The Heterogeneous Technology of Retail Banking
Kent Eriksson
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ABSTRACT
Retail b a n k o p e r a t i o n s have i n t h e l i g h t o f recent developments in technology, deregulation and market become ittore comnlex. B,anks need to handle both standardized dnd unstandardized services which leads to differentiation between units. This paper presents a framework for analysis of technologies and work flows in banks.
1. Introduction
In his classical work Thompson (1967) mentions banks as mediating technologies, where the bank mediates between several, diverse depositors and a more homogeneous population of borrowers. This is a highly simplifred picture of the bank, which was only recently replaced by more complex views. This paper follows the latter tradition by focusing on the complexity of the mediation performed by the bank organization. The purpose is to elaborate on what differentration might be expected from the complexity of the services and work procedures.
This Will result in a number of areas where differentiation is expected to emerge. These areas Will later be empiritally investigated
through aresearch design earlier applied by Lawrence & Lorsch (1967).
The prime influence on this work is Engwall(1978), which employs organization theory to anaiyze newspapers. More recently Engwall (1990) developed a bank model which focuses on the complexity of the entire bank. The present paper adopts a narrower approach and dwells on the complexity of the retail part in a bank. For the sake of simplicity, tustomer relations are in focus when the retail bank is discussed.
2. Bank Services
Bank se~viccs havt rccently becn divided in segments ranging from
highly automated cards to advanced advisory systems. According to
Scherer (1985) there are feur main ways to identify product
differentiation: the possibility of locating products conveniently for the
tustomer, good service, physical differentes in products, and image dif-
ferentiation (i.e. advertising etc). These four categories were primarily
developed for manufacturing organizations, when they are applied to
vice. The heart of the banking service would, in Scherer’s terms, include finantial products and their related activities. The characteristics of a bank service change over time. An obvious example of this is a credit card where the applitant must have extensive contact with the bank.
Once the tustomer has received the card he need not communicate directly with the bank. Another example is a real estate loan where applications are scrutinized thoroughly. But again, once the loan is ap- proved the recipient enly pays mortgage and interest four times a year.
These examples all point to different leveis of service standardization in banking. Some services are standardized throughout, such as tustomer access to automated teller machines (ATM). Due to the variation in stan- dardization among the activities related to a particular service, it is not easy to classify a service as either unstandardized or standardized.
Roughly it may be said that standardized services are performed in a similar way several times, and without changes in material, knowiedge etc. Unstandardized services on the other hand vary in materials, know- ledge, performance etc. The important point is that standardized and un- standardized services are handled differently by the 0rganization.l
The tustomer relations are analyzed by breaking the bank services down into parts, so that the bank is viewed as engaged in different activities. This view breaks up a service into different activities, for in- stance of a deposit account into order of account, examination of client, deposit, and despatch of balante report.
3. Dimensions of Technology
‘+ i Bank service is performed by a workflow. Bakke (1959) defines i. .Sikflow as the pioduction and distribution of the output.2 The work- iaX~w in retail banks ;an be defined as consisting of (1) activities into tie LWIX, (2) processing and (3) activities out of the bank. The line between
! ünstandatdized services mav become standardized over time, but new services emerge and the division inta standardized and unstandardized services rP,nains. For ar,alytical purposes two service lev& are &scusscd_ In redity,
’ .:“irver, ser&-- rallge on a continuum from standardized to ynstandardized.
2 Ihe workflcws are then supported by administra:ive processes. Argyris
(1934) r~,n~kcd [hat bank managers are invoivec! m the workllow pro_ eis :: :
greater extent than in other businesses, whiih indicates a close connection
between administration and the production workflow.
activity into the bank and processing is somewhat diffuse. When a clerk fills out a form in co-operation with a client, for example, this is an activity into the bank while filling out a form without the client is proces- sing.
Each workflow Will be analyzed according to the nature of the work processes performed and their impact on struttural factors. The literature on how the technology
usedin workflows affects structure is extensive.
