bank cost cutting
With increasing airfare and hotel costs, banks are “hunkering down and taking a closer look at travel expenses,” says Jim Neckopulos, Dallas-based senior vice president and leader of the financial practice at Hitachi Consulting. While RBS is priming its people for what the Financial Times describes as, ' a fresh strategy and cost-cutting plan in the new year,' other banks are doing the same and jettisoning ballast as they go. They wanted to cut operational costs and improve efficiency and effectiveness in their back-office support groups. A few months on and cracks are beginning to show. On the other hand, many banks in the Asia-Pacific region are pursuing a broader efficiency agenda focused NEW YORK. Moving to less expensive marketing channels. It’s another shocker that’s all too common in banking, and invites cost reduction. BAI is Bank Administration Institute and BAI Center, Cost-Cutting Tips for Revenue-Squeezed Bankers. HSBC, Goldman Sachs and UBS are all promising new strategies for the new decade. This story took place at one of the largest consumer banks in the United States. They wanted to cut operational costs and improve efficiency and effectiveness in their back-office support groups. With nearly 1,500 branches, 24,000 employees, and $175 billion in assets, they sought to cut costs and improve the efficiency of their retail branch network. This, in turn, helped them to focus their efforts on workforce performance and cost reduction in banking overall. Replacing (some) employee travel with video conferencing. … UMB Bank of Kansas City, Mo., for example, expects to reduce its branch staffing expenses by $1.9 million over three years by utilizing such a system to coordinate branch staffing, planning and forecasting, according to Meara. In some cases, a paperless initiative in the back office can lead to reducing the use of paper through delivery channels as well, Meara says. This is an absolutely true case study from the files of The Lab Consulting. And the work paid off. While some banks have slashed their existing marketing budgets across the board, others are looking to re-engineer their marketing with an eye toward lower-cost, electronic channels such as online, email and SMS. Consider: Productivity shot up 30 percent. Reviewing vendor contracts. Remember: a million clients across 17 countries. He estimates that these efforts will reduce existing costs by between 10% and 15% per year. Deutsche Bank has expanded its cost-cutting plans with its CFO saying a previous target of bringing expenses down to €21bn by 2021 was not ambitious enough.. Much of the cost-cutting burden is falling on the bank’s staff. You might want to learn more about The Lab’s unique self-funding engagement model and money-back guarantee. Societe Generale is cutting 640 jobs within its investment bank in France as part of a broader plan to restructure its equity derivatives unit after a period of poor performance. One way to avoid out-of-town travel is to utilize video- or audio-conferencing. Here are some common tactics that banks, large and small, are utilizing in their efforts to improve operating efficiency: Goldman Sachs CFO confident bank can hit cost-cutting targets. It was a tall order. Dubai’s Mashreq Bank may move jobs to Pakistan as part of cost-cutting move The report added that Mashreq Bank will also cut a large number of … ➤Sharp cost-cutting by Brazilian banks could drive price-based fintech models out of business. HSBC bank will shift its physical services into the digital sphere in a push to get more customers to migrate to mobile as part of cost-cutting program. This cuts Information Technology as well as support costs, he says. Individual performance reporting was inconsistent. Implementing these initiatives is expected to improve efficiency in the respective units by about 25% and reduce the bank’s total costs by 4%. Randy Burchfield, who manages marketing for BancorpSouth, says that he uses video-conferencing every week for his regular meetings with the bank’s lead ad agency, which is based a five-hour drive away in Little Rock, Ark. In addition, some banks are opting to hire part-time employees instead of full-time in order to gain more flexibility in staffing models and to save on employee benefit costs. Proven industry-leading practices were required to standardize NIGO fixes, streamline the workflow, and slash variance among teams. Five areas were addressed: The initial analysis shone a spotlight on a glaring weakness for the bank: The rate of not-in-good-order, or NIGO, inbound applications averaged 50 percent. Banks are facing increasing pressure to cut costs as profits have slumped over the course of 2020. The Canadian Imperial Bank of Commerce plans to lay off an undetermined number of staff in an effort to cut costs and become a “more efficient bank,” according to a … In this bank, operating metrics were not consistently collected, employed, or understood. So was the backlog. San Francisco-based Wells Fargo & Co. and Bank of America Corp. in Charlotte both announced major cost-cutting initiatives this past spring (in March and April respectively) and others have followed in recent weeks. The results of this lean effort, implemented in concert with the bank’s management team and internal change-management organization, are incredible. Ineffective processes permeated the bank’s back-office operations. ABN Amro Bank NV plans to cut about 2,800 jobs over four years as the Dutch lender retreats from large parts of its investment bank and digitization allows it to operate with a smaller staff. While other banks are pushing the pause button on pre-Covid job cuts and digital transformation projects, Deutsche Bank is pressing ahead with plans laid down in 2019…and seizing the opportunity to make further costs savings from home working and video-conferencing. This was linked directly to the bank’s management team. Six months after that, its ROI was pegged at a factor of 4.5. They were being processed in an ad-hoc fashion, with a variance in productivity routinely exceeding 70 percent. Deutsche Bank is gearing up to cut hundreds of jobs in its equities trading and research, as well as derivatives trading, as part of a cost-cutting drive, according to the Wall Street Journal. Instead, banks are being careful about worker hiring, training and deployment. “Banks have to be cautious about unnecessarily making radical changes; they need to be able to remain agile and fluid,” says David Albertazzi, senior analyst for Boston-based Aite Group. This prevented a focus on a lean, customer-centric experience while applications were being processed. The German lender says it had already given notice to or "eliminated" 900 employees as part of a shake-up announced two weeks ago. Refining and consolidating back office systems. Deep Digitization in Utilities Operations. Think about that: Half of the applications received were not in good order. But those NIGO applications were still a problem. By Simon Gompertz Personal finance correspondent, BBC News With so much of their money flowing out to vendors, it’s not surprising that many banks are looking to review or renegotiate outsourcing contracts. Not surprisingly, the rate for this KPI (key performance indicator) was significantly higher than that of the bank’s competitors. Our previous article discussed ways to increase operational efficiency in the banking sector. ... PwC has identified a bank of over 100 Cost Reduction Initiatives and Techniques. While BancorpSouth still uses television to build its brand, Burchfield says he has moved virtually all of the remainder of the bank’s marketing efforts from traditional print media to Internet channels such as banner ads and micro-sites within other popular sites, which also offer banks the ability to track their marketing returns more accurately. Published November 9, 2020 Updated November 9, 2020 . Bank of America recently suffered from rumors about soup, crackers, and hand soap no longer being supplied to employees. And they wanted to improve the overall customer experience in the process. “Business as usual” within this bank included multiple back-office support functions which created positions dedicated solely to rework. “The racks in our branches used to look like those racks at a beach or mountain vacation spot, with all these brochures stuffed in there,” Lindsey says. Ms. Hoffman is a freelance writer based in Lawton, Okla. BAI © 2020 All rights reserved. Error rates were cut in half. “In other scenarios, we may consolidate on fewer systems to increase efficiency and consistency,” Dillon adds. The cost-cutting and efficiency agenda will vary among regions and from bank to bank. Employee compensation accounts for about 44% of U.S. banks’ operating cost, according to the Federal Deposit Insurance Corp. After the initial analysis and design phase of the assignment was complete, the implementation phase began. The entire project broke even in just six months. Impressively, nearly 90 percent of these improvements required no new technology investment.