ANZ sets strategy to cut costs
Competition amongst the banking industry heavyweights is behind the best practice strategies announced by ANZ Banking Group this week. Whilst noting that a 10% reduction in operating costs is required just to keep pace with its competitors; ANZ has set itself the target of a 30% reduction in operating costs within its personal financial services division over the next 2 to 3 years.
In particular ANZ has identified cost reductions through higher sales and revenue growth, staff reductions, and by eliminating possible duplication of costly and cumbersome procedures in its mortgage processing operations. Whilst a major overhaul of back office functions is also likely, the bank has ruled out the outsourcing of its mortgage processing functions to a third party, such as Westpac which has had its National Mortgage Processing Centre operating since 1996.
The cost – cutting initiative and operational efficiencies are also likely to become a priority across the bank’s international network.
As with its competitors, ANZ has a strong commitment to driving down its cost to income ratio and has achieved a steady reduction from 62 per cent in the September quarter to 55.8 per cent in the March quarter. These initiatives look to secure a cost to income ratio of 53%, around that of rival NAB.