Scott (1981 pp. 207-233) considers it the most important of the more
“internal” struttural determinants. Hall (1987, pp. 105-110) and Fry (1982), in reviewing empirital work, find support for such connections.
The importante of other factors is not denied, but for the present purpose technology is a sufficient tool.
Scott (1981, pp. 208-212) carried out a review of how technology concepts have been used and found two important aspects. First, there are differentes in technology for stages of workflow. Setondly, there are dif- ferences as to where the level of analysis lies; e.g. the materials, opera- tions and knowledge involved in the workflow. All aspects seem relevant for banks.
Engwall (1978) defines technology as “the set of tasks by which in- put is acted on in order to produce output”. He uses an integration of Hickson (1969) and Perrow (1967) for a technology analysis. This integration includes:
- Operations technology, which concems the actions replaced by machines in workflow activities, and is subdivided into three categories:
a) Automation, meaning the extant to which human actions are re- placed by equipment.
b) Workflow rigidny, meaning the interdependence and inter- changeability of parts in the sequence of operations.
c) Finally the possibility to evahrate the operations petfornred in terms of the specificity of evaluation of operations.
- Materials technology, which concems the characteristics of raw material acted on:3
3 The raw material to banks is value and information.
a) How the organization understands the nature of the raw material.
bj The extent to which adjustment to the raw material is needed is analyzed as the variability of the raw material.
- Knowledge technology. which concems the complexity of the knowledge
medin the workflow:
a) the trumber of exceptional cases and
b) the analyzability of the problem in terms of the nature of the search process which is undertaken when exceptions occur.
The concepts are summarized in Table 1, which Will be used to distuss different technological aspects of each production activity.
Table 1. Summary of Technology Divisions per Production Activity
Technology Aspects
OEttzechnology
Workflow Rigidity
Materials Technology 1 Understandability
! Variability
i Exceptional I Zases 1 Analyzability
Source: Engwall(l978 p. 53).
In measuring these aspects automation, for instance, was broken down
into a) the leve1 of automation of the bulk of the equipment 01 :!re
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organization, and b) the most automatic piece of equipment used by an organization (Hickson et. 1969 p.382). It is difficult to obtain precise data on these measures. Similar operationalisations were used for all other technological aspects, which point to a fundamental criiicism of the technological school (Perrow, 1986, p. 143, Scott, 1981, pp. 208-212).
To estimate whether the different aspects of technology take high or low values, each production activity Will be discussed for the three stan- dardization leveis. If stores are high in operations technology, this part of the workflow can be treated in a standardized fashion. If the materials used are easy to understand and low in variability, this part of the work process is also standardizable. Finally, if the knowledge employed in the workflow is easy to analyze and has no exceptions, this part is standardizable. The indications given by technological estimates are related to where and what kind of differentes are expected to emerge.
Such estimates for first standardized and then unstandardized services follow below.
4. Standardized Services
A specific definition of standardized services is services the workflows of which involve a high degree of automation, high workflow rigidity and workflows which are easy to evaluate. The materials processed are easy to understand and do not vary much. There are few exceptions to routine procedures, and when such occur they are easy to analyze.
4.1. Example of a Standardhed Service
Figure 1 shows an example of a workflow for standardized services. The
start of the service is critical to the rest of the workflow, so it is used as
an elample. The despatch of mottgage and interest payments and other
following activities have been omitted. The flow description is a result of
interviews on several occasions and draws on literature such as Argyris
(1954), Davis (1989 p. 38), Dunn and Poe (1990), Mayer (1974), Reve
(1990), Shostack (1988 p. 97), Schmenner and Platt (1988) and
Valentine and Wright (1988 pp. 97-139).
