May | 2012
It's a familiar story in the financial services industry. The market is down, profits are down, and a major bank announces it will take out a billion dollars in costs by restructuring the business and reducing staff by a few thousand people. The stock market responds positively to such announcements, but the truth is that such cuts simply return a bank to its status quo. As the market or the economy rebounds, staff levels inch back up and the bank's cost basis returns to previous levels.
For years, much of the financial services industry has responded to market cycles with short-term across-the-board cost cuts. But there are forces at play that make a change in the industry's mindset an imperative:
In such a changed environment, the financial services industry must abandon its reliance on short-term 'fixes' and create permanent efficiencies by reducing processing costs and increasing productivity. For inspiration, banking executives should look at manufacturing and how successful manufacturers handle their supply chains.
In manufacturing, knowing the "cost per unit" is part of the industry's DNA. By understanding the cost of each element of the production process, including FTEs, a manufacturer can tinker with the components of his supply chain and use alternative delivery approaches to drive efficiency and productivity.
Read more about what financial services executives can learn from manufacturing in the Wipro Consulting paper, 'Not Just Another Round of Cost-Cutting.'?
Chris Rooney is Senior Partner, Wipro Consulting Services. He is based in Boston and may be contacted at chris.rooney@wipro.com
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© 2021 Wipro Limited |
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