Bank cost-cutting threatens free cash machines. A few months on and cracks are beginning to show. Multiple retail branch forms and templates were standardized. 1. Deutsche Bank counts cost of job cutting with £2.8bn loss. They were being processed in an ad-hoc fashion, with a variance in productivity routinely exceeding 70 percent. Bank … 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 … Think about that: Half of the applications received were not in good order. Many are holding off on filling open positions (sometimes for months) as a way to free up some short-term expenditures without impacting morale, according to Paul Tomasofsky, president of Two Sparrows Consulting of Montvale, N.J. Using standardization, the productivity variance of “in good order” applications plummeted to less than 15 percent. Handsomely. This website uses cookies and third party services. He points out that Extraco Banks, a Waco, Tex.-based community bank, was able to save $8,000 in paper costs last year, due to multiple initiatives such as imaging deposits at the teller line. Remember: a million clients across 17 countries. BancorpSouth has also reduced the number of its in-branch marketing materials, from more than 25 to about half a dozen. 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. Our previous article discussed ways to increase operational efficiency in the banking sector. For this initiative, retail branch support functions were analyzed for more than 500 employees across four different cities. In this one, we’re going to dive into a cost-cutting case study with big results—and great takeaways for you. ➤Sharp cost-cutting by Brazilian banks could drive price-based fintech models out of business. Over the course of two months, more than 125 individual-improvement and cost-cutting opportunities were identified. 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. And they wanted to improve the overall customer experience in the process. 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. The results of this lean effort, implemented in concert with the bank’s management team and internal change-management organization, are incredible. 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. The German lender’s latest cost-cutting measure signals the bank is willing to slash just about anything to save a few dollars. One way to avoid out-of-town travel is to utilize video- or audio-conferencing. “I haven’t traveled to Little Rock in two months,” he says. 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. 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, The Lab’s unique self-funding engagement model and money-back guarantee, Automate Paycheck Protection Program Loans, Lean Six Sigma Projects for Finance and Accounting, Robotic Process Automation in Credit Unions, Robotic Process Automation in Finance and Accounting, Robotic Process Automation in Financial Services, Robotic Process Automation in Health Insurance, Robotic Process Automation in Investment and Asset Management, Robotic Process Automation Insurance Claims, what are retail banks doing to control costs and improve efficiency. Blood-thirsty bank analysts are excitedly burnishing the sharp edges of their cost-cutting calculations. Processing cycle time dropped by a third. But those NIGO applications were still a problem. This, in turn, helped them to focus their efforts on workforce performance and cost reduction in banking overall. The cost-cutting and efficiency agenda will vary among regions and from bank to bank. 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). “We may renegotiate to add more years in order to push for a better price,” says Michael Lindsey, senior vice president for BancorpSouth of Tupelo, Miss. Error rates were cut in half. So was the backlog. 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. 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. Error rates dropped by an amazing 35 percent. It was a tall 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. Refining and consolidating back office systems. “Business as usual” within this bank included multiple back-office support functions which created positions dedicated solely to rework. He estimates that these efforts will reduce existing costs by between 10% and 15% per year. The entire project broke even in just six months. Implementing these initiatives is expected to improve efficiency in the respective units by about 25% and reduce the bank’s total costs by 4%. In the wake of coronavirus lockdowns, the world’s largest investment banks presented a united front in refusing to cut jobs. These were compounded by: These problems made themselves known in numerous KPIs, including processing cycle time, error rates, and backlog volumes. Not surprisingly, the rate for this KPI (key performance indicator) was significantly higher than that of the bank’s competitors. Davidson. 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. It’s just one of countless others we’ve delivered for clients for more than 25 years. They can also be enacted if … Deep Digitization in Utilities Operations. For institutions most affected by the crisis, particularly those in North America and the United Kingdom, tactical cost reductions are the immediate priority. HSBC, Goldman Sachs and UBS are all promising new strategies for the new decade. Faced with a slow-growth economy and shrinking revenues, bank managers are pulling the only lever they have left: expense control. BancorpSouth, for example, has “virtualized” many of its servers, Lindsey says, meaning that instead of using dedicated hardware, the company deploys generic shared hardware to more efficiently run specific areas of its operations. 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. You might want to learn more about The Lab’s unique self-funding engagement model and money-back guarantee. 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 story took place at one of the largest consumer banks in the United States. 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. NEW YORK. “In other scenarios, we may consolidate on fewer systems to increase efficiency and consistency,” Dillon adds. 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. Employee compensation accounts for about 44% of U.S. banks’ operating cost, according to the Federal Deposit Insurance Corp. Earlier this month, Deutsche Bank circulated a memo noting that free fresh fruit will no longer be provided to employees, according to the FT. Bankers will now need to dip into their own wallet to stave off scurvy, it appears. 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. Since opening its doors in 1993, The Lab has helped some of the best companies in the world become even better. 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. ➤Incorporating nonfinancial services is a way for fintechs to counterattack big techs' foray into finance. This bank’s Caribbean operations presented a tremendous improvement opportunity. After the initial analysis and design phase of the assignment was complete, the implementation phase began. On the other hand, many banks in the Asia-Pacific region are pursuing a broader efficiency agenda focused Thus management was poorly equipped to implement uniform routines across operational areas. 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