Under the influence of multiple factors, such as fee-concession measures and increased market competition, the banking sector is facing unprecedented pressure to increase profits, using front-line applications such as generating artificial intelligence and large models to achieve effective cost control and optimization, while safeguarding the stable and efficient operation of its operations, becoming the focus of current banking concerns and a key issue for major banks to address。
A recent study by kpmg china on how banks can create value through strategic cost optimization provides a completely new insight and strategic path to cost control and value enhancement in the banking sector. The report provides an in-depth analysis of the current challenges faced by the banking sector in terms of cost management and optimization, and explores how the banking sector can create value through strategic cost optimization in order to achieve sustainable and sound development。
According to zhang chudong, the partner in charge of the financial sector in kpmg and china, simple scale expansion and rapid growth are no longer adapted to the current industry environment. For banks, cost optimization is not a one-time tactical adjustment, but rather a long-term development that requires a comprehensive review and accurate measurement of the actual costs of the entire chain, from a holistic perspective. Banks need to move towards a more comprehensive, balanced and strategic cost-efficiencies strategy, and to avoid a purely cost-cutting strategy that promotes continued innovation and sound development of banks than other programmes that may have similar value growth effects。
In the kpmg cost transformation survey, respondents from all regions emphasized that the current global economic downturn was the biggest obstacle to future cost optimization transitions for banks. This finding demonstrates that the key to the success of the current transformation of banks is not only that they demonstrate a strong commitment to change, but also that they are flexible and innovative in adapting to the external environment。
In the face of increasingly stringent regulatory requirements, a complex and volatile market environment and individualized demand, the bank needs to consider, in addition to the application of technical tools, a number of other aspects, such as addressing risks and regulatory costs, focusing on the progress of efficiency reduction management, and improving the organizational change capacity of members of the institution. He stressed that addressing the cost of risk and regulation was key to bank cost transformation. Risk management and cost optimization inputs are needed to ensure that banks operate safely; by integrating risk management strategies, banks are not only able to cope more effectively with single risks, but also to improve the comprehensiveness and effectiveness of risk management, thereby maintaining a competitive advantage in a complex and volatile global environment。
At present, cost transformation optimization is a key tool for banks to improve their competitiveness. It is the view of the partner treasurer of kpmg's strategic advisory services in the financial sector that domestic banks should not limit their work on “down-of-home fees” to cost compression from a financial perspective, ignoring the combination of long-term value enhancement and optimization and innovation. The right cost optimization is not simply a cost reduction, but requires better strategic decision-making on business models, products and services, maximizing capacity by optimizing the entire business model from the front to the back end, and seeking a balance between value creation and cost reduction. In addition, in the long run, “savings” should be accompanied by active efforts by banks to explore “open sources”, including improving unit capital generation capacity through proactive asset structure optimization and light capital transformation, as well as building more specialized and integrated service capacities to enhance asset pricing and investment returns。
The report emphasizes that banks should make value creation and cost control a central objective, addressing inefficiencies more effectively through cost-efficient initiatives and in the right order, and maximizing the level of client experience by combining new technological instruments, streamlining processes and introducing innovative efficiency gains to achieve a balance between resource allocation, business development and customer experience。
In the digital age, technological solutions and new skill requirements are not negligible aspects of bank cost optimization. Globally, banks generally consider artificial intelligence and other automated technologies to be one of the most potential levers for reducing bank costs, while they will also play a more important role in their future business models. The officer-in-charge of the advisory services of the chief information officer of the bank of china and the regulatory industry, yoo xiaogwang, indicated that the bank was moving towards more efficient automated processes, using big data and ai technology to simplify processes and improve management efficiency. At the same time, in addition to focusing on technology delivery, banks need to focus on establishing the right business architecture and mechanisms, which are equally important for reducing transaction costs. Artificial intelligence not only helps banks to upgrade their services and enhance their customer experience, but can also bring about revolutionary changes in risk management, customer services and product innovation, which will greatly contribute to the transformation and growth of banking, with significant economic benefits for banks。
In promoting cost transformation, banks need to balance inputs with outputs to ensure the sustainability and viability of transition plans. The report stresses that the digital transformation is not a simple technological upgrading, but a comprehensive optimization of banking models, products and services. Banks should use cutting-edge technologies, such as big data and artificial intelligence, to drive cost transformation, drive the automation and intelligence of business processes, reduce costs and increase operational efficiency and achieve precise cost management。
