➤Incorporating nonfinancial services is a way for fintechs to counterattack big techs' foray into finance. For institutions most affected by the crisis, particularly those in North America and the United Kingdom, tactical cost reductions are the immediate priority. NEW YORK. And they wanted to improve the overall customer experience in the process. Published November 9, 2020 Updated November 9, 2020 . Individual performance reporting was inconsistent. They can also be enacted if … 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. “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. 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). Remember: a million clients across 17 countries. Goldman Sachs CFO confident bank can hit cost-cutting targets. Implementing these initiatives is expected to improve efficiency in the respective units by about 25% and reduce the bank’s total costs by 4%. Not surprisingly, the rate for this KPI (key performance indicator) was significantly higher than that of the bank’s competitors. 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. 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. 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. Cost cutting is a matter of commitment from the top management. “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. Impressively, nearly 90 percent of these improvements required no new technology investment. 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. They were being processed in an ad-hoc fashion, with a variance in productivity routinely exceeding 70 percent. 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. The entire project broke even in just six months. Whether true or not, Bank of America has already received heat and bad publicity for trying to apply cost cutting measures that ultimately would have minimal impact on … Davidson. And the work paid off. They wanted to cut operational costs and improve efficiency and effectiveness in their back-office support groups. 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. This website uses cookies and third party services. 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. Error rates were cut in half. ... PwC has identified a bank of over 100 Cost Reduction Initiatives and Techniques. 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. But those NIGO applications were still a problem. 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 … Excessive customer touch points to gather follow-up information. Employee operating costs were cut by 16 percent. Refining and consolidating back office systems. “I haven’t traveled to Little Rock in two months,” he says. HSBC, Goldman Sachs and UBS are all promising new strategies for the new decade. Reuters . ➤Sharp cost-cutting by Brazilian banks could drive price-based fintech models out of business. Cost cutting measures are typically implemented during times of financial distress for a company or during economic downturns. 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. 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. BAI is Bank Administration Institute and BAI Center, Cost-Cutting Tips for Revenue-Squeezed Bankers. The results of this lean effort, implemented in concert with the bank’s management team and internal change-management organization, are incredible. 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. 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. 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. Reviewing vendor contracts. One way to avoid out-of-town travel is to utilize video- or audio-conferencing. The reasons to do it are obvious: large-scale cost cutting to compensate for the dim earnings outlook, thanks to the pandemic-induced combination of rising loan losses, weak borrowing and collapsing net interest margin. This is an absolutely true case study from the files of The Lab Consulting. These provide clients with a number They’re all the more impressive when you realize that no new technology was required: Best of all, this project broke even in just six months. 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. Ineffective processes permeated the bank’s back-office operations. Cutting to spend on technology has been a thing for several years, but 2020 looks like the year it gets real lift. ➤Lack of historical data and high customer acquisition costs puts fintechs at a disadvantage in comparison to banks and technology companies. 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. By Simon Gompertz Personal finance correspondent, BBC News Thus management was poorly equipped to implement uniform routines across operational areas. Instead, banks are being careful about worker hiring, training and deployment. “Banks will focus on what they can control — as opposed to taking any undue risks as they work through all this,” said Kevin Fitzsimmons, an analyst at D.A. 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