Figure 1. Workflow at Medium Stanhrdization Leve1 (Exemplified by a simple loan)
activit in
to the 41ank prpcessing activity
activit out of the gank
tustomer request form filling
check client form filling
send to head quarters receive at head quarters register order of distribution open account
give tustomer access to account send service fee
As can be seen in Fig. 1 the tustomer generally requests the service, by taking the initiative in talking to the clerk. He then filis out a form and sends it to where it is processed. When the processing is complete the bank makes the account accessible to the client and sends a service fee.
4.2. Operations Technology
For a simple loan, the client Will fil1 out a form containing personal finantial information and deliver it to the bank. At the bank, the loan is processed by personnel using computers and communications technology to evaluate the client and administer the distribution of the service.
4.2.1. Activities into the Bank
The collection of loans through branthes is critical to the following
workflow activities and includes a considerable personal component. The
clerk generally informs the client about the conditions and helps him fil1
out a form.
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The activities into the bank are still characterized by personal contact and filling out forms. As far as operations technology is concemed, we may note that the degree of automation of standardized services is medium. Personal contact and form-filling are still tommon procedures to gather finantial services, although computers are being used more and more often. The workflow rigiditv is substantial for standardized services, sinte there only is one right procedure to follow. Similarly, the soecificitv of evaluation of operations is high for standardized services sinte they can be evaluated immediately. A form for account application is either filled out correctly or lacks information. A machine either works or does not.
4.2.2. Processing
For the simple loan, the credit evaluation is done by a lotal clerk who runs a routine check of creditworthiness. The cierk then approves the loan and sends the application to the headquarters where they open an account for the client.
For standardized services automation of processing is very high.
Computers are used for many of the standardized services, such as book- keeping of accounts and money transfer. The workflow rigidity for stan- dardized services is higb because procedures must follow a certain sequence. Tbc suecificitv of evaluation of operations is high for standar- d;zed services sinte they tonsist of routine activities which are tightly linked in a sequence. These activities are also linked under time con- straints.
4.2.3. Activities out of the Bank
The delivery of a simple loan involves the delivery of an account which is accessible to the client, a service fee, and a contract.
In terms of automation, we see that the distribution of standardized
services is to a great extent performed by machines, mainly printing and
enveloping. The workflow rigidity of standardized services is high. The
distribution involves delivery systems, some of which are external to the
bank. The heavy use of machinery and the need for stritt timing makes
the workflow of standardized services very rigid. The suecificitv of evaluation for standardized services is high, sinte they do or do not reach the tustomer and work.
4.2.4. Conclusion
Table 2 shows that standardized services are highly automated, workflow is very rigid, and that they are easy to evaluate.
Table 2. Summa
Stanakr%ed Services of Estimates for the Operations Technology of that the
Technology Aspects Operations
Technology
Production Activity Ac tivity in
to bank Processing
Activity F$iv& out
Automation medium high high
I Workflow
Rigidity high high high
Specificity of Evaluation
high high
/
4.3. Materials Technology
Computers are used centrally for handling information conceming asset and liability management or accounting. Asset and liability management concems short- and long-term liabilities, short- and long-term assets, wholesale funds and retail deposits (Harrington, 1987 p. 11). Accounting is the bookkeeping of account balantes and funds transfers.
4.3.1. Activities into the
BankThe simple loan is a traditional task which involves filling out of forms and perhaps some calculations to estimate the client’s cost.
In terms of uv of the material processed, standardized
services store high. The organization has no problem in dealing with the
tasks and information associated with standardized services. The variability of standardized services is low, sinte the types of services of- fered are uniform.
4.3.2. Processing
The processing of simple loans is done both manually and by computer.
Standardized services are classified as high in understandability.
How they are processed is easy to understand and computers are used extensively to rationalize them. The variability of standardized services is low. They seldom deviate from the standardized services offered, and consequently, the materials used in processing are stable.
4.3.3. Activities out of the Bank
The simple loan ends with the printing and delivery of account balantes, which is a task very familiar to the organization.
The understandability of activities out of the bank for standardized services is high, sinte they often involve physical distribution of services. Standardized services show low variability for similar reasons.
