Term Report Om Final

1.

Executive Summary

Almost every infrastructure manager and most analysts will acknowledge the importance of ensuring that adequate capacity is planned for and provided. And there's nothing inherently difficult or complex about developing a sound capacityplanning program. So why is it so seldom done well? During the course of preparation and gathering the data we have paid the frequent visits of 4 branches located in Hubs of city’s economic activities. In our research we consider the 10,000 customers as a peak capacity, hence we have used the capacity measures available in the books by applying the information we have obtained by visiting various Bank’s branches. Summarized result of our research is as under: Service

Customers

Staff Req.

Equipments/Fixture Requirements

Full Day Banking Consumer Finance Corporate Finance Investment Banking Miscellaneous Total

7900

68

ATMs 5

Counters/Tables 68 Counters

PCs 68

Photocopiers 7

300

17

-

17 Tables

17

3

300

34

-

34 Tables

34

4

300

34

-

34 Tables

34

4

1200 10000

78* 231

5

48 Tables 201

48 201+29=23 0

5 23+6=29

*Includes Supervisory, Branch Management and Support Staff. The total space requirements are tabulated below: Covered Area: Open Area: Total

24100 Square Feet 45000 Square Feet 69100 Square Feet

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3.

Capacity Planning in Bank dealing 10,000 Customers per day

In the given scenario, in which we have to research and develop a capacity plan for bank branch dealing with 10,000 customers per day. The volume of customers is too huge, we have tried to find out any branch in metropolis to have such customer’s ratio, but we did not find it even in the Pakistan’s Wall Street (I.I. Chundrigar Road). Financial facilities are not ordinary buildings, and hence bank designs cannot be ordinary either. Following some factors, which we have considered before measuring capacity. 1) Banking is now become a technology-driven business, products and services are marketed through computers and telephone instead of inviting peoples to branches. The ready and easy availability of ATM is also taking away hefty part of routine customers (Drawers) from Branches. It seems to us, that the future prospectuses of branch banking are limited. 2) Banks able to make large investments in technology gain an unparalleled ability to reach customers nationwide that also create the need to spread costs over a broader customer base, that is why they are more reluctant to spread their customer base, now peoples are highly encouraged and welcomed for adopting banking services. 3) Most major banks now offer telephone banking, in which current accounts and deposit accounts can be operated over the telephone. The attraction from the banks' point of view is that considerable cost savings can be achieved. Accounts can be operated from large call centers in areas of low employment costs, dispensing with the need to maintain expensive networks of branches. Recently, internet banking has been expanding rapidly - this reduces further the costs involved in banking, largely by reducing further the number of staff required. 4) Lower profit margins in retail banking encourage moves into wholesale business. 5) Long wait times can have a dramatic impact on wealthy customers. This was clearly demonstrated by comparing two branches on the west coast only a few miles apart. The first branch boasts affluent customers whose deposits are six times the average at 65,000 per customer. The second branch has a more average deposit rate. 4.

Source of Information

During the course of preparation and gathering data for report we have visited Following branches and meet their senior staff to acquire specific knowledge for bank operations, procedures, practices to deal customers and to find out the average daily turnout.

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4.1 Primary Source of Information The visits and meetings are therefore our primary source of information, as we have discovered the daily average turnout of branches we have visited. 1) Bank Al-falah Customers/Day 2) Soneri Bank Customers/Day 3) MCB Bank Customers/Day 4) HBL Customers/Day

-

PECHS Branch

500-650

-

Gole Market Branch 450-550

-

Burns Road Branch

-

Cloth Market Branch 2500-3000

850-1200

4.2 Secondary Source of Information Besides, our visits and meetings, we also would like to acknowledge the tremendous amount of help and useful information provided by the course textbook. We have also visited the websites of all major national and multinational banks operating in Pakistan to acquired information about the services offered by banks in Pakistan. 4.3 Authentication of Data The data supported our research report is authentic, because it is gathered from best available and authentic resources. 5.

