How can banks reduce operational costs?

2 Adopt cloud computing

Another way to reduce operational costs is to adopt cloud computing, which allows banks to store, access, and process data and applications over the internet, rather than on-premise servers. Cloud computing can offer several benefits for banks, such as scalability, flexibility, security, and innovation. By moving to the cloud, banks can reduce the costs of hardware, maintenance, and upgrades, as well as improve their performance, reliability, and agility. Cloud computing can also enable banks to access new technologies and services, such as analytics, blockchain, and open banking.

3 Optimize branch network

A third way to reduce operational costs is to optimize the branch network, which is often the most expensive and least efficient channel for banks. Banks can optimize their branch network by closing or consolidating underperforming or redundant branches, and by transforming the remaining ones into more customer-centric and digital-friendly spaces. For example, banks can use self-service kiosks, video conferencing, and mobile apps to provide customers with more convenient and personalized services, while reducing the need for physical staff and infrastructure.

4 Outsource non-core functions

A fourth way to reduce operational costs is to outsource non-core functions, such as IT, accounting, legal, and HR, to external providers who can offer better quality, expertise, and cost-effectiveness. By outsourcing non-core functions, banks can focus on their core competencies, such as product development, customer relationship management, and innovation. Outsourcing can also help banks access new skills, technologies, and markets, as well as reduce the risks and complexities of managing multiple functions in-house.

5 Implement lean management

A fifth way to reduce operational costs is to implement lean management, which is a methodology that aims to eliminate waste, improve quality, and increase customer value. Lean management can help banks identify and eliminate inefficiencies, errors, and redundancies in their processes, products, and services, as well as enhance their customer satisfaction and loyalty. Lean management can also help banks foster a culture of continuous improvement, collaboration, and innovation among their employees.

6 Enhance employee engagement

A sixth way to reduce operational costs is to enhance employee engagement, which is the degree to which employees are committed, motivated, and productive in their work. Employee engagement can have a significant impact on the operational performance, profitability, and reputation of banks. By enhancing employee engagement, banks can reduce turnover, absenteeism, and errors, as well as increase productivity, quality, and innovation. Banks can enhance employee engagement by providing clear goals, feedback, recognition, training, and empowerment to their employees.

7 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?