Converting cost to growth Why strategic cost reduction matters in banking 44% 42% For more information visit: www.accenture.com/banking-cost-reduction © 2016 Accenture All rights reserved. Reducing costs, but often being disappointed by returns... 30% 24% of banks prioritize reinvesting cost savings to align with strategy and faster ROI of banks intend to funnel cost savings into growth initiatives and have an enterprise-wide strategy to do so Linking cost reduction to value creation Competing priorities leading to misaligned initiatives... Being aligned around cost and growth initiatives of banking executives said end-to-end business diagnostics are the most relevant cost management and business performance improvement techniques 18% of banking executives have utmost confidence in their leadership team’s investment and growth initiatives Counteracting the rise of nimble FinTechs... Securing the right capabilities for sustainability of banking executives said digital strategies are an enabler of advanced operating models of banking executives said they undertake a formal review of investment success Maintain a holistic approach Connect cost reduction and investment decisions Adopt a digital, agile operating model Three ways to win Banking executives want to reclaim profitability… …but they are faced with three challenges Banks are seeking 11% return on equity (RoE) 35-45% cost-income ratio Research shows that by embracing strategic cost reduction, banks can fund new streams of growth and better compete. 1 2 3 Be aggressive in tackling the cost base. Develop a cost-conscious culture by embracing spend visibility and cost category ownership. Directly address the drivers of consumption in your bank. Reinvest cost savings in initiatives that drive value creation and fuel new growth. Undertake an end-to-end assessment of the bank’s enterprise across its front-, middle- and back-office functions. Define a future state that recognizes a different approach to cost, then design and embed the right digital capabilities to execute with pace and certainty, and achieve sustainability in an era of digital disruption.