New tools and techniques were required to report on productivity, quality, service, and cost data. Consider: Productivity shot up 30 percent. They wanted to cut operational costs and improve efficiency and effectiveness in their back-office support groups. They can also be enacted if … Impressively, nearly 90 percent of these improvements required no new technology investment. And they wanted to improve the overall customer experience in the process. 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. Thus management was poorly equipped to implement uniform routines across operational areas. Ms. Hoffman is a freelance writer based in Lawton, Okla. BAI © 2020 All rights reserved. Goldman Sachs CFO confident bank can hit cost-cutting targets. “Business as usual” within this bank included multiple back-office support functions which created positions dedicated solely to rework. A few months on and cracks are beginning to show. 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.. But those NIGO applications were still a problem. By Simon Gompertz Personal finance correspondent, BBC News Rather than looking to massive across-the-board cuts to boost returns, most financial companies are seeking to trim expenses selectively with an eye to keeping employees content, customers well-served and avoiding harm to client retention and sales growth. Redesigning the operating model for support functions and reducing the number of employees is expected to cut costs by about 15% (or 3% of the bank’s total costs). 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. Six months after that, its ROI was pegged at a factor of 4.5. 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. And they wanted to improve the overall customer experience in the process. “In other scenarios, we may consolidate on fewer systems to increase efficiency and consistency,” Dillon adds. 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. ... PwC has identified a bank of over 100 Cost Reduction Initiatives and Techniques. This was linked directly to the bank’s management team. For help in making these important decisions, here's some insight into potential areas for cost cutting and ideas on how to think about each reduction. Wells Fargo, as part of its Project Compass initiative, is consolidating disparate systems onto a single platform, such as with its customer information database, according to Scott Dillon, head of the bank’s technology infrastructure services. The German lender’s latest cost-cutting measure signals the bank is willing to slash just about anything to save a few dollars. For institutions most affected by the crisis, particularly those in North America and the United Kingdom, tactical cost reductions are the immediate priority. Although formal numbers have yet to be announced, the German lender may eliminate as many as 15,000 to 20,000 jobs, joining a growing list of global banks that have announced multiple jobs reduction rounds this year. Deutsche Bank counts cost of job cutting with £2.8bn loss. 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. In this bank, operating metrics were not consistently collected, employed, or understood. Even as they shy away from major core system replacements and other massive overhauls, savings can be found in the simplification or selective replacement of back office technology. Think about that: Half of the applications received were not in good order. Bob Meara, senior analyst for Boston’s Celent, part of the Oliver Wyman Group, says that more banks are using teller management software to help them staff their branches more effectively, based on when customers are most likely to come in and what they need at various times. The London-based bank, which is planning to cut 35,000 jobs to trim costs, is seeking to double the number of mobile users by 2022, which could generate more revenue per customer. Inside Wells Fargo's Plan to Cut $10 Billion in Expenses The bank will try to complete its ambitious plan while also trying to balance other initiatives. After the initial analysis and design phase of the assignment was complete, the implementation phase began. BAI is Bank Administration Institute and BAI Center, Cost-Cutting Tips for Revenue-Squeezed Bankers. The entire project broke even in just six months. ➤Lack of historical data and high customer acquisition costs puts fintechs at a disadvantage in comparison to banks and technology companies. Ulster Bank had announced plans back in February to cut its costs, including a redundancy scheme for 100 managers as part of an earlier £250m group wide cost-cutting plan. Processing cycle time dropped by a third. Services. Perhaps the story of your bank, tactfully disguised as this one was, might end up in these blogs, too. Employee compensation accounts for about 44% of U.S. banks’ operating cost, Extraco Banks, a Waco, Tex.-based community bank, was able to save $8,000 in paper costs last year. 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. Banks are facing increasing pressure to cut costs as profits have slumped over the course of 2020. Bank cost-cutting threatens free cash machines. Bank … As the credit crisis gripped financial services a couple of years ago, cutting costs was the call to action at banks worldwide, and especially in the U.S. That meant a relentless pursuit of greater efficiency and a deeper understanding of where are the excess expenses and processes in … This is an absolutely true case study from the files of The Lab Consulting. Implementing these initiatives is expected to improve efficiency in the respective units by about 25% and reduce the bank’s total costs by 4%. Bank cost cutting: The final tally. They wanted to cut operational costs and improve efficiency and effectiveness in their back-office support groups. Published November 9, 2020 Updated November 9, 2020 . NEW YORK. The French bank said the jobs would go as it looks to strip out around €450m within its capital markets unit by 2023. In the wake of coronavirus lockdowns, the world’s largest investment banks presented a united front in refusing to cut jobs. This addressed the conflicting information they had previously created for employees and customers alike. Since taking over as CEO in 2010, Moynihan has cut Bank of America's non-interest costs by $28 billion to just under $55 billion. Replacing (some) employee travel with video conferencing. BancorpSouth has also reduced the number of its in-branch marketing materials, from more than 25 to about half a dozen. 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. Handsomely. Since opening its doors in 1993, The Lab has helped some of the best companies in the world become even better. “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. Cost cutting is a matter of commitment from the top management. You might want to learn more about The Lab’s unique self-funding engagement model and money-back guarantee. 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 … 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. Eliminating unnecessary document printing and electricity usage can save even a smaller bank thousands of dollars annually and can also help boost the bank’s reputation as environmentally friendly. Multiple retail branch forms and templates were standardized. 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. Reviewing vendor contracts. Refining and consolidating back office systems. Tellers will print out 8.5×11 sheets with current product listings and rates at a customer’s request, so they are assured the information is up-to-date and there’s no waste of paper, he adds. Up to 2,200 job cuts likely at Bank of Ireland under cost-cutting plan Broker says bank likely to cut headcount by up to 20% Wed, Jul 25, 2018, 10:27 Updated: Wed, Jul 25, 2018, 18:12. Using standardization, the productivity variance of “in good order” applications plummeted to less than 15 percent. Error rates were cut in half. Numerous non-technology improvements were implemented to fix this problem. 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: Deep Digitization in Utilities Operations. Ineffective processes permeated the bank’s back-office operations. Over the course of two months, more than 125 individual-improvement and cost-cutting opportunities were identified. For this initiative, retail branch support functions were analyzed for more than 500 employees across four different cities. Tomasofsky says that banks are asking for better terms and pricing on these contracts “even if they’re not up for renewal.” One tactic is to offer to extend the contract terms in order to sweeten the deal for the vendor. Much of the cost-cutting burden is falling on the bank’s staff. Instead, banks are being careful about worker hiring, training and deployment. 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. He estimates that these efforts will reduce existing costs by between 10% and 15% per year. Davidson. Cost cutting measures are typically implemented during times of financial distress for a company or during economic downturns. This, in turn, helped them to focus their efforts on workforce performance and cost reduction in banking overall. It was a tall order. 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. Fifth Third Bancorp is slashing costs, with plans to remove $200 million in expenses by early next year, including its recent decision to shed some jobs. 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. To improve the overall customer experience in the banking sector careful about worker,... Shocker that ’ s latest cost-cutting measure signals the bank ’ s management team the results of this effort. Employee travel with video conferencing America recently suffered from rumors about soup, crackers, and slash variance among.! 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