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Even though all financial organizations have full-time resources dedicated to Cost Management, the above facts showed that there still is a lot of room for process optimizations such as lean management, capacity management… The systems and techniques that were being used by those Cost Management-teams were outdated and were no longer adapted to the actual corporate strategy, the organizational structure…
This was proven during the crisis of 2008-09 when all financial organizations were forced to look for opportunities that would optimize their costing structure. However, detecting the true drivers and owners behind costs was not as easy as they had hoped it to be. Both the banking and insurance companies have always been very product-oriented, whereas their new challenge already started a movement towards "knowing your customer" and "customer value".
Because financial organizations didnt have (and many still dont have) the correct information, cost savings operations were rarely based on accurate facts resulting in short-term actions that arent always in line with the long-term strategy.
In other words, financial organizations are looking for a clearmanagement control structure with well-defined responsibilities in costing information, based on transparent and interpretable data.Once organizations are able to control this, more advanced techniques such as Time-Driven Activity-Based Costing become interesting for these companies because it manages capacities, measures the effectiveness of lean-initiatives, and supports corrective actions where needed.
To make processes leaner (because the companies became bigger), we see an increasing trend towards specialization in the back-office and the Shared Services (Human Resources, IT, Legal…). At the same time, a new challenge surfaces for both banks and insurance companies: How can these Shared Services be calculated towards the different (Chargeback)? In order to calculate this, companies need a lot of information from customers, channels, portfolio movements… It is because of the absence of this kind of information that financial companies try to optimize the customers portfolio instead of optimizing the product profitability.
And this is why financial organizations trust in the Strategy Management Collaborative to assist…