Achieving Cost Improvements and Bank Operational Efficiencies

Transcription

1 Achieving Cost Improvements and Bank Operational Efficiencies May 12, 2015 Audit Tax Advisory Risk Performance 2015 Crowe Horwath LLP 1 Session Description With banks experiencing slow revenue growth, and customer preferences and technology changing rapidly, effective cost management is crucial and can have a huge impact on your bottom line. This session covers actions you can take to analyze your costs, as well as to help improve efficiency, save money and improve your bottom line. Presenter: Timothy Reimink Crowe Horwath LLP Audit Tax Advisory Risk Performance 2015 Crowe Horwath LLP 2 1

2 Topics Sources of Efficiency Ways to Improve Costs Examples Audit Tax Advisory Risk Performance 2015 Crowe Horwath LLP 3 What is Efficiency? Conducting activities at the least cost required for the quality and value delivered Having products with healthy profit margins Having low levels of total expenses relative to total revenues (low efficiency ratio) Audit Tax Advisory Risk Performance 2015 Crowe Horwath LLP 4 2

3 Why Worry about Efficiency? Shrinking Loan and Deposit Margins Low rate environment Rate competition Slow Portfolio Growth Careful customers Careful lending Slow growth economy Changing Customers Product Usage Channel Usage Loyalty Technology Imperatives Security Mobile Regulatory Compliance costs going up Audit Tax Advisory Risk Performance 2015 Crowe Horwath LLP 5 The Biggest Areas for Improvement Branches 1 to 2 FTE per branch Lending Commercial, Mortgage and Consumer 0.25 to.75 FTE per lender Growth without increased back office staff Payments 2 4 bp improvement on volume Vendors 15% reductions Audit Tax Advisory Risk Performance 2015 Crowe Horwath LLP 6 3

4 Ways to Improve Efficiency Business Alignment Channel Optimization Process Costs Staff Productivity Technology and Automation Vendor Relationships Audit Tax Advisory Risk Performance 2015 Crowe Horwath LLP 7 Improving Efficiency: Business Alignment Basic Premise Get out of High Cost Businesses Ways to Improve Identify Competitive Realities Minimum Necessary to be Competitive Means of Differentiation Base Your Decisions on Good Information What we ve seen Robust Strategic Planning Non-bank acquisitions Exiting business lines Audit Tax Advisory Risk Performance 2015 Crowe Horwath LLP 8 4

5 Improving Efficiency: Channel Optimization Basic Premise Cost effective combination Adapted to your customer base Ways to Improve Take a holistic view of channels In Person Branch, Sales Forces Remote - Call Center, ATM, RDC Internet Online, Mobile Performance Analysis Adjust Investment to Sales and Service trends What We ve Seen Branch Sales and Purchases Enhanced Call Centers Electronic Account Offerings Relationship Manager centric delivery RDC and Merchant Services Audit Tax Advisory Risk Performance 2015 Crowe Horwath LLP 9 Efficiency Opportunity: Branches Reduce staffing to expected volume New job roles and focus Reduced real estate footprint Fewer and different locations Performance Analysis Value versus Cost Branches to Benchmark 1,400,000 1,200,000 1,000,000 Total Branch Value 800, , , , , , , , , , , , , , ,000 Personnel Cost Audit Tax Advisory Risk Performance 2015 Crowe Horwath LLP 10 5

6 Improving Efficiency: Process Costs Basic Premise Reduce Unit Cost to Value Ways to Improve Continuous Performance Monitoring Analyze and Rethink Process Automation What We ve Seen Analysis, Mapping and Benchmarking Shift to Processing with Images Changing Job Roles Workflow technology Audit Tax Advisory Risk Performance 2015 Crowe Horwath LLP 11 Efficiency Opportunity: Loan Processes Commercial Reduce touches of smaller loans Shift work from high cost to lower cost staff Increase lender time for sales and relationships Parallel processing with images Residential Mortgage Set Gates to Streamline Workflow Clear to Process, Clear to Underwrite, Clear to Close Automate Compliance and documentation Use Online Channel and Communication Consumer Loans Go paperless Audit Tax Advisory Risk Performance 2015 Crowe Horwath LLP 12 6

