Commercial branch performance evaluation and results communication in a Canadian bank – a Data Envelopment Analysis application

In this paper, we focus on evaluating the performance of the commercial branches of a large Canadian bank using data envelopment analysis. Two production models are considered in this country-wide evaluation. One model, looking directly at resource usage, is most useful to the branch manager. The other model, incorporating financial results, is more geared towards senior management. We introduce non-discretionary factors to reflect specific aspects of the environment a branch is operating in, such as risk and economic growth rate of the region. Both input and output multipliers are constrained by incorporating market prices as well as managerial preferences, in order to get effectiveness measures. The cost-minimisation study led to valuable results pertaining to the performance of individual branches. Notable is the methodology introduced here that shows how to present graphical and numeric outcomes to managers. Gap maps, pie charts and target tables are produced for each branch to provide performance goals for the managers. Useful information has also been obtained at the district level. Output oriented models were analysed to reflect the Bank's recent emphasis towards growth in some areas.