Cost Productivity

Why it’s important

Increased competition from digital/fintech challengers, changes in customer behavior along with regulatory pressures have made it essential for banks to focus on sustainable cost reduction.

The Cost Productivity Benchmark provides a holistic view of the cost base and identifies major cost saving opportunities that serve as a crucial input for planning cost reduction or transformation initiatives.

Bank performance:

• How does our bank perform in terms of the cost-income ratio compared to peers, and what are the drivers behind it?

Front office efficiency:

• How productive are our front-office FTEs and what should our targets be?
• Are the contact center FTEs efficient? What are the costs per answered call?

• Is the front-office staffing mix optimized for the future of the branch, both in terms of costs and FTEs?

Middle office and support functions efficiency:

• To what extent can we streamline support function costs?
• Should we strive for a leaner segment management layer?
• In which functions can we consider centralization to reduce duplication and benefit from synergies?

IT Transformation:

• What is the bank’s IT spend (OPEX+CAPEX) as compared to peers and how efficient are IT FTEs?
• How does the bank perform in terms of run-the-bank vs change-the-bank IT spend as compared to peers?

Property footprint:

• How does the size and staffing of our branches compare to that of peers?
• Are our branches too expensive relative to peers? Should we consider flexible branch formats?

What the Cost Productivity Benchmark provides

• Analyzes your bank’s position against relevant local, regional, and global peers

• Identifies improvement opportunities by tracking both root cause KPIs and outcome KPIs (e.g. offshore and centralized FTEs and outsourcing) instead of pure cost KPIs

• Provides granular business segment split (retail, private/wealth, SB, corporates, IB) to ensure full comparability and calculate mix-adjusted efficiency ratios
• Develops an action plan to accelerate performance improvement