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.