Pay no mind to the Alan behind the curtain...

Doug Henwood dhenwood at panix.com
Wed Sep 29 10:07:09 PDT 1999


DANIEL.DAVIES at flemings.com wrote:


>Enrique Diaz-Alvarez wrote:
>
> >>What the hell is "banking productivity" anyway?
> >
> >Good question. No one really has any idea.
> >
> >Doug
>
>No, really, there is such a thing. Like if this year it only takes a call
>centre and a smart system to run a credit card operation, whereas last year
>it took 500 account managers. It is even possible to measure banking
>productivity changes through "stochastic frontier analysis" if you can
>specify the outputs (loans, deposits) and inputs (people, computers). The
>actual specifics of doing so, however, are pretty damn boring.

But the problem is that no one knows how to adjust banking or almost any other service for quality, which is part of what productivity is supposed to measure. It's hard enough for cars (in the 1960s, a larger engine was considered a quality improvement; in the 1970s, a smaller engine was considered a quality improvement). But banking? Stockbrokering? If web trading allows people to trade more cheaply, but their returns are worse, is that a quality improvement?

Doug



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