![]() Some banks have even pledged not to lay off employees.īut no bank can afford to operate in the red. Wanting to play a positive role during the current crisis, many financial institutions have participated in the government-backed paycheck protection program and have extended traditional loans to small struggling local businesses. Although these moves helped the bottom line, they greatly damaged employee morale and customer sentiment. Having already closed 395 of its 5,032 branches in 2020, the bank announced it was on track to close another 250 branches in 2021.īanks used similar cost-cutting measures during the financial crisis of 2008, closing thousands of branches and laying off many thousands of employees. Bancorp, which closed nearly 400 of its approximately 2,800 branches last year, is going to close more this year. PNC has announced plans to close 280 branches by the end of 2021. According to S&P Global Market Intelligence data, a record 3,324 branches closed in the US in 2020. (See Exhibit 1.)īanks responded quickly to the crisis, shuttering branches and laying off staff. ![]() In August, the bank index was still down more than 30%, while the broader S&P 500 had already returned to positive territory. While the S&P 500 lost more than 30% by late March, the KBW Bank Index lost more than 50%. Last year was a grueling one for US banks. Savings of this magnitude can boost net income before taxes by 3% to 4%. In our experience, banks that take an aggressive approach to improving procurement typically save 10% to 15% annually on their total procurement spending. Procurement spending can account for up to 45% of a bank’s total cost base. Optimizing procurement, in fact, is one of the least disruptive and fastest ways to achieve significant savings. For most banks, savings are waiting to be tapped across many categories, and a wide variety of levers are available to tap them. But the current approach of closing branches and letting employees go has proved disruptive and painful.Ī far better alternative is hiding in plain sight: optimizing procurement. With no respite in sight, banks will need to find ways to aggressively cut costs in the near term. The COVID-19 pandemic wreaked havoc for the banking industry. Technology, Media, and Telecommunications.
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