SUNConferences, Southern African Institute of Industrial Engineering 2013

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Development of an Improved ATM Service Level Model
Annaleen Mouton

Last modified: 2013-06-29

Abstract


This report investigates ATM performance at a leading financial institution in South Africa, specifically the policy to maintain a 98% service level. Based on the findings, a new ATM Service Level Model is developed to determine optimal service levels for individual ATM, minimising cost and risk. The objective of any bank is to provide customers with good ATM service at the lowest possible cost. However, in the financial services industry, good customer service is especially difficult to define and any form of cash handling and distribution is extremely costly. Therefore finding the balance between cost and service is a difficult task. ABC Bank places more emphasis on maintaining good customer service than reducing costs. The current company policy is to stock all ATMs at a 98% service level.

It is recommended that ABC Bank replaces the 98% service level policy with the ATM Service Level Model as developed and explained in this report. The ATM Service Level Model is able to calculate an optimal service level for each and every one the ATMs belonging to ABC Bank. The optimal service level is one which will provide the service level actually required by customers at each specific ATM while simultaneously minimising the costs and risks incurred. This is done by differentiating between ATMs based on their individual characteristics and location. Each ATM is assigned an “Importance Factor” and an optimal service level is calculated using historical holdings-withdrawals data pertaining to that specific ATM. Implementing the optimal service levels calculated by the ATM Service Level Model, would result in massive savings for ABC Bank, whilst maintaining the level of ATM Performance.