Improving productivity and performance

As new competitive models evolve within global markets, financial services firms face growing pressures to increase productivity and efficiency as well as to enhance service quality. To address these needs, the Center pursues primary research that seeks to improve institutional performance. The end result of these activities—substantive recommendations for changes in management techniques and operating practices—create real value for financial services companies.

Key studies, forums and programs

The Financial Institutions Center initiated its analysis of productivity with a major study of more than 300 commercial banks. The results of that landmark project have appeared in numerous academic papers and journal articles. In addition, the study has been widely covered in publications serving the financial services industry.

The link between value and process in retail banking channels is the focus of ongoing FIC research that is yielding significant insight into the interaction between technology and human resource management. This research indicates a clear need for financial services companies to align strategy and process with technology and human resource management in order to achieve gains in productivity and efficiency. Furthermore the research shows that banks with more consistent process performance develop more consistent.

Patrick Harker and Lorin Hitt of Wharton's Operations and Information Management Department have been developing useful insights into the role played by management processes in differentiating successful IT investments. In one research effort, they examined the organization of IT decision-making processes in financial institutions for evidence of differentiating success factors. As part of this study, they conducted a case study on IT project management that focused on the development of PC-banking services. That case study revealed that a general weakness in post-project evaluations led banking miss to miss critical benefits of real potential value in subsequent development efforts, including web-based banking.

Call centers—a major area of investments—are also being studied by the Center. To evaluate changing call center dynamics, the FIC launched Call Center Management to Create Performance Advantage, a research program involving a consortium of academics as well as executives from the banking, insurance and brokerage sectors. The scope of this multi-year program has evolved from an exclusive focus on call center productivity issues to a broader view of emerging sales and service delivery channels.

In addition, the Center expanded its research focus into new industry sectors with a multi-year investigation of the drivers of efficiency, performance and competitiveness in the life insurance industry. This research effort, based on field work and a comprehensive survey of more than 70 life insurance firms, features a unique application of Data Envelopment Analysis and other breakthrough methodologies in the study of the drivers of relative efficiency in the industry.

Efficiency and productivity are the subjects of periodic Center forums, such as the international academic conference on "The Performance of Financial Institutions" sponsored by FIC. The published proceedings of the conference are available from Cambridge University Press (London).