Customer Efficiency, Channel Usage, and Firm Performance in Retail Banking

Innovations in technology and service design have increasingly enabled firms to incorporate self-service technology to augment or substitute for “traditional” employee-provided service channels. Although it is clear that self-service can reduce cost, less is known about how customers utilize self-service channels in a multichannel service delivery system and the resulting impact on firm performance. An important aspect of service operations is that customers are coproducers of the service. Thus, the performance of the delivery system and customers' use of service channels can be affected by customers' own efficiency or productivity in service coproduction (customer efficiency). In this paper, we utilize prior theoretical frameworks in service operations and economics to hypothesize relationships among customer characteristics (especially coproduction efficiency), channel utilization, and firm performance. We then test these hypotheses using panel data from a large retail bank. Overall, we find that higher customer efficiency in self-service channels is associated with greater profitability and has a complex relationship with customer retention and product utilization.