Multi-objective optimization for a strategic ATM network redesign problem

During the last decades, the banking industry has been facing multiple challenges, from
changes in regulations and legal systems, to the irruption of new technologies. A constant
adaptation to the rapidly changing business ecosystem is therefore required. This paper deals
with one type of efficiency improvement that is required from traditional banking operations
as a result of the current shift in the industry towards more use of technology. That is, we deal
with the decision-making process related to the redesign of existing ATM networks, which is
currently being considered by many banksworldwide. This redesign is mainly a consequence
of an increased use of electronic payment methods and card transactions, which have made
the demand for cash decrease significantly. We describe a multi-objective mathematical
programming model to be used as a tool when making strategic decisions regarding the bank
ATMnetwork redesign. Total costs and the coverage of customers and turnover are considered
as conflicting performance attributes and analyzed through several multi-criteria techniques,
namely the weighted sum and Tchebycheff methods and Archimedean goal programming.
Among other insights, the results on a realistic case study show that the potential for cost
reductions is high and that the consideration of both customer coverage and turnover coverage
is crucial for the performance of the network.