Banking: Reshaping your cost base for today's market realitiesFollow @PwC_North
Cost restructuring is at the top of the agenda for most UK banks and building societies. It is essential that organisations make the right cost-related decisions and avoid the pitfalls that are common in traditional approaches to cost cutting. To be successful, organisations need to treat cost as a strategic issue and understand that sustainable cost restructuring requires an open mind and a commitment to change.
The fallout from the financial crisis and the impact of regulatory change is prompting a fundamental rethink of business strategies, operating models and cost structures within many banks and building societies. The challenges faced across the banking value chain, instability in the eurozone, ongoing deleveraging, and increases in capital and funding costs are spurring a greater focus on operational costs: they require structural cost changes that are significant and sustainable.
Change will take time. Many banks have excessive and inefficient structures as too many decisions are taken with a short-term view. Margins in banks will be increasingly tested. Banks will need to look for large-scale transformational cost restructuring in every part of their business. Longer-term solutions are needed, and many will not payback in a year or two. These solutions can't be a repeat of the same cost-cutting tactics. You need to think differently, be open to possibilities not considered or attempted before, challenge the status quo and existing assumptions, and overcome organisational inertia and resistance to change.
In our paper Reshaping your cost base for today's market realities we take a fresh look at costs and show you the benefits you can get when cost restructuring is tackled as a strategic objective. Restructuring your cost base, instead of simply cutting costs, can bring you a rapid improvement in financial performance and deliver a sustainable reshaping of your cost base.
Contact: David Roper