Raising productivity in financial services
Organisations need to find better ways than traditional cost-cutting to meet challenges
IN A new report titled The Productivity Agenda – Moving Beyond Cost reduction in Financial Services, PwC sets out the important challenges and opportunities facing the financial services industry and the ways in which senior executives should respond if they want to move beyond simple cost-cutting and improve profitability in the long term.
With banks struggling to improve their return on capital, many institutions are being forced to restructure and cut costs. Cost-cutting will only deliver so much. If financial institutions are to improve profitability in the long term, they need to improve the productivity of the enterprise.
Pieter Crafford, a financial services advisory leader for PwC South Africa, said: “A number of external factors have put significant pressure on the financial services industry in recent years, leaving many organisations with increased pressure on cost structures. Traditional cost-reduction measures can deliver only limited results.
“Financial services organisations need to tackle the productivity challenge head on in order to move to a sustainable and low-cost business model.”
Based on a global survey of the financial services industry, PwC has identified six areas where financial institutions can focus their productivity efforts to boost sustainability:
1. Better understanding the workforce.
PwC’s experience indicates that by simply tracking hours by task, organisations can improve productivity by 15 to 20 percent. The implementation of service catalogues and multi-tier sourcing can bring another 20 percent improvement. Of the organisations that didn’t track work by hours and tasks, 62 percent believed such tracking would yield productivity benefits.
2. Rethinking change functions.
Forty percent of financial institutions are spending 20 percent of their budget on so-called “change the institution” efforts. However, only 15 percent said they were satisfied with their ability to execute change.
3. Embracing the platform economy.
Only 21 percent of financial institutions employ crowdsourcing tools. Platforms can run challenges that tap the collective brainpower and resources of a crowd, driven by a sense of competition to develop the best response. PwC predicts that gig employees will perform 15 to 20 percent of the work of a typical financial institution within five years. This translates into significant cost savings across the board, along with the potential to improve the level of talent and innovation delivered from the employee base.
4. Improving workforce digital IQ.
As people live and work longer and unemployment rates remain low, digital training and retraining of existing workforces is particularly crucial. Despite its importance, research shows that current efforts are not achieving the desired results.
5. Bringing an agile mindset to the mainstream.
To keep up with digital-only competitors and rapidly deliver a seamless and instant customer experience, 77 percent of financial institutions are turning to agile delivery methods in some way throughout their organisations.
6. Mastering digital labour.
More than 50 percent of chief executives believe artificial intelligence (AI) will have a bigger impact than the internet. Getting the balance right between tasks performed by AI and tasks performed by people will be key to the future success for financial institutions. | Supplied by PwC