4.3.4. Conclusions
Table 3 shows that the material processed is easy to understand and
varies little over production activities.
Table 3. Summary of Estimates for the Materiais Technology of Standardked Services
Technology Aspects Production Activity Materials
Technology Activity in
to Bank Processnig Activi out Activity ofB arZ
Understandability high high high
Variability low low low
4.4. Knowledge Technology
Standardized services are typically treated by rigid routines and there are few occasions when these routines cannot be applied, sinte the bauk ramly customizes this type of standardized service..
4.4.1. Activities into the Bank
The simple loan requires low analytical ability or knowledge by the people employed. Both the routines and the competence for handling
these services are extensive. i
The number of excentianal cases in activities inta the bank is low for standardized services, sinte they deal mainly with services of which the organization has Wide experience. Routines are likely to solve any emer- gent problem. The analvzabilitv of standardized services is usually high.
The fiiancial complexity of a simple loan is very low.
4.4.2. Processing
The simple loan is processed according to well defined routiues and requires low analytical ability or knowledge by the people employed. If any problems arise, they Will probably be easy to aualyze and solve.
The number of excentianal cases is low for staudardized services
sinte they show simple search routmes. The analvzabilitv of standardized
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services is very high sinte, if an exception occurs, other standardized solutions Will be applied.
4.4.3. Activities out of the Bank
Activities out of the bank for the simple toan tonsist in the delivery of money and papers which tasks are easy to grasp.
Standardized services are judged as low in the number of exceutional cases The activities out of the bank often involve distribution which is -.
typically done by machines or the post office. In the analvzabilitv of the problem, the standardized services store high.
4.4.4. Conclusions
As shown in Table 4 there are few exceptional cases and the analyzability is high for the activities constituting the workflow. This implies that requirements on personnel are low, as regards their analytical ability and their knowledge. Sinte the activities require low analytical ability it is possible to break the service in parts which are well defined and treated routinely.
Table 4. Summary of Estimates for tbc Knowledge Technology of Standardized Services
Technology Aspects Knowledge Technology
Production Activity Activity in Processing
to Bank Activity Activity out of Bank Number of
~a;;sptional
Analyzability
low low
high high
low
high
I
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4.5. The Complete Technology Profde
Table 5. The Complete Technology Projile for Standardized Services
Production Activity Technology
Aspects Activity in Processing Activit out
to Bank Activity of Banl?
Operations Technology
Automation medium high high
Workflow Rigidny high high high
Speciticity of high high high
Evaluation
Materials Technology
Understandability high high high
Variability low low low
Knowledge Technology
Number of low low low
Exceptional Cases
Analyzability high bigh high
As shown in Tabbe 5 Standardked services are consistently high or low in estimates, and all indicate that the knowledge involved is familiar, that tbc materials processed are easy to handle, and that the organisation should have no difftculty in establishing simple work routines.
5. Unstandardized Services
Unstandardized services are defined as involving little automation,
having flexible workflows, and being difficult to evaluate. The materials
processed are difficult to understand and vary widely. There are also
many exceptional cases which are difficult to analyze.
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5.1. Example of an Unstandardized Service
Figure 2 illustrates a workflow for standardized and unstandardized services respectively. The flow description is a result of interviews on several occasions and draws on literature such as Argyris (1954), Davis (1989 p. 38), Dunn and Poe (1990), h4ayer (1974), Shostack (1988 p.
97), Schmenner and Platt (1988) and Valentine and Wright (1988 pp. 97- 139).
Figure 2. Workjlow of Unstandardized Services (Exemplified by a private placement advice.)
Activi in fy t o t h e a n k
Processing Activity out
Activity of the Bank
tustomer request
information gathering on client, placement alternatives and economic development professional evaluation
proposition to client purchase of finantial
services
notification of client
Figure 2 show the workflow of an unstandardized service. The client and adviser distuss what is to be done and the latter then applies his professional knowledge to make a proposition to the former. If the proposition is accepted he proceeds to execute it.
