 / / / FCFS (No queue for loan customers)

Customer completes
loan application

Loan
processing
queue

Money credited

Background check

Loan sanction

Fig. 7 Process flow diagram for loan transactions

Promotion of self-service / technology

The following measures can be adopted to encourage use of technology and self-service:

Lower fees on online service as compared to similar services being offered physically
within the branch. E.g. Customers of Deutsche Bank can apply for a demand draft
free of cost through Internet Banking which is delivered to their mailing address. By
charging the in-branch customers for the same, customers can be encouraged to use
Internet banking services

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Cheque drop box facility is not available in all branches of the bank. Thus, elder
citizens and business customers utilize teller time to deposit cheques, which comes
at a premium (waiting). By installing drop-boxes within the branch / ATM locations,
bank can promote self-service.

The bank can provide simplified video tutorials on its website to promote the use of
technology so that all kinds of customers can equally utilize Internet / Phone banking
services.

There is still a significant number of customers requesting for withdrawals through

the cash counters instead of utilizing the ATMs. This either happens due to
unavailability of ATMs, cash run-out in ATM or security concerns. By addressing
these issues, the bank can reduce workload on one service.

Evaluation Parameters

Average service time for teller services Provides insight into the competence of
personnel and optimality of personnel numbers

Average loan processing time Provides insight into the service provided to highengagement customers

Customer buildup Shows the ability of the bank to handle peak demands and
prevention of balking

Percentage of customers opting for Internet Banking services Provides insight into
the confidence of customers on reliability and safety of technology

Employee retention Provides information about employee satisfaction, employee

workload which translates into better customer service

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Recommendations

Absence of ATM ATM is one of the prime ways of reducing human workload by
allowing self-service for basic banking operations. The absence of ATM facility at
Gulbai Tekra branch prevents such reduction. A new ATM should be installed either
within the bank premises or in a nearby area.

Promotion of online services As indicated above, by providing lower service

charges on online transaction, the bank can promote self-service and utilize
technology to reduce wait times at the bank.

Space utilization - The space between teller window and seating area is limited (As
seen in figure 2). By using chairs instead of couches or by removing the seating area
altogether, crowding of the teller area due to queue formation can be prevented.
However, there is a trade-off on the comfort of waiting customers. The manager has
indicated that the new facility will have better waiting area and space utilization.

Loan transactions The average processing time of loan transactions is very high.
This is primarily because of the due diligence process. By outsourcing this process or
utilizing shared credit history, loan processing time can be cut down.

Locker services Usually banks do not make a lot of money or lose money on locker
services. The high wait times lead to customer dissatisfaction. By employing
scheduled appointments (through internet / phone), waiting times can be nullified
leading to better utilization

Cheque drop box facility This model has been successfully used by private banks
like ICICI and HDFC. By providing drop box services at convenient locations, cheque
transactions at the bank can be processed faster as customers do not have to wait in
line for teller to get free.

Visibility of forms Commonly used forms like deposit, withdrawal, demand draft
requisition etc. should be readily stacked and should be kept in a corner along with a
writing space in the form of a mounted table.

Customer service training The bank should regularly organize customer service
and technology trainings for the bank employees in order to keep them up to date as
well as build soft skills in better servicing bank customers.

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Quick Scan Audit

Service concept
1. What are the various services offered by the branch?
2. What is the average time to provide each of these services?
3. What are the various stages in provision of each of these services?
4. Are there any facilities offered by the competing banks / branches that are not
available at your branch?
5. Are there any services which bring significantly higher revenues/profits than others?
6. What is the number of bank employees providing each of these services?
7. Are there any new services in the offing or plans to automate operations?
8. Are there any services which do not require physical presence of customers or
intervention of bank personnel and lead to self-service?
Customer profile and requirements
9. What is the typical distribution of customers across various services on an average
day?
10. What are the average waiting time / number of customers waiting to avail each kind
of service?
11. What is the demographic and economic profile of customers visiting the bank?
12. What kind of amenities, seating facilities are available to customers waiting to be
services?
Operating conditions
13. What are the operating timings of the branch?
14. Are there any peak hours when the customer arrival is extraordinarily high?
15. Does the bank offer services when customers would probably be free weekend /
lunch hours?
Internal Processes
16. What is the feedback mechanism employed by the bank for customers to bring
forward their complaints and suggestions?

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17. Does the bank identify high value customers and provide differentiated services?
18. What is the banks strategy to build up customer base?
Service Personnel
19. How many employees does the branch employ?
20. What is the cost of employing different kind of personnel?
21. What is the organizational structure?
22. What are the various incentive schemes for the employees?
23. Has there been any change in number of employees in the past few years?
24. Does the bank organize training program for the employees to keep them up to date
in customer service and banking skills?
25. Does the bank employ latest technological facilities as per the industry norms?

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APPENDIX A Queuing Model Analysis

Teller transactions
Average number of customers waiting (Nq) = 2.329
Average balking = 0.221 per hour
Average waiting time (Tq) = 0.2
Locker transactions
Average number of customers waiting (Nq) = 7.403
Average balking = 1.03 per hour
Average waiting time (Tq) = 2.495

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APPENDIX B Inside view of the bank

* Even though the picture above shows presence of two computer terminals in the teller
area, the bank manager indicated in an interview that on an average, one teller operates.