7 Improving Efficiency: Staff Productivity Basic Premise Get more done with the same number of people Ways to Improve Performance Management is Key Expectations and Scorecards Motivation and Rewards Training and Supervision Change Job Roles and Capacity Benchmarking What We ve Seen Visible Metrics Line of Sight Incentives More Capable Employees Flexible Work Arrangements Co-Sourcing Specialists Audit Tax Advisory Risk Performance 2015 Crowe Horwath LLP 13 Example of Staff Productivity Benchmarking Staffing Pro Forma Average monthly volume Staffing at Median New Loans 135 Staffing at Median Total Loans 5,038 Bank Actual Staff Loans documented per month (Doc Prep) Loans boarded per month (Bookers) Loans outstanding per payment processing, collateral/file tracking & maintenance FTE Other servicing staff Management 1 1 Operations Staff Subtotal Loans closed per month (AAs) Total Staff Audit Tax Advisory Risk Performance 2015 Crowe Horwath LLP 14 7

8 What is Right-Sizing? 15 The number of employees is in line with the volume of activity Audit Tax Advisory Risk Performance 2015 Crowe Horwath LLP 15 What is Right Sizing? 16 The number of employees is in line with the volume of activity The number of employees with relevant skills is in line with the volume of required activities Audit Tax Advisory Risk Performance 2015 Crowe Horwath LLP 16 8

9 Where is Right-Sizing Needed Most? 17 Branches Residential Mortgage Call Centers Compliance Activities Special Assets & Collections Digital Channels Small Business Lending Commercial Lending & Credit IT Deposit Operations Support Groups Audit Tax Advisory Risk Performance 2015 Crowe Horwath LLP 17 Improving Efficiency: Technology and Automation Basic Premise Reduce time spent finding information Move work through automated business rules Ways to Improve Automation of Workflow Routing and Queues Business Rules Paperless Processing Imaging at time of receipt Effective Infrastructure and Mobility What We ve Seen Workflow Systems using Images Signature Pads and Online Account Opening Intranet incorporated into daily work New platforms (Salesforce, MortgageBot, etc) Audit Tax Advisory Risk Performance 2015 Crowe Horwath LLP 18 9

10 Advancing Technology Capabilities 19 Mobile Workforce Social Networks Hosted and Cloud Solutions Workflow Systems Self-Service Systems Live Chat Customer Support Decisions Models and Systems Targeted Applications Audit Tax Advisory Risk Performance 2015 Crowe Horwath LLP 19 Improving Efficiency: Vendor Relationships Basic Premise Focused management of vendors to improve costs and value Ways to Improve Vendor Management Service Level Agreements Vendor Managers and Scorecards Contract Negotiation Vendor Consolidation Market Price Benchmarking What We ve Seen Savings > 15% with Focus More Responsive Vendors Primary Vendors cutting deals Vendor shifts for Improved Costs or Reduced Risk Audit Tax Advisory Risk Performance 2015 Crowe Horwath LLP 20 10

11 Improving Efficiency: Business Mindset Culture and Priorities Balancing of Value and Cost Managing Trade-offs of Cost, Speed and Quality Metrics and Accountability Spending Practices Continuous Improvement Audit Tax Advisory Risk Performance 2015 Crowe Horwath LLP 21 Cost Savings can t be the only strategy Providing customers with value and service is essential Having the capacity and capability to sell and grow is key Being prepared for the future is important Audit Tax Advisory Risk Performance 2015 Crowe Horwath LLP 22 11

12 Thank You Timothy Reimink Director, Performance Advisory Services Crowe Bank Consulting Group Office Mobile Audit Tax Advisory Risk Performance 2015 Crowe Horwath LLP 23 12