5.2. Operations Technology
Unstandardized services often involve user defined computer programs.
The adviser has considerable autonomy as to when and how to petform
his or her work.
52.1. Activities into the Bank
The private placement advice starts by the client determining what the area of advice should be. The adviser is bound to the situation as long as this interaction takes place.
Unstandardized services may use computers to effect an initial screening of advice. This is, however, a low degree of automation. Un- standardized services have low workflow rieiditu, sinte the adviser decides when to meet the client. The specificitv of evaluation of operations is medium for unstandardized services. The adviser’s work may be evaluated in terms of the number of initial tustomer contacts which lead to the provision of advice.
5.2.2.
ProcessingThe private placement advice is processed by the adviser who has considerable autonomy. He collects the information which he considers relevant and the methods for this may vary. He may, for instance, collect information himself or talk to a friend or colleague. The adviser can also affect the use 6f cornputers.
The unstandardized services involve a medium degme of automation sinte information is handled with the aid of computers. Unstandardized services have low workflow rieiditv sinte the adviser can arrange his routine as he sees fit. The snecificitv of evaluation of operations is negligible for anstandardized services sinte they generally cancern long periods and a high complexity of evaluation.
5.23. Activities out of the Bank
For private placement advice the activity out of the bank invofves the presentation of placement alternatives and then the performance of these services.
In terms of automation, unstandardized services store low. The
distribution of advice is done verbally in a meeting with the client and by
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filling out of forms which allow the adviser to do what he proposes. The unstandardized services are subjett to low workflow riaiditv sinte they determine when their advice is ready to present to the client. The mecificitv of evaluation for unstandardized services is low sinte these services often deal with future assumptions.
52.4. Conclusion
As we see in Table 6 stores on operations technology are generally low, which signifies that operations are ottly routinized with difficuhy. In ex- ceptional cases the processing is automated to a medium degree, due to the use of computers. The speciticity of evahtation is medium for activities into the bank.
Table 6. Summary of Estimates for the Operations Technology of Unstandardized Services
Technology Aspects Production Activity Operations
Technology Eti$;y in Processing
Activity A$itiy out
5.3. Materials Technology
The materiais used for the private placement advice comprise
information and assets. The information on finantial markets is
perceived by the organization as complex and changing. Tbc adviser can,
however, use similar placements for several customers, as long as the in-
formation does not change.
5.3.1. Activities into the Bank
For the activities into the bank the adviser and the client use computers to screen information on markets and instruments. The knowledge is needed to select the tight information in order to judge the potential of various instruments.
Unstandardized services require not only a high degree of customi- zation, but also judgement of complex finantial and legal information which makes them store low in understandability. Unstandardized services exhibit a variety of tustomer demands and information which must be considered. Unstandardized services GM, however, be treated in a somewhat similar fashion, when one service has been analyzed. The variabilitv is medium.
5.32. Processing
The private placement advice is processed by the adviser who selects and processes information regarding general market conditions, market in- struments, and available assets. C & C technology is an important aid to this work.
Unstandardized services involve both complels information and professional knowledge which makes them low in understandability. Un- standardized services require continual adjustment to clients’ needs as well as to financiaI environmental information. This adjustment Will be rapid in periods of changing regulations, or finantial tnrmoil, but may also be calm, so that these services are medium in variabilitv.
53.3. Activities out of the Bank
lhe private placement advice is presented to the ctient. The information used in the presentation is difficult to select and may change rapidly in periods when market conditions are very dynamit.
The understandability of the material of the unstandardized services
is low, sinte it contains much professional knowledge and assumptions
conceming information. It may als0 involve complex finantial services.
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The m of unstandardized services is medium, as mentioned above. At a given point, there are certain items ofinformation and a number of services from which to choose. They result in pieces of ad- vice.
