Multicriteria Decision-Making in Banking and Financial Services

Multicriteria decision-making (MCDM) has become a vital framework for addressing the complexity of choices in banking and financial services, where stakeholders must balance performance, risk, cost and customer satisfaction. By decomposing decisions into a hierarchy or network of criteria, methods such as the Analytic Hierarchy Process, Analytic Network Process, TOPSIS and VIKOR enable the systematic weighting and ranking of alternatives. Fuzzy set theory and DEMATEL further capture uncertainty and causal relationships among criteria, improving the fidelity of real-world modelling. Applications range from credit scoring and portfolio selection to branch location, service innovation and risk control. In credit risk assessment, MCDM methods integrate financial ratios with qualitative factors such as borrower reputation, allowing lenders to fine-tune approval thresholds. In portfolio management, investors combine return, volatility and liquidity criteria to derive efficient frontiers. For bank performance evaluation, hybrid models assess service quality, operational efficiency and compliance in a unified framework. The advent of Fintech has spurred innovation strategies evaluated through networked criteria, guiding banks in adopting new technologies, forming partnerships and redesigning customer journeys. Globally, regulators and executive teams rely on MCDM to reconcile divergent objectives—profitability, stability and social responsibility—thus enhancing transparency and fostering resilient financial ecosystems.

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Multicriteria Decision-Making in Banking and Financial Services publication trend

The graph below shows the total number of articles in multicriteria decision-making in banking and financial services across all publications each year (not limited to Nature Index journals).

Technical terms

Multicriteria Decision-Making (MCDM): A collection of methodologies for evaluating and ranking alternatives against multiple, often conflicting criteria.

Analytic Hierarchy Process (AHP): A structured technique that decomposes a decision into a hierarchy of criteria and uses pairwise comparisons to derive relative weights.

Analytic Network Process (ANP): An extension of AHP that accounts for interdependencies and feedback among decision criteria.

TOPSIS: Technique for Order Preference by Similarity to Ideal Solution; ranks alternatives based on their distance from an ideal and an anti-ideal solution.

VIKOR: A compromise ranking method that focuses on multi-criteria optimisation and the identification of a compromise solution closest to the ideal.

DEMATEL: Decision-Making Trial and Evaluation Laboratory; a method that models and visualises the causal relationships among criteria in a decision problem.

Fuzzy Logic: A mathematical approach that handles uncertainty by allowing variables to have degrees of membership rather than binary true/false values.

References

1. Improving Financial Service Innovation Strategies for Enhancing China’s Banking Industry Competitive Advantage during the Fintech Revolution: A Hybrid MCDM Model. Sustainability (2019).
2. A hybrid financial performance evaluation model for wealth management banks following the global financial crisis. Technological and Economic Development of Economy (2015).
3. An application of DEMATEL for transaction authentication in online banking. International Journal of Data and Network Science (2019).
4. Finans Kurumlarının Etkinliklerinin Artırılmasına Yönelik Bulanık Mantık Temelli Strateji Önerileri. Ekonomi Politika ve Finans Arastirmalari Dergisi (2022).