Cost Optimization

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Irrespective of whether a market is growing or challenged, cost needs to be optimized. It drives profitability, ROE, ROA, RAROC, and shareholder value. Cost tends to creep up, as unfortunately most cost is fixed whereas revenue is projected. A mismatch is therefore bound to occur. Effective tracking of cost, using the right metrics (this is key), and logical approaches of keeping it under control is an on-going business activity.

There tend to be inefficiencies in the coverage model. Too many branches, large branch size, underutilized branch staff, under-leveraged RMs, poor loading, lack of use of technology - both by the customer for self-service, and also the sales organization. Digital penetration is weak.

There then tend to be inefficiencies in the back office. Digitization poorly executed, too many touch or handover points, manual processes, incorrect process framework, sub-optimal centralization… the list goes on. If you get it right, using digital effectively, 30%-40% of the cost can be shaved off at the back-office. If one doesn’t get this right, the pure digital banks, or challenger banks will force you to do so.

Cedar has a proprietary cost-optimization framework for financial services companies, that includes relevant regional and international benchmarks. The analysis can be completed within 60-90 days, and then Cedar can use its tools and AGILE approach to rapidly optimize cost in sprints.

Standard Chartered
Deutsche Bank
Emirates NBD
Dubai Islamic Bank
BNP Paribas
RBL Bank
Royal Bank of Scotland

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