Branch Flexing: An Agile Approach to Cost Management
Since the spectacular end of the pre-2007 credit boom, the profits of retail banks have come under intense and sustained pressure. Even after the recent rebound, the average return on equity for regional banks remains at roughly half of pre-crisis levels. The causes of this decline are familiar – reduced lending growth, higher capital costs and deposit margin contraction caused by exceptionally low interest rates and regulatory restrictions on fee income.
Retail banks must again look to regain profitability by cutting costs. In our latest Perspective, Branch Flexing: An Agile Approach to Cost Management, we suggest that instead of simply cutting branches, retail banks must develop a more flexible operating model which can readily increase or decrease capacity and costs in line with the opportunity to capture customer value. In this paper, we describe the keys to properly “flexing” a branch, the different branch flexing strategies, goals and objectives of the program, and steps to implementation.
Sumit Sahni, Partner in the Americas Retail and Business Banking and Strategic Information Technology and Operations Practice
Paul Mee, Partner and Head of the EMEA Strategic Information Technology and Operations Practice
Aaron Fine, Partner in the Americas Retail and Business Banking Practice
Massimo Tessitore, Partner in the EMEA Retail and Business Banking Practice
This publication is only available by request. Please fill out the form below to request a copy: