Client Situation
Our client is a leading bank in Oman providing Retail, Corporate and Islamic banking services across Oman. Bank had steady growth in its assets and net income margin, however the fee income did not reflect similar progression. Cedar assisted the bank with a quick diagnostic of its corporate fee income along with designing the way forward fee income strategy.
Cedar’s Approach
- Internal Assessment -
- Developed a deep understanding of the existing fee income framework, process, and systems in place to collect and govern the collections through multiple stakeholder discussions.
- Analysed fee income to determine income leakage, i.e., Fee income ought to be collected vs Actually collected
- External Benchmarking - Reviewed best practices adopted in the market and regulatory landscape, including central bank guidelines and directives on fee income.
- Comparative Analysis - Performed a comparative analysis of the current fee structure of the bank with 6 peer banks in the region. Mapped variations using Cedar’s proprietary Fee Elasticity framework to determine potential correction opportunities.
- Way Forward Initiatives - Based on the benchmark comparative, Cedar determined modifications in the existing fee income categories (increase/ decrease) and identified new fee types from global opportunities for bank adoption in a regional context. Devised a roadmap capturing key initiatives across fee revision, implementation, and process and systems.
Outcome
The program resulted in a best-in-class way-forward strategy for corporate fee income growth with the following results:
- Benchmarking of 116 conventional and 84 fee types in Islamic banking with six regional banks
- Identifying more than 60 new fee types as income opportunities and ~47 existing fee types for fee revision opportunities
- Identifying leakage areas for ~10% of the bank's total fee income
- Identifying additional 8-11% fee income opportunities inclusive of new and revised fee incomes