Branch Flexing: An Agile Approach to Cost Management

April 16, 2012
Operations/ Benchmarking
Global, Asia-Pacific, EMEA, Latin America, North America



Since the spectacular end of the pre-2007 credit boom, the profits of retail banks have come under intense and sustained pressure. Even after the recent rebound, the average return on equity for regional banks remains at roughly half of pre-crisis levels. The causes of this decline are familiar – reduced lending growth, higher capital costs and deposit margin contraction caused by exceptionally low interest rates and regulatory restrictions on fee income.

Retail banks must again look to regain profitability by cutting costs. Oliver Wyman’s latest Perspective, Branch Flexing: An Agile Approach to Cost Management, suggests that instead of simply cutting branches, retail banks must develop a more flexible operating model which can readily increase or decrease capacity and costs in line with the opportunity to capture customer value. In this paper, Oliver Wyman describes the keys to properly “flexing” a branch, the different branch flexing strategies, goals and objectives of the program, and steps to implementation.

Lead Authors:

Sumit Sahni, Partner in the Americas Retail and Business Banking and Strategic Information Technology and Operations Practice
Paul Mee, Partner and Head of the EMEA Strategic Information Technology and Operations Practice
Aaron Fine, Partner in the Americas Retail and Business Banking Practice
Massimo Tessitore, Partner in the EMEA Retail and Business Banking Practice

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned operating unit of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
Tel: +1 212 345 1366

Europe (London)
Chris Williams
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
Tel.: +81 3 3500 3023

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