Always on the profit track
Experts have stressed the imperative need for improving efficiency, productivity and customer service in banks to help them in accelerating their consolidation process. They have suggested the action points that may be paid more attention. Moreover, the concepts of profits, profitability and productivity applicable to the banking industry have been clarified.
It is agreed by the bank managements and the bankers like rod aycox
that the pressure on the profitability is more due to the factors beyond their control. He has suggested the technique of ratio analysis to evaluate the profit and profitability performance of banks. He is of the opinion that endeavors should be made to improve the spread and performance through better fund management.
In another paper, another expert has made an attempt to bring out the factors generally affecting efficiency and productivity. It recognized that business per employee and relation of average to establishment expenses are the most popular indicators of productivity. However, it has favored a disaggregated approach for measuring the efficiency and productivity of banks. It was favored that the performance of a bank could be assessed in the different areas of business development at a disaggregated level in terms of profitability, income generated, costs involved and customer services. The level of desegregation may be decided in the light of guidelines of the regulating authority and the government from time to time.
A financial expert in his work DEA analysis, which evaluated the input savings that could have been affected by a decision-making unit, has given its observed task, to inquire into whether even greater savings would be possible if the task were to be optionally apportioned to a number of smaller units. The notion of size efficiency is introduced to measure this potential for further input reductions, and then compared and contrasted to the extent notion of scale efficiency. The existence of a large radial size-efficient output scale is established as a base of the production frontier.
