Talk to any successful business manager and they’ll tell you that the phrase “that’s just the way it’s always been done” should make anyone suspicious. Exploring (and hopefully finding) better ways of accomplishing tasks can uncover cost savings and free up staff time. As banks and credit unions face an environment where competition for financial services is increasing and margins are decreasing, it’s important to consider how your institution can be more efficient.
Many people tend to think of efficiency as purely a cost-cutting measure, but that’s not the whole picture. As a consultant at Crowe Global observed about banking efficiency, “A focus on cutting costs alone is not a formula for long-term success. A balanced approach… is imperative to the success of a bank’s operations and profitability.”
Efficiency can be improved by cuts, but success ultimately comes down to the value of services. This can mean cutting in some areas, growing in others, and finding new ways to put time and energy into areas that have the biggest impact.
Cutting direct costs
Typically, the fastest and simplest boosts to efficiency are cutting costs without really changing any processes or the customer experience. This can be as simple as installing energy-efficient lighting or closing one of your teller lines for a few hours each week.
As cost-cutting gets more complex, managers need to think about total long-term costs and how services are provided. Automated services and new technology can require large upfront investments that could take years to pay for themselves and change how people do their banking.
At the highest level, cost-cutting can involve a complete reassessment of an institution’s footprint and channels. Low-traffic branches may be shut down and replaced with a few ATMs or ITMs, or certain roles might be outsourced to lower-cost service providers.
Efficiency can also become from increasing revenue to make any costs worthwhile.
Historically, the most common way to boost customer/member revenue has been by getting them to consolidate accounts and loans at one bank or credit union. Digital banking hasn’t changed the idea behind this strategy, but it has altered how people consolidate accounts. Since digital banking can be done from home, institutions must make it extremely convenient for existing customers/members to access services or get loans to keep them from using another service.
Adding other services, such as wealth management or private banking, can also lead to greater revenues and better retention. However, the value these types of services can provide will vary greatly by institution (or even by branch location).
Creating effective staff
Another way to increase efficiency is by helping staff to get more work done and support more customers/members without hiring additional support. Again, technology can be a major influence on these costs. Teller cash recyclers can allow tellers to handle transactions faster, while improvements to digital support tools can mean more efficient operations and facility management.
Improvements to staff effectiveness are often the result of removing barriers, so it’s incredibly important to talk to staff about what causes their biggest problems and slowest interactions. It’s also important to plan out which new tasks or training staff should work on if they complete their work faster. An amazing innovation that cuts the process time in half isn’t valuable if staff members have nothing to do with the freed-up time.
Whenever a potential improvement is found, its real value needs to be analyzed. Being able to improve the efficiency of a process by 30% is a big gain; but, if the process only happens a few times a year, the improvement may not be worth pursuing.
A specific area where banks and credit unions can look to improve their efficiency is with vendors.
Typically, managers don’t think about vendor efficiency because it’s outsourced or contracted work done at a fixed price. However, the vendor work is only part of the process. Improving interactions between staff and vendors can save a considerable amount of work.
Equips is built on unlocking vendor efficiency for financial institutions. Our equipment management system allows you to keep using your existing vendors while lowering maintenance costs and reducing the work hours needed to schedule, bill, and follow-up with those vendors.
Contact Equips today to find out how we can make efficiency happen at your financial institution.
Equips is revolutionizing how Banks and Credit Unions manage, maintain, and protect critical branch equipment. Leveraging a network of 500+ vendors, experts at Equips help Financial Institutions respond to equipment problems quickly in one place: Equips.com. Active management allows Financial Institutions of all sizes to improve operational efficiency, cut costs, and streamline equipment inventory and vendor management. Our groundbreaking solution provides clients across 45 states with better insight and transparency into their critical equipment and enables employees to do their best work. To learn more visit equips.com.