Three Simple Ways Banks Can Reduce Branch Operations Costs with Benchmarking

www.StrategicFacilityGuide.com
800.362.3708
3 SIMPLE WAYS BANKS & CREDIT UNIONS CAN
REDUCE BRANCH OPERATIONS COSTS
A bank or credit union of any size can be confident of their spending
on their branch buildings with facility cost benchmarking.

800.362.3708
Branches Are Changing...
 There is a lot of industry discussion about the
size, design, location, and value of traditional
branches.
 Some organizations have even decided there
is no longer a need for the physical branch.
 A majority of financial executives
prefer customers use phone,
ATM and internet for services.
 Costs of digital transactions are
much lower.

800.362.3708
...But They Are Still Important
 The Branch-ATM-Online combination
still defines the core of day-to-day
banking.
 46% of customers have used all three
of these channels for their banking
over the past six months.*
 Many banks and credit unions
consider branches to be an
important part of their business.
 A large percentage of new product sales occur in
branches.
* http://www.slideshare.net/kennethjjkwan/the-new-banking-channel-network

800.362.3708
Branch Buildings Are a Sizable Investment
 Real estate and buildings are a
major capital asset whether
owned or leased.
 This will be even be true for smaller
high-tech branches and other new
design variations
 Operating costs for property are
often dispersed among different
budgets making them difficult to see.
 Branches are typically small and
geographically dispersed, further
disguising these costs.

800.362.3708
It is Important to Manage Branch Costs
 Managing branch building operating
expenses can reduce the channel cost and
provide recurring overhead savings.
 It is more important than ever to
manage ongoing controllable costs.
 This cost management does not
mean lower quality or comfort.
 These efforts can be part of making
buildings more environmentally
sustainable.

800.362.3708
Benchmarking can Help
The objectives of benchmarking are (1) to
determine what and where improvements are
called for, (2) to analyze how other organizations
achieve their high performance levels, and (3) to
use this information to improve performance.
— businessdictionary.com

800.362.3708
Benchmarking is Simple & Inexpensive
 Organizations in other industries have used
facility cost benchmarking for significant
savings.
 Our utility group saved an average of $16 million
per participant over 10 years.
 Some benefits of benchmarking:
 Uses available information.
 Low cost
 Has low demand of busy staff time.
 Provides useful metrics.
 Surfaces hidden problems and opportunities.

800.362.3708
Step 1: Assemble Your Branch Building Costs
 The first step is to assemble all of the
building-related operating costs for each
branch.
 Start with the last full year of actual costs
 Readily available.
 No concerns about seasonality.
 Find the costs in various budgets and categories
 Organize them in an industry standard way.
 Use a template provided.
 Itemize parts of leases to the degree possible.

800.362.3708
Savings Opportunity #1
 Review the costs and identify items that are
unknown, unexpected, or undesirable.
 Investigate if these items can be eliminated.
 Some examples:
 A water bill for a building you no longer own.
 Repair payments for equipment under warrantee.
 Service charges paid at one branch but not another.

800.362.3708
Step 2: Compare Your Branches to Each Other
 Compare the costs by branch to identify
building-specific opportunities.
 Use $/square foot, $/operating hour, or other ratio
to normalize data to allow comparison among
different size branches.
 Identify and review outliers (high and low):
 Is the data correct?
 What do better performing branches do that
results in lower costs?
 What cost areas seem excessive at worse
performing branches?

800.362.3708
 Identify specific actions based on your best
and worst performing branch buildings
 Take immediate action to reduce costs at higher-
cost branches where cause is known.
 Accurately define opportunities to reduce costs at
higher-cost branches where cause/solution are
not clear.
 Identify the practices that seem to contribute to
better performance at lower-cost branches.
 Apply these practices where applicable at other
branches and monitor results.

800.362.3708
Step 3: Compare Yourself to the Industry
 Compare your results with others in the
industry to identify system-wide
opportunities.
 Participate in an established program with data
quality control
 Identify how you stand:
 Identify areas of better and worse performance
than peers
 Verify reasonable costs ranges to expect.
 Network with others willing to share lessons
learned, especially on current issues of concern.

800.362.3708
 Identify specific actions based on
comparisons with benchmark group
 Focus on areas with potential opportunity:
 Larger potential benefit.
 Better defined course of action.
 Issues of more importance to your organization.
 Learn about the practices used by better
performing organizations.
 Test applicable practices and monitor results.

800.362.3708
3 Opportunities Provided by Benchmarking
Participating in a benchmarking program
provides three simple savings opportunities
1. Know your costs to be able to identify
questionable spending.
2. Identify your worst performing buildings
to address and your best performing
buildings to copy.
3. Discover and adopt best practices to
reduce costs, improve quality, or both.

800.362.3708
Bonus Value of Ongoing Benchmarking
 As your organization transitions to new style
branches, benchmarking will help you
measure changes in branch building costs.
 Track your progress.
 Identify and understand how cost profiles are
different for different style branches.
 Fine-tune and adjust your branch design and
operations based on lessons learned.

800.362.3708
Start Today!
 Want to learn more?
 Read more about how to get started,
see examples and other resources:
StrategicFacilityGuide.com/banks/
 Want help getting started?
 Schedule a complimentary 15 minute consultation
to see if benchmarking is a suitable approach for
your organization and how to best start:
Rlambe@RALStrategies.com
https://www.linkedin.com/in/lambe

Three Simple Ways Banks Can Reduce Branch Operations Costs with Benchmarking

Recommandé

Recommandé

Contenu connexe

Plus de Robert Lambe, CFM

Plus de Robert Lambe, CFM (6)

Dernier

Dernier (20)

Three Simple Ways Banks Can Reduce Branch Operations Costs with Benchmarking