5.3.4. Conclusions
Tabk 7 indicates that the materials acted on are difficult to understand but medium in variability. This implies that issues are fairly similar but very compiex.
Tabie 7. Summq of Estimates for the Materials Technology of Unstandardized Services
Technology Aspects Materials
Technology Understandability Variability
,
Production Activity Activity in
to Bank
Processing A c t i v i out Activity of Ban 2
low low low
medium medium medium
5.4, KnowleQge Technology
Unstandardized services may be really difficult, but usually cancern typical issues. In Sweden, where the leve1 of taxation is high, these issues are often related to tax planning in some way. Even though these issues are often similar they involve professional knowledge as well as infor- mation on markets etc.
5.4.1. Activities inta the Bank
The private @cement advice requires an introductory discussion whereby the client and the adviser obtain a notion of the problem. They then distuss how services might solve it and what the costs might be.
The adviser has to be both analytical and knowledgeable.
Unstandardized services store medium in the number of exceptional capes which occur. As mentioned earlier, much of the advice concems similar issues, although rapid changes can occur periodically. The analvzabilitv of unstandardized services is medium for similar reasons.
When exceptions occur, they can be difficult to process, but the activity into the bank is easier.
5.4.2. Processing
The private placement advice is processed when the adviser analyzes and plans the portfolio. This process requires professional knowledge and ac- cess to relevant information on placement alternatives and general economic conditions. Unstandardized services may involve computers and programs specialized for certain evaluations ( eg. tax planning).
The unstandardized services deal with exceptional cases to a medium extent in terms of both the tasks investigated and the search for
information conceming legal and economic aspects. The analvzability of unstandardized services is classified as low sinte really difficult excep- tional cases occur. These cases can invalve analysis of turbulent finantial markets or new laws or regulations.
5.43. Activities out of the Bank
The private placement advice here involves the placing of client funds (i.e. executing the proposed placement plan). This advice either results in the purchase of fmancial services on the client’s behalf or a single un- standardized service.
The number of exceutional cases is medium in unstandardized services sinte the advice given is often similar. In the ,t@vzabilitv of the problem the unstandardized services store low.
54.4. Coudusions
As we see in Table 8 the knowledge required for operating
unstandardized services is substantial. It is also difficult for the
organization to handle this knowledge.
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Tubie 8. Summary of Estimates for the Knowledge Technology of Unstandardized Services
Technology Aspects Rroduction Activity Knowledge
Technology Number of pa;;rtional
Analyzability
tAoctBi;il in
medium
medium
Processing Activit out Activity ofBan P
medium medium
low low
5.5. The Complete Technology Prof’ile
Table 9. The Complete Technology Profilefor Unstandardized Services
F’roduction Activity yscc;logY
gitiky in “ -qG&z
Operations Technology
Automation low medium low
Worktlow Rigidity low low low
Specificity of medium low low
Evaluation
Materials Technology
Understandability low low low
Variability medium medium medium
Knowledge Technology
Number of medium medium medium
Exceptional Cases
Analyzability medium low low
As we see in Table 9 approximately one third of estimates are medium
and the rest store low. Tbc materials operated on are not handled with
ease by the bank, and the knowledge involved when acting on the
workflow is difficult to acquire. The operations cannot be routinized because the organization has no firm grasp thereof. All this means that unstandardized services are difficult to handle in any other way than with a professional adviser who has considerable autonomy in ccnducting bis work.
6. Conclusions
The technological aspects of each production activity for both standardization levels are summarized in Table 10.
Table 10. Conclusions on Technological Aspects
Technology Production Activity
Aspects A ctivity in Processing Activit
to Bank Activity out of Jank Operations Technology
Automation medium
low 1)
high medium
high
IOW
Workflow Rigidity
high low S ificity
o Evaluation F”
high medium
high low high low
high low high low fiaterials Technology
Understand- ability
high low
high low
high low
Variability low low low
medium medium medium
Cnowledge Technology Number of
~3x~~tional
Analyzability
low medium
high medium
low medium
high low
low medium
high
low
The upper row contains technological estimates for standardized, and
e lower for unstandardized services.
