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.