Estimating Capacity Requirements

No single capacity measure is applicable to all types of situations, as far as banks concerned, they would have one capacity measure for processes that serve customers with B2C (Business to Customers). Before, involving in capacity planning we have assessed the core services for which customers reach to a Bank Branch. That is given in following table. We have also observed the customer inflow by analyzing it in various branches and then distributing the inflow as per following Table. Major Product Service Includes Full Day Banking -do-do*ATM Consumer Finance Corporate Finance

Distribution %age Cash Withdrawal, Deposits, 27% Lockers, Cheque Clearance 22% Utility Bills Payments 17% Cash Withdrawal through 13% ATMs Cards, Instant Financing, 3% Home Finance, Auto Finance Working Capital Loans, Term 3% Loans, Trade Finance Services and Investment

Distribution Customers 2700 2200 1700 1300 300 300

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Banking Investment Banking Includes all activities banks 3% used to perform in IPOs of Government or Private sector securities. Miscellaneous Quires etc. 2% **Customers walkout 10% without being serve Total: 100%

300

200 1000 10000

Hence, the maximum customer inflow (i.e. 10,000 per day) distributed as per above analysis: *

Cash withdrawal through ATM takes times from 1 minute to 2 minutes, hence here we have taken maximum time of 2 minutes.

**

As we have learned from Managers of banks where we have visited, that 5% to 10% of banking customers walk out of the branch without being served our they come to bank for non productive reasons like changing currency notes or only for change; hence we have taken maximum %age of that type of customer here.

Overall, customers are less satisfied with customer service at the longer wait times in line and longer transaction times. Therefore, in our study, we have adopted "focus on five" efficiency, that means “Keep wait times under five minutes; make sure no more than five people are in the teller line; and complete transactions in less than five minutes. 5.1 Human Resource Requirement We have analyzed only the customer concerned HR requirements, we are not thoroughly involved to analyzed supervisory/support staff requirements, and supervisory/support staff requirements only presented as roughly estimation , for detail please see Annexure “A”. 1) 2) 3) 4) 5) 6) 7) 8)

Cash Withdrawal/Deposits Cheque acceptance for clearance Utility Bills payments Consumer Finance Business Finance Investment Banking Miscellaneous (Includes quires etc.) **Customers walkout without being serve

50 Persons 13 Persons 5 Persons 17 Persons 34 Persons 34 Persons 2 Persons 8 Persons 163 Persons 33 Persons 5 Persons

9) 10) 11)

Supervisory Staff 1 for 5 Branch Management Support Staff (Includes peons, security, and janitorial workers) 30 Persons Total 231 Persons ======================================== Page 4 of 9

5.2 Equipments Requirements 1) 2) 3) 4) 5)

ATMs Required Personal Computers Printers (231/5 = 33) Copiers (231/10 = 23) Fax

4 260 (Includes 29 Standby) 37 (Includes 4 Standby) 29 (Includes 6 Standby) 20 (Includes 6 Standby)

5.3 Capacity Decision Before, making any capacity decision we examine the dimensions of capacity strategy, by analyzing Waiting Line Models. The analysis of waiting lines is of concern to managers because it affects design, capacity planning, layout planning, inventory management, and scheduling. In following phrases, we discuss the usage of waiting-line models in our analysis. A waiting line is one or more “customers” waiting for services. A waiting line forms because of temporary imbalance between the demand for the services and the capacity of the system to provide the service. In Branch banking which is comes under service system and that may be described by the number of lines and the arrangements of facilities. In bank’s branch, there are multiple lines according to the services but there are one type of service facility arrangements that is Multiple-Channel Single-Phase System: All services demanded by a customer can be performed by a single-server facility. In single line design, customers are served by the first available server, as in the lobby of bank, like ATM, Cash withdraw/Deposit etc. as per following figure:         1) 2) 3) 4) 5) 6) 7) 8) 9)

| Service Counter 1 | | Service Counter 2 | | Service Counter 3 | | Service Counter 4 |

      

Cash Withdrawal/Deposits 2,700 Customer per day Cheque acceptance for clearance 2,200 Customer per day Utility Bills payments 1,700 Customer per day *Cash Withdrawal thru ATMs 1,300 Customer per day Consumer Finance 300 Customer per day Business Finance 300 Customer per day Investment Banking 200 Customer per day Miscellaneous (Includes quires etc.) 200 Customer per day **Customers walkout without being serve 1,100 Customer per day Page 5 of 9

-----------------------------10,000 Customer per day There should be 236 Desks/Counters/ATM to serve customers. Average per Hour Arrival of Customer

=

10,000 Customers 236 X 4.50 Service Hours

=

10,000 1062

=

9.41 ~ 10

=

10 Customers/Hour/Counter

5.3.1 Service Area Capacity To figure out what amount of space each counter and associated customer line and other facilities will take, we have following estimations as a result of our research. Counter Space :

4X6 Square Feet

Total: 24 Square

*Customer Line (10 Customers):

2X20 Square Feet

Total: 40 Square

Feet Feet Total: 64 Square Feet 236X64 = 15104 ~ 16000 Square Feet Capacity will be required in Service Area * Estimating that each customer will take 2X2Square Feet space in line. 5.3.2 Non Service Area Capacity a)

Washrooms/Common rooms etc. *Non Service Area (Washrooms, Common rooms etc) Wash Rooms

12X12 Square Feet

Total 144 Square

Common Rooms

30X30 Square Feet

Total 900 Square

Feet Feet 12 Wash Rooms each having measuring 144 Sq’ = 1728 ~ 1800 Sq’ 2 Common Rooms each having measuring 900 Sq‘= 1800 ~ 1800 Sq’ Total = 3600 Sq‘ capacity will be required. *It is estimated that 8 Washrooms needed for customers and 4 for staff and 2 common rooms for male/female staff. b)

Passages Page 6 of 9

According to our discussion with Bank Managers, that passage usually takes almost half service area, thus, we have take half service area that is = 4500 Sq’. c)

Car Parking (For Customers/Staff) It is calculated that in average 2223 customer (Equation - 1) will reach bank in an hour, and in average they are arriving at the rate of 38 Customers per minutes (Equation - 2), as average customer will take 2:30 Minutes, hence 15 customer departure per minute (Equation - 3). Eq. 1 10,000 / 4.5 = 2222.22 ~ 2223 Customers per hour Eq. 2 2223 / 60 = 37.50 ~ 38 Customers per minute (Arrival) Eq. 3 2223 / 60 X 5 = 7.41 ~ 8 Customers per minute (Departure) Assuming that 60% Customers have Cars, 25% Customers have motorcycles, and remaining 15% are pedestrians. Customers having cars = Customers having motorcycle= Pedestrian Customers =

6000 2500 1500

Hence considering the gap between arrival and departure it is calculated that we need space of 18 cars every minutes (60% of 30 = 18) and 8 motorcycles every minutes (25% of 30 = 7.5~8). Roughly estimating we need space for parking 200 Cars 100 Motorcycles, that will be around 30000 Sq’. For the parking of Staff and other vehicles (i.e Cash delivery vehicles) we have estimated 10000 Sq’. Summary Service Area 16000 Square Feet *Wash/Common Rooms 3600 Square Feet Passages 4500 Square Feet Car Parking (Customers) 30000 Square Feet Car Parking (Staff etc.) 10000 Square Feet Green Belt 5000 Square Feet Total 69100 Square Feet / =================================== Covered Area 24100 Square Feet Open Area 45000 Square Feet Total 69100 Square Feet =================================== •

Basement will be used as storage, strong rooms and lockers rooms.

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•

1st floor will be used as non service area, (Office Area) cubicles of supervisory staff, auditors, and other staff will be accommodated.

For detail drawing please see Annexure “B”.

5.3.3 Locating / Positioning Different Service Counter Please see the Annexure “C” that shows layout the location and position of difference service counter. 6.

Conclusion by Researchers.

In subject report, we have to assess the capacity planning affairs for a Bank branch involve in dealing with 10000 customers per day. The volume of customers is too high we have tried our best possible efforts to find out such branch in metropolis that deal with 10000 customers per day, but our efforts in vain. In the current competitive banking landscape, banks cannot afford to miss any sales opportunities. Measuring customer behavior, including wait times and line abandonment is the first step in analyzing the bank's performance in customer retention. This quantitative approach also provides the yardstick for measuring future performance enhancements and providing a return on the bank's improvement investments. Good working facility should meet two criteria: it should follow good business function, making it easy to conduct business there, and it should be a comfortable place to spend half your life. A good financial facility, however, poses even greater challenges. It must be flexible enough to respond to: * * *

Rapidly changing operational requirements Highly competitive retail environment New products, services and technologies that will continue to change the financial industry

But, during the course of preparation we have learned lots of useful information about capacity decisions, as well as banking operation. It is noteworthy to mention that, strategic decisions like capacity and layout planning for a facility could not be prove fruitful for longer period of times until and unless it is supported by the comprehensive knowledge of procedures and processes of the facility. In the end we are thankful to our course instructor Cdr. (Retired) Azhar Nisar, who share and provides precious knowledge through-out the course, and with out the precious guidance we can’t be able to complete that research effectively and efficiently.

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