The Financial Services industry is undergoing massive change and is challenged by enormous cost pressure caused by sharply declining revenues and signifi cantly increased costs of doing business. This made cost management a key topic for top executives.

While especially Private Banks are forced to massively change their business models by the trend towards tax transparency and regulatory requirements, insurance companies are facing strong pricing pressure. We are convinced that these changes are structural and not cyclical and therefore create a highly demanding entrepreneurial challenge for the leaders: reducing costs and over-capacities with minimal negative impacts on growth potential and client service quality.

Call for action
Today, for most Financial Services players there is no valid alternative to embarking on cost reduction projects - targeting not only signifi cant, but also sustainable efficiency gains. How are best in class companies doing this? From our experience with a wide range of clients, we recommend the following considerations:
- Consider Cost Efficiency not just as an isolated topic but as a driver for a fundamental and objective assessment of the current business and operating model and the value chain in an integrated way to move towards a cost effective and differentiated business model
- Drive Cost Efficiency projects as enablers for growth. Done in the right way, they free up resources, which can then be invested into growth opportunities
- Focus the project on effective and radical measures – not just on politically easy ones
- Perform a thorough evaluation of major areas for improvement and defi ne measures, based on the current strategy and deep insights from leading companies
- Plan for sustained enforcement of the cost reduction measures throughout the organization - not just for implementation
- Leverage the project as an opportunity to push further simplifi cation, standardization and industrialization
- Approach Cost Effi ciency as a regular and ongoing process which is closely linked to the corporate culture and leadership principles, rather than being a one-off project executed under emergency conditions.

With these considerations, clients will ensure that cost reduction projects deliver more than short-term cost reduction but genuinely support the company in becoming “Fit for Future”.

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