HSBC, Goldman Sachs and UBS are all promising new strategies for the new decade. NEW YORK. Employee compensation accounts for about 44% of U.S. banks’ operating cost, according to the Federal Deposit Insurance Corp. 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. A few months on and cracks are beginning to show. Over the course of two months, more than 125 individual-improvement and cost-cutting opportunities were identified. 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. After the initial analysis and design phase of the assignment was complete, the implementation phase began. He estimates that these efforts will reduce existing costs by between 10% and 15% per year. The results of this lean effort, implemented in concert with the bank’s management team and internal change-management organization, are incredible. They were being processed in an ad-hoc fashion, with a variance in productivity routinely exceeding 70 percent. 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 … New tools and techniques were required to report on productivity, quality, service, and cost data. 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.. For institutions most affected by the crisis, particularly those in North America and the United Kingdom, tactical cost reductions are the immediate priority. On the other hand, many banks in the Asia-Pacific region are pursuing a broader efficiency agenda focused Cutting to spend on technology has been a thing for several years, but 2020 looks like the year it gets real lift. 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. Excessive customer touch points to gather follow-up information. Davidson. 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. Services. But those NIGO applications were still a problem. Cost cutting is a matter of commitment from the top management. Proven industry-leading practices were required to standardize NIGO fixes, streamline the workflow, and slash variance among teams. 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. 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. Six months after that, its ROI was pegged at a factor of 4.5. Blood-thirsty bank analysts are excitedly burnishing the sharp edges of their cost-cutting calculations. Reducing internal use of paper and electricity. This prevented a focus on a lean, customer-centric experience while applications were being processed. 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. 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. 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. Here are some common tactics that banks, large and small, are utilizing in their efforts to improve operating efficiency: “In other scenarios, we may consolidate on fewer systems to increase efficiency and consistency,” Dillon adds. Impressively, nearly 90 percent of these improvements required no new technology investment. BAI is Bank Administration Institute and BAI Center, Cost-Cutting Tips for Revenue-Squeezed Bankers. 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