Sophisticating business performance management for banks: using data envelopment analysis on business process level

Crucial bank inefficiencies are rooted in the bank's production processes. From an operations perspective, the assessment of inefficiencies, especially in highly standardised processes, should lead to better directed action for improvement and hence efficiency enhancement. This paper presents a new application of DEA for the measurement of business process efficiency. In our case study, the efficiency of the securities settlement and clearing process of a large European bank is analysed. It is a unique, large-scale dataset containing actual production data of this bank. Two different input-output models are used, representing most important objectives of operations managers in process performance analysis. The results show a high variance in process performance among different perspectives of analysis, indicating production inefficiencies in the process execution.