Hub & Spoke Branch Set up for a National Bank in Tanzania
A Case Study for an optimized distribution strategy
Client Challenge
The client struggled with managing back-office operations across multiple regional branches. Primary issues included process inefficiencies, long queues in banking halls, and bureaucratic delays in processing large loans. Additionally, there was a need to centralize back-office activities to improve service quality and reduce operational costs. The challenge was to streamline these processes without impacting customer contact, ensuring proximity for ATM replenishment and other cash activities, and managing more complicated financial products.
Response
The response was a comprehensive centralization strategy, starting with a feasibility study for the Kilimanjaro Region. The study proposed centralizing back-office operations to three distinct support levels:
- Level 1: No proximity required. Support provided by Zonal/National Service Centre or Head Office for transactional processes such as back-office suspense account reconciliation and payroll.
- Level 2: Regional proximity required. Includes Level 1 support plus assistance with more complex financial products (e.g., SMEs, corporate loans, marketing).
- Level 3: City proximity (<20 min) required. Includes Level 1 and 2 support plus additional assistance for nearby branches with overriding issues, ATM replenishments, and other proximity-dependent activities.
The response included setting up a pilot phase to analyse the impact of centralization at regional and national levels. The centralization strategy involved creating Zonal Service Centers to support various branch types with transactional services and more complicated financial products. This approach aimed to free up staff for innovative distribution channels, save costs, and improve current quality and service.
Outcomes
The centralization initiative led to several positive outcomes. It enabled the client to streamline their back-office operations, resulting in significant efficiency gains. The pilot phase demonstrated that up to 80% of back-office activities could be centralized . This centralization freed up staff for other activities and improved the overall service quality. Additionally, the creation of Zonal Service Centers provided specialized support for different customer groups, enhancing customer satisfaction . The project also laid the groundwork for future business process outsourcing opportunities, further increasing operational efficiency and service levels.
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