Value-Based Cost Reduction: Finding the Optimal Strategy for Growth
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Transcript of Value-Based Cost Reduction: Finding the Optimal Strategy for Growth
Copyright © 2016 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.
Value Based Cost Reduction: Finding the Optimal Strategy for Revenue Growth
But most have realized only modest improvements in
their cost-income ratios.
And the work isn’t done yet.
Copyright © 2016 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.
Investment banks have worked hard
to control costs.
In fact, research reveals the largest investment banks
collectively may need to further reduce costs by up
to US $20 billion to improve the average return on
equity.
Copyright © 2016 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.
So what has the game plan been up until now?
Copyright © 2016 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.
All firms have
increased their
compliance
activities.
Firms have
focused on
reducing “unit
costs.”
Improved
virtualization and
cheaper
computing power
have helped to
reduce IT costs.
Cost reduction
has taken place
largely within the
four walls of
banks.
Now, as one investment banking executive puts it:
“We have squeezed this lemon dry. There is no way to continue with historical
cost-reduction activities and expect more savings or any sustainable cost
advantage. We need to solve this differently—with industry-wide cooperation
and with different techniques within our institutions.”
Copyright © 2016 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.
New ideas are starting to take hold, however,
with five hot topics worth noting:
Copyright © 2016 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.
Broker use is increasing as a result of
remediated broker policy and controls,
and a shift in the role of inter-dealer
brokers in the over-the-counter (OTC)
market.
1
FIVE TOPICS SHAKING UP INVESTMENT BANKS
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Market data use is increasingly
driven by proactive enforcement of
usage agreements by data vendors.
2
FIVE TOPICS SHAKING UP INVESTMENT BANKS
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FIVE TOPICS SHAKING UP INVESTMENT BANKS
Sales and trading workforces are
being resized to accommodate ongoing
electronification across asset classes
and changing market conditions.
3
Copyright © 2016 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.
Control workforces, particularly
compliance and risk departments,
are growing as a result of new rules
regarding conduct and supervision.
4
FIVE TOPICS SHAKING UP INVESTMENT BANKS
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Technology is being simplified,
driven by increased consumption of
change, IT infrastructure and third-
party application services. In addition,
zero-based budgeting and spending
has the potential to play a pivotal role
in helping banks make effective,
value-adding investments to
continually refuel for growth.
5
FIVE TOPICS SHAKING UP INVESTMENT BANKS
Banks can optimize return on investment
through three steps to profitability:
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Copyright © 2016 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.
Take an outside-in view to create
cost visibility and insight.
Compare how much it would cost to
house a specific function outside the
bank with how much it costs to
maintain it internally.
1
THREE WAYS BANKS CAN OPTIMIZE RETURN ON INVESTMENT
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Build an end-to-end governance
model that drives accountability to
the rightful owners. A governance
model, along with related financial
controls and performance incentives,
plays a key role in ultimately shifting
mind-sets toward long-term growth.
2
THREE WAYS BANKS CAN OPTIMIZE RETURN ON INVESTMENT
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Use cost savings to fuel growth.
Design transformation programs
based on sustainable operating
models that promote efficiency and
cost savings.
3
THREE WAYS BANKS CAN OPTIMIZE RETURN ON INVESTMENT
LEARN MOREabout how investment banks are controlling costs to
fuel long-term growth with our full report:
Copyright © 2016 Accenture All rights reserved. Accenture, its logo, and High Performance Delivered are trademarks of Accenture.
Value Based Cost Reduction:Finding the Optimal Strategy for Revenue Growth