Cut Costs

The headlines have started on reporting service charge and rate increases by the major banks after taxpayers have helped prop up their "toxic assets". Happily, the CEO's of Canada's major banks, except TD Canada Trust, have all announced significant voluntary cuts in their performance pay packages due to economic conditions and the perceptions regarding current remuneration of financial industry executives.
Unfortunately, at least two of the top five have increased consumer costs to use their services. The rationale provided by the public relations people is historically consistent and argumentatively weak! Fees and rates have increased due to "rising costs".
TD Canada Trust subsequently backed off an announced charge on inactive credit lines. No doubt these accounts are primarily held by customers who are in better than average financial positions and the charge is perceived as a nuisance. Even though the charge has been dropped, the bank has lost some public profile and probably a few customers.
The "professionals" should be doing a better consumer-centric job during these disruptive socioeconomic times in developing their productivity strategies and tactics. First and foremost, assess all processes and activities for cost improvements. Our experience over many years and clients continues to produce major savings in all financial institutions. Secondly, address strategies to build real, not "tag-on revenues". The latter is a lazy strategy and is extremely bottomline effective when the institution has millions of customers like the major banks. For example, if there are ten million customers who have hypothetically 15 transactions a month when service charges are raised five cents each the big profit meter clicks out millions of extra dollars without any improvements. Perhaps the cost cuts should start in the departments that don't have market empathy or customer-centric solutions.
Everyone has to re-adjust their costs of living and operations at this time and no one person or company is exempt, especially those who have had their hands out!

Pat Palmer | Wednesday, February 04, 2009 | Comments (0) | Trackbacks (0) | Permalink