Client Situation
Our client is a leading bank providing retail, corporate, and Islamic banking services. The bank maintained a steady growth in its assets and net income margin; however, the fee income did not reflect a similar progression. Cedar assisted the bank with a quick diagnostic of its corporate fee income and designed its way forward fee income strategy.
Cedar’s Approach
Cedar's consulting team performed a thorough assessment of the existing fee income strategy as follows:
- Internal Evaluation – Conducted extensive discussions with various stakeholders and understood the bank's current fee income framework, processes, and collection systems. The existing fee income sources were analyzed to identify discrepancies between expected and actual collections, pinpointing areas where fees should have been collected but were not.
- External Assessment – Evaluated best market practices and regulatory guidelines, including those set by the central bank, was undertaken to benchmark the bank's fee income strategies. Conducted a comparative analysis between the bank's fee structure and six regional peer banks. Cedar's proprietary Fee Elasticity framework was utilized to map variations, highlighting potential opportunities for adjustments.
- Way Forward & Next Steps – The team drew insights from the comparative analysis, proposed modifications to the current fee income categories (either increases or decreases), and identified new fee structures from global opportunities suitable for adoption by the bank in the regional context. A strategic roadmap outlining key initiatives for fee revision, implementation, and improvements in processes and systems was developed.
Outcome
The program resulted in a best-in-class way forward for retail and corporate fee income improvement strategy for the bank with the following results:
- Benchmarked of 269 fee types across retail and corporate with major banks across the region
- Identified an opportunity to revise 31 existing fee types across retail and corporate and introduce ~25 new ones.
- Identified fee income collection leakage to the tune of approximately USD 3.2 Mn.
- Increased fee income by approximately USD 5 Mn by revising existing fees and introducing new fees.