The study revealed that the percentage of time that a given salesperson spent face-to-face with actual customers was low. The focus should not just be on cost reduction; banks should instead strive for improving efficiency by eliminating paper, automating more processes, eliminating unnecessary physical infrastructure and … This meant that the anti-money laundering team was basically wasting its time, analyzing an account that had already been rejected! . 10 à 20%. The most recent article in this series described a three-pronged approach to improving operational efficiency in the banking sector. Things were good, but they could’ve been better. In this case, The Lab spent eight weeks analyzing every aspect of the processing of a product or service in the bank’s retail branches. It’s a true story of how The Lab worked with a bank to reduce operating costs and boost sales uptime. That’s how many improvements were uncovered, and that’s how valuable they were, taken together. The offerings under study included personal deposit accounts, mortgages, credit cards, and loans. Put Off Extra Appliances, and Machinery After Hours. Deep Digitization in Utilities Operations. It required careful analysis of the situation. And it reveals four quick-hit areas for improvement, based on that engagement. Slash Health Payer Operations Costs & Mult... How to survive the banking core-system-pro... Twelve-month ROI on the engagement was tenfold. Then they should design a new cost structure … So can improved communication between departments. That’s why senior management contacted The Lab for this engagement. Ask yourself: 1) Are there opportunities for cost cutting measures in your bank, based on the uptime—or lack thereof—of your sales force? Support areas were scrutinized, too. The workarounds that they developed were then shared across the company, making it as efficient as possible while the new technology was still being installed. This killed the sales team. But before you read it, read more about how The Lab specializes in cost reduction techniques in banks. h޴U�j�0������,[2���6�M6aS(}P�;�����ȗ�-[҅"��4g.��!�Ԁ�" q� ��{���\yGA \����l���` In this Canadian bank, the processing of loans and other products didn’t always follow a rational sequence. This is an agonizingly forthright cost reduction strategy … In this article, we’re going to use a real-world example to show how these same strategies … Cost cutting strategies for banks rooted in industrialization Large-scale office automation technology first appeared in the 1920s. But it wasn’t going to be ready for another 18 months. How did The Lab help? Consider some of these other decidedly quick wins: Self-funding improvement initiatives like this aren’t rare events. But that’s not all. This sustained cost reduction has largely taken place without change to the traditional banking operating model. endstream endobj startxref 547 0 obj <>/Filter/FlateDecode/ID[<9B17B83609D94942BB5357D57587FDD4>]/Index[536 20]/Info 535 0 R/Length 69/Prev 471437/Root 537 0 R/Size 556/Type/XRef/W[1 2 1]>>stream In view of the depression in oil market, costs have been cut by most E&P companies and related services providers to levels no one would have imagined before. endstream endobj 537 0 obj <>/Metadata 65 0 R/Pages 534 0 R/StructTreeRoot 117 0 R/Type/Catalog>> endobj 538 0 obj <>/MediaBox[0 0 612 792]/Parent 534 0 R/Resources<>/Font<>/ProcSet[/PDF/Text/ImageB/ImageC/ImageI]/XObject<>>>/Rotate 0/StructParents 0/Tabs/S/Type/Page>> endobj 539 0 obj <>stream The top five areas that almost every organization agreed upon as being important for success (in slightly different orders each year) were: 1. Facing continuing pressure from investors to reduce expenses in a slow-growth environment, the temptation for many bank executives is to cut costs indiscriminately, for example, 10% across all departments. How to Increase Operational Efficiency in the Banking Sector. Improving the customer journey 2. “Banking on the future : Vision … Copyright © Lab Consulting Partnership, 2021 | All rights reserved, Cut Banking Costs Now: Achieve “The New Normal” for Productivity “Big Rock” 1 of 3: The retail branch network. Most likely, your answers are 1) Yes, and 2) No. h�b```���� A�FFF&��H����O�{6H��uq�q�9vz�xP�Ţp�E����ni@�����x������k�h�4�DGR'�70�w4�7�T4�T40T�@���� �+�+�� �tP�9� 6 � �| �1�1 II�.~k��������0���b��?�u78l�Yk�4+��H� ������e`\ Banking cost reduction through digitization and automation. The order in which activities take place is crucial to containing costs in your bank. Casualisation: An operational cost reduction strategy to survive in the banking industry. Generally, an income statement for the city (multiple stores) … Since opening its doors in 1993, The Lab has helped some of the best companies in the world become even better. It broke even in just four months. Our last article traced the connection between reducing bank operating expenses and standardization of processes. That meant that everyone needed to know the best ways to deal with the existing technology in the bank. In some industries, cost per unit falls on a quarterly basis and firms must continually find cost reductions to remain competitive. But that’s exactly what happened here. %PDF-1.5 %���� The bank is planning to roll out a special customer value tool to help with this. Cost-cutting Strategy: Geographic The third strategy focuses on a specific geographic area or physical location such as a branch. This bank provided services across various departments. … It refers to the potential … Several businesses lessen recurring costs by pooling resources with other small businesses, and this cost reduction strategies cut across broader layouts. Banks should apply a bottom-up, zero-based budgeting approach to challenge existing cost and service levels. And not a single one required the implementation, or cost, of new technology. You might not think that old technology can hand you an improvement opportunity, even while new technology is on its way. Payback period is defined as the length of time required to recover the original investment on the … Cost reduction is the process of identifying and implementing ways to reduce the opex and capex of a business. Vendor consolidation is one of the procurement strategy used by banking and financial services industry to achieve cost savings. This article, by contrast, is a case study. Why? 555 0 obj <>stream 536 0 obj <> endobj Their time was being wasted on the complex processing of documents and compliance tasks. Accenture Strategy research reveals that banks are facing three cost-related challenges: Banking executives must link cost reduction and value creation to succeed Although banks have shown a willingness to undertake cost reduction … As a result, further cost reductions are more likely to impact customer experience, resiliency and regulatory compliance… ��s����-�q�m���#�fcK)�,��[�[�)9�6��6��(�ٍma����k l^�n6�N��$�C"R�Sޛ�eY��b� Know the best companies in the process of identifying and implementing ways to with... Was supposed to fund itself in just six months some of the simplest widely. Per unit falls on a quarterly basis and firms must continually find cost reductions to competitive! You might not think that old technology can hand you an improvement opportunity, even while technology. 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