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Efficency in banking

Efficency in banking



Stanislas Chambourdon

Head of Banking and Insurance

KPMG in Luxembourg


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By extracting more value from all of their available data sources, banks can develop a better understanding of customer needs and thus offer more effective and profitable services, which translates into a competitive advantage and a means of staving off threats posed by new market entrants.
For banks, boosting revenues from customers hinges on several imperatives: 

  • becoming proficient at quickly gathering and leveraging valuable structured and unstructured data about their customers—and their target new customers 
  • gathering the data on customers and their behaviour that is often buried deep in banks’ data mines and in third-parties’ repositories
  • determining how best to monetise those sources of value 

Although the challenges are clear and the options to move forward are fairly well known, a disconnect remains between many banks and their customers. Driven by advances in technologies already adopted by other industries, consumers are demanding the same from banking, but the banking industry has been slow to adapt. 

The real competitive advantage will go to those players who are able to successfully combine data from all available sources to develop a better understanding of customer needs and, as a result, serve customers more effectively and profitably.

European banks are struggling with high costs and low profitability. Balance sheet restructuring has not increased the very low returns on assets and returns on equity of many European banks.

Five areas provide significant scope for many banks to reduce costs:

  • On average, more than 50% of banks’ costs relate to staffing, a significant portion of which goes specifically to people processing customer transactions. This is mainly due to a lack of complete automation of the service processes. STP (straight-through processing), therefore, is a relevant topic to many banks. STP aims to pare back the human input required to process transactions to an absolute minimum —banks should identify their STP throughput rates and try to dramatically increase them. 
  • Self-service channel usage also has significant cost implications. By giving customers more power and responsibility to carry out their own banking activities, there will be less need for human input from the bank. 
  • Simplification: the cost base of banks comprises, among other things, complex products, services, legal and operating structures, operating platforms and systems, and booking models. There is scope to simplify in all these areas, and to drive down costs accordingly. 
  • First-time resolution means that processes are resolved immediately at the first point of contact with the customer, whether it is at a branch or a contact centre. This contrasts with the currently prevalent centralised model, where the vast majority of transactions end up in central operations. 
  • Investment in technology: besides simplifying aspects in the cost base, IT investment is capable of reducing costs over the longer term, while also improving (or at least protecting) income through improved customer service, risk management, and cyber security.

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