01. Minimize Yearly Recruitments
New employees are recruited by the banks every year to
fulfill the organizational requirement . But in the
recent past it was observed that explicit drawback in employee recruitments in banking sector. Comparatively less opportunities are available for interested candidates to apply and work for.
This mainly targets to reduce the cost involved in recruiting, training and funds allocations for the wages salaries bonus payments and other welfare activities.
02. Outsourcing
An obvious tendency of outsourcing of some procedures of the
banks/financial institutes can be seen in the present scenario .
Eg:- Recovery
Process (To some extent )
Janitorial
Activities
Marketing
Activities/ ATM Cash loading
IT related Activities- PC Hardware repairs and software installation /IT Help Desk Support
Bank’s major expectation through this is the time and cost management. Here bank has the opportunity to assign its human capital to different task which is more effective and profitable. Comparatively fewer salaries are paid to outsource staff.
03. Recruitments done on temporary basis (Interns/ School Leavers)
Instead of recruiting to the permanent carder school levers
are given the opportunity to join the bank and work for. They are undergoing an
internship programme from 06 months to one and half year.(Very from bank to
bank)
School leavers who are expecting their examination
results or who are expecting for university selection, join the bank for
temporary basis until their requirement accomplish. This is such a profitable mechanism
that management be able to make perform core banking functions, mainly front
office activities at a low cost.
04. Implementing new technology
Most
banks use Cash deposit Machines (CDM) and Cash Recycling Machines (CRM).This
also be considered as a low cost mechanism. For example, one CDM or CRM may
replace a certain number of tellers and also it is much time efficient that
people can deposit their cash even at mid night.
The labor cost is minimal and machines continuously run longer period (24/7)without incurring
labor costs.
05. Reduce training sessions /outbound activities
Banks
are kind of “Learning Organizations” where provide training, learning,
development and education to its employees. To have an understanding of proper talent
management is a key development strategy of a bank. But when the banks come to
cost efficient perspective, a certain downfall of these activities can be observed
in the recent past.
Banks intend to minimize the various cost factors, involved in training sessions, payments
for outside lectures, reimbursement of expenditures etc.
Reference
Domimique A. (2018) bank can radically reduce cost. bcg.com [online] Available from: https://www.bcg.com/publications/2018/four-ways-banks-can-radically-reduce-costs. [Accessed : 29 April 2021]
arca.com. (2021) cutting branches to cut cost. arca.com[online] Available from: https://arca.com/resources/blog/cutting-branches-to-cut-costs-does-it-work. [Accessed : 28 April 2021]
17 Comments
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ReplyDeleteVery useful article ..
ReplyDeleteThanks Shashika
DeleteReduce training sessions /outbound activities is disaster for banking and Financial sector, Therefore, organization should have well performed employees to face those challenges in competitive business world. To achieve this purpose, organization should have to give effective training to their employees. Employees can enhance their knowledge, skills and attitudes through the effective training. Today, nature of the working environment changes due to globalization, technology changes and economic environment changes. So firm is facing increased competition. To faces that competition, firm should provide better training to their employees to face these challenges and further enhance their performance. Because, the success or failure of firm is depending on quality of HR.
ReplyDelete@Madushani Abeysinghe
ReplyDeleteTotally agreed with your elaboration. HR is the fundamental of any organization and workforce development is one of key responsibility of it. Otherwise any organization will not be sustained prolonged period in this competitive business environment .
Cost-cutting is most commonly used in methods to increase company profit. Using that strategy, the company sometimes struggles with recruiting quality workers, improving facilities for employees, Trainings Etc...
ReplyDeleteUsing cost-cutting only you can buy employees, but It might be not in quality. In my opinion, Cost-cutting is not suitable for HR.
HRM is the fundamental of an organization. Except charities, they mainly focus on profits and turnovers. Since it is important for the organization to embark on the human resource practices to save operating cost and remain competitive. Both quantitative and qualitative methods should be employed to achieve company goals.
DeleteI am not agreeing with taking interns used by HR as a strategy of cost cutting in banking sector. Because regarding the banking operations these interns don’t have big responsibility. Also they don’t want to strength their relationships among present company .Their main objective is gained experience from present job roll and move to another place. It may highly damage for the bottom line of the company when HR pay attention to get more interns other than to permanent employees.
ReplyDeleteInterns play different roles in different banks. Its true that they join to gather some experience for the future carrier prospective. But still they are also having a responsibility when they take a counter to work .They have to be inline with banking culture which may change from bank to bank. Rather than deploying a permanent employee to front count or any other work place engaging an intern is less costly.
ReplyDeleteObviously today the banks are more concerned about their profit & managing cost is an important fact. Hence the banks have look in to digitalization in banking operations.
DeleteBanks face more challenges from every direction. The ongoing environment of low interest rates continues to create intense margin pressure and lack of growth. Meanwhile, consumer preferences and expectations are endlessly shifting and rising and incumbent digital innovators redefine how services are delivered.
In this challenging environment, cost management is a strong imperative for the entire global banking industry. However the prevailing mind-set seems to be expanding from save-to-grow to save-to-transform. Most banks continue to have very positive belief for revenue growth, and many are using cost reduction as a tool to help fund their required growth. However, in today’s increasingly digital platform, more and more banks also recognize the need to transform their operations and capabilities with infrastructure investments in key digital innovations.
These digital technologies can deliver substantial improvements in competitiveness, performance, operating efficiency, and cost savings. And also important they can also strengthen a bank’s positioning for adverse future issues, including economic downturns and digital disruption.
The cost management application and trends shaping the future of banking and global business. It also explores how the latest digital platform and cost management strategies are acting as a catalyst for transformation in a world being actively redefined by digital confusion.
You have shown us a different aspect of cost cutting in global banking context. Digitalization is also can be regarded as method of cost cutting to some extend which is highly used in current banking landscape. Thanks Susantha for our value addition to this topic. Your view point is much appreciated.
DeleteI think that is not good option to reduce training session and taking Intern and school leavers for bank in order to cutting cost. Every bank holding very confidential details of their customers. it's a high risk area. Due to that matters HRM should place a proper recruitment strategy to hire well experienced and educated employee.
ReplyDeleteYes Anjula, most of school levers and interns can access most crucial and very confidential information of customers .Actually it is an area the HR should highly concerned. Thanks for your view.
DeleteAs other mentioned, I do not agree with point of reducing training hours. Because Employee training and development are based on the premise that employee skills need to be improved for organizations to grow. Organizations which are constantly creating new knowledge, extending it through the entire organization and implementing it quickly inside the new technologies, develop good products and excellent services. Training is a systematic development of knowledge, skills and attitudes required by employees to perform adequately on a given task or job. Training and development will maximize job satisfaction, opportunities for career growth and retained talented employees.
ReplyDeleteTotally agree with you Sevindi. Rather than reducing training sessions HR can use digital platforms to conduct the programme at a low cost. Now this newer technology should be used for the betterment of the organization.
DeleteReducing training time I do not agree with you. Because employee training is the most essential item with the banking sector. We are in a world that is constantly updating with new technology. So my opinion is that we should train employees and help them improve their skills. Employee skills are a great way to grow organizations.
ReplyDeleteActually reducing training sessions is not the option for the cost cutting. Having them at a less cost is the practice that we should follow. Thanks Kavishka for your view.
Delete