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Table 10 shows a summary of technological aspects of activities in the workflows of standardized and unstandardized services. We shah now analyze the differentes which we expect to find between workflows generdted by standardized and unstandardized services. These are:
For operations technology
- Xbove medium automation for standardized services.
- The workflow rigidity and the specificity of evaluation show major differentes between standardization levels.
For materials technology
- The variability is low for standardized and medium for
unstandardized services.
- Understandability is high for standardized and low for unstandardized services.
For knowledge technology
- The number of exceptional cases is low for standardized and high
for unstandardized services.
- The analyzability is high for standardized and low for unstandardized services.
We now see that the division in standardized and unstandardized services shows major differentes, which is a very good reason for asswning that the division itself is appropriate. The more general implications from the technological analysis in this paper are that:
- there are major differentes between standardized and unstandardized services. They often oppose each other in technological estimates.
- Standardized services show more consistency in messures of workflows.
Tbc differentes in technology between the typical workflows indicate that the requirements for the personnel operating them Will be different.
Retuming to activities within workflows the following differentes
are found:
- Activity into the bank deviates in automation for standardized services.
- For unstandardized services activities into the bank seem to deviate most.
- Messures for unstandardized services are less consistently high or low. Approximately one third of the stores are medium.
- Processing by computers is far different from manual processing.
- The complexity of the service is most notable in activities in to and out of the bank.
The differentes in technology between workflows show consistent messures within workflows, particularly for standardized services. The deviation of activities into banks for unstandardized services emphasize the criticality of the start of the workflows.
Some of the technological estimates may be questioned, but as Engwall(l978, p. 67.) remarks: “The main purpose [...] has been to point out the mixed character of newspapzr technology [bank technology], and this conclusion Will not be altered even if some of the stores are
changed.” Thompson (1967) mentions three tommon technologies which illustrate the differentes that can occur in organizations:
- Long-linked technology, where input is acted on sequentially and with interdependence.
- The mediating technology, which links customers who wish to be interdependent. The mediating technology operates with clients distributed in time and space, so that standardized criteria are necessary.
- The intensive technology, where “a variety of techniques is drawn upon in order to achieve a change in some specific object; but the selection, combination, and order of application are determined by feedback from the object itself.”
Banks, then, use mediating technologies from a bird’s eye perspective.
Advanced unstandardized services may be mentioned as intensive technologies and standardized services as long-linked technologies.
A concrete description is that the standardized and unstandardized
services try to “buffer” their technical cores. The bank Will thus have two
service producing departments which look primarily to their own
functioning. This is illustrated by the very tommon division into retail
and wholesale banking. Services for retail customers are predominantly
standardized, whereas wholesale customers are usually offered unstandardized services.
Issues related to retail bank services should focus on aspects of operations technology. The routinization of standardized retail services is a crucial issue for retail banks. So, bank management should adjust back office routines to fit the requirements of the retail divisions as closely as possible. At the same time, Back office routmes should be flexible enough to handle the unstandardized wholesale services.
The raw materials to the retail and wholesale parts of the bank are different. The services offered by wholesale banks involves information and value, whereas standardized retail services predominantly deal with value.
Wholesale services involve knowledge technology to a greater extent than retail services. Personnel selection and training is a crucial issue.
Wholesale services are performed by personnel who are analytically trained and accustomed to acting without guidelines. Tbey are usually better educated than personnel handling retail services.
Differentes similar to those between wholesale and retail services can also be found between standardized and unstandardized retail services, or, forthat matter, any other organization offering services with similar characteristics.
In conclusion we see that variations in standardization levels require
a certain amount of differentiation. At the same time, the connections
between these levels talls for integration. These questions Will be
stipulated and empiritally investigated in subsequent papers.
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