BANK’S BRANCHES LOCATION DETERMINATION BASED ON THE TYPOLOGY OF AREA ATTRACTIVENESS INDEX (CASE STUDY OF INDONESIA)

Abstract

This paper presents a typology of AAI that is developed for banking sector to determine the attractive area for bank branching. Bank-branch location problems are complex, often requiring large data sets and sophisticated modeling techniques in their solution. However, the fact shows that many decision makers often use intuition rather than data driven. This study is significance for the banking sector and scholar in developing the typology so it can support the spatial decision making process with data-driven. This study will be focusing in the case of locational analysis for bank sector only and it is also narrow to the saving product. The research is based on a qualitative case study methodology to explore the case of the complex decision making in determining branch bank location. The data for this study includes: population data statistic, interview, other documents review which are analyzed using the typology analysis in which generally segmented into compression and expansion techniques. The limitation of this study is in the data collection that relies heavily on the data provider such as statistic bureau or other research institution. Therefore the most updated data will be limited by the data availability provided by the institutions. The end result of this study is the typology model of AAI for bank branching. This typology involves two dimensions: Economy & Demography and Banking Competition which categorized in low-medium-high attribute, hence there are 9 quadrants within the typology. By utilizing the typology, exploring expert knowledge, and reviewing other important documents, the study arrives at the comprehensive analysis. The comprehensive analysis result in the selection of 4 attractive regencies spread in quadrant 9 with the attribute high economy& demography and banking competition. The analysis is also generating some strategies to get into the particular regencies in the potential quadrants, especially the 4 attractive regencies that have been selected deductively. In conclusion, the typology of AAI can be implemented effectively to determine the attractive area for bank branch location.