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Achieving high performance with structural cost initiatives

Read Accenture's report on the next level in cost transformation and learn six cost transformation principles for banks.


There’s no question that banks have made cost reductions—yet, given the market outlook over the next few years, greater efforts are necessary. The next wave of cost transformation requires banks to make structural changes to their cost base. Accenture has identified six principles that will enable banks to transform their cost structure.

Australian banks have driven cost-to-income ratios from the 50 percent range a decade ago, to the 40 percent range today. However, today’s banking landscape requires even greater efficiency.

Notably, Commonwealth Bank has targeted a cost-to-income ratio of 35 percent for its retail business. If this becomes industry standard, each bank will need to trim 20–30 percent from its cost base—an estimated $1.5–2.5 billion each.


Based on analysis of the EU postal industry, Accenture identified six cost transformation principles for banks:

  1. Speed up the supply chain

  2. Restructure retail distribution to balance service and costs

  3. Shift fixed costs to third parties

  4. Decrease labour costs

  5. Share infrastructure and assets

  6. Diversify to refresh cost structure


Today’s business environment requires increasingly rigorous efficiency. Indeed, given Commonwealth Bank’s target cost-to-income ratio of 35 percent for its retail business, Australian banks must move beyond tactical cost reduction. By capitalising on the next wave of cost transformation, banks can position themselves for high performance—now, and in the future.


Ira Maruta is a senior manager in Accenture’s Financial Services Strategy practice in Sydney, Australia. He has spent the past 10 years working closely with clients to define and implement their business and operational strategies, and to help them pursue their business transformation agendas. He has worked in a number of different industries in Asia Pacific, including banking, resources and supply chain services.

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