APPLICATION OF QUEUING THEORY FOR OPTIMAL CUSTOMER CENTRICITY TO THE BANKING SECTOR IN KENYA

Abstract

Long queues and waiting times are common in banks, resulting in customer dissatisfaction and low customer retention. The study applied a descriptive research design to investigate queuing dynamics in a banking hall at a commercial bank in Kenya. A single server system (M/M/1) queuing model was used to estimate the average waiting time, system intensity, service time, and optimal number of staff during peak and off-peak periods (July). The study used secondary data on daily waiting times, service times, the number of customers, and servers for May and July 2019, 2020, and 2021 during working hours between 8.30 a.m. and 4 p.m. on Monday to Friday and 8:30 a.m. and 12 p.m. on Saturdays. Data analysis was done using R and Excel. The research findings indicated that the peak periods (May) recorded an average waiting time (AWT) of 13 minutes, 35 seconds in 2019, 10 minutes, 14 seconds in 2020, and 8 minutes, 36 seconds in May 2021. In the off-peak periods (July), an AWT of 3 minutes, 46 seconds, was registered in 2019, 5 minutes, 12 seconds in 2020, and 7 minutes, 42 seconds in 2021. An average service time (AST) of 1 minute 52 seconds in May 2019, 2 minutes 34 seconds in May 2020, and 2 minutes 27 seconds in May 2021. In the off-peak periods (July), an AST of 3 11 seconds was registered in 2019, 3 4 seconds in July 2020, and 2 43 seconds in July 2021. Overall, the system intensities are low to moderate, with the COVID-19 pandemic severely impacting the peak period more than the off-peak. In the peak periods, the service rates averaged 33, 24, and 25 persons per hour in May 2019, May 2020, and May 2021. The respective system intensities were 0.534, 0.360, and 0.492. In the off-peak periods, the average service rates were 19, 20, and 23 persons per hour in July 2029, July 2020, and July 2021. The respective associated system intensities of 0.535, 0.461, and 0.487. From the pooled data for 2019 and 2021, the study recommends that banks operate with an AWT of 6 minutes, 24 seconds, and an AST of 3 minutes. Further, the study established that a bank could work with an optimal four servers with an AST of 2 minutes, 35 seconds (a service rate of 20 people per hour), and achieve a moderate average service intensity of 0.552.