Despite the major banks’ strong management of operational expenses, these expenses have increased for the majority of them over the year.
The major banks are focusing on productivity and simplification to address cost pressures. They are simplifying and digitising front-, middle- and back-office processes to drive top-of-funnel growth, increase efficiency and reduce costs. However, costs will continue to be driven up by wage and other cost inflation pressures, as well as the digital investment needed to support growth strategies.
Banks need a new cost transformation approach to eliminate complexity and drive operating effectiveness in process, data, systems and controls.
While many of the cost levers available to banks are not new, banks need to consider their cost transformation more strategically. For example, transformation needs to deliver on all four cost objectives: reduction, flexibility, scalability and transparency.
Strategic cost transformation is not for the fainthearted. The level of transformation required can be daunting, requiring experienced talent. Transformation teams must be capable of managing complex security and privacy requirements while integrating multiple legacy systems and connecting operational silos.