Our last blog article addressed several well-known myths regarding operational efficiency in financial services. This time, we’ll look at another real case from The Lab Consulting archives. You’ll immediately understand how you may apply its teachings to cost-cutting measures in your own bank.
This is the tale of a large bank. You’ve heard of them, but we won’t identify them here. And this narrative is about their operations in the Caribbean. That’s a long storey in and of itself. This is due to the bank’s service to over a million consumers in 17 nations and territories around the area, ranging from the Islands in the northwest to Trinidad in the south.
Across all of this territory existent, a retail network of branches that the bank’s executives understood should be improved? “What are financial institutions doing to minimize expenses and increase efficiency?” they inquired of The Lab. The mission consisted of three parts:
- Improve the retail branch network’s efficiency and efficacy.
- Transfer as many activities from the branches as feasible to the centralized back office.
- Processes should be standardized across the area
Banking services are getting a face lift
The Lab examined processes all through the bank over a six-week analysis and design phase of an engagement. The following topics were investigated:
- Operations on the ground
- Personal and commercial ventures
- Service provision
- Payments and business transactions
This critical examination set the ground for the final five-step implementation phase. This is due to The Lab’s discovery of over 225 activity-level enhancement opportunities. Even better, more than 80% of them did not necessitate the implementation of new technology (or its associated costs).
Cost-cutting strategies in banks are to identify and eliminate built-in waste
When The Lab examined this bank’s branch operations and compared it to our own templates, we discovered several opportunities for improvement:
- There were low-value tasks everywhere.
- Data input was frequently redundant, laborious, and prone to mistake.
- Because of the nature of free-form comment areas, it was hard to detect (or fix) frequent problems.
- Customers with low-value wants were being over-served.
Do you have the same horribly sub-optimal procedures in your network of branches? Would you want to see changes to cut banking costs? This particular bank did. We assisted them in redesigning over a dozen branch processes. As a consequence, duplicate tasks were reduced. The effort was no longer being squandered
Bank Cost-cutting Strategies, Justify Staffing
This bank’s Caribbean businesses lacked an efficient recruitment strategy. There was no base, and there was no consistency. That was corrected by the Lab. We started with a thorough examination of process stages at the individual level of physical activity. These were then used to create standard timings for completing individual jobs.
We were able to construct an information capacity model using this information. As a result, the bank was able to match employee numbers to real work volumes.
Is your staffing strategy that specific? Are you conscious of your precise requirements and capacity? Don’t be embarrassed if you aren’t; this is a common issue at banks looking to save expenses.
Bank Cost-cutting Strategies, Keep Processes Consistent
Here’s a fact that may ring painfully true for you: Over the previous few centuries, this bank has made numerous acquisitions throughout the region. However, other alterations were only cosmetic.
This made it extremely difficult to cut the bank’s operational expenditures. Many processes have inconsistencies. Many more were superfluous. The Lab collaborated with the company to standardize its payment operations, which included the following:
- Verifications of account transfers
- Orders of the day
- Over-the-counter transactions
- Payments on loans and credit cards
If the company bank has gone through the M&A process, you most likely have comparable chances to cut operational expenditures.
The ultimate tally of bank cost-cutting measures
The Caribbean operations of this bank provided a huge chance for growth. Remember a million customers in 17 countries. And the effort was rewarded.
- Productivity increased by 30%.
- Error rates fell by an astounding 35%.
- The entire initiative was profitable in six months.
- The ROI over a 12-month period was 2.7.
- The annual savings were $7.1 million.
That all of this cost-cutting at the bank was done without the use of technological advances or capital expenditure.