Client challenge

A banking client approached KPMG in India to address key challenges in cost management and operational efficiency. They sought a thorough review of their cost allocation framework to identify underlying business drivers and recalibrate cost allocation ratios by defining unit rates and transaction weights.

Additionally, they requested industry benchmarking to refine their framework with a focus on reducing the cost-to-income ratio. To enhance productivity, they required manpower optimisation, process efficiency improvements, and incremental digitisation supported by peer benchmarking for both digital and analogue processes. This holistic approach aimed to align their operations with industry best practices while driving cost efficiency.

Service provided

KPMG in India conducted physical visits to 130 locations as part of an extensive time-and-motion study, collecting hands-on-time data to identify quick wins for process improvements. As part of KPMG in India’s efforts, the team developed a precise, driver-based cost allocation framework tailored to the client’s needs.

KPMG in India also designed a branch-level profitability analysis framework, offering recommendations based on key metrics such as market share and capacity utilisation. Additionally, our team created a comprehensive chargeback model for over 16 services delivered by the shared services entity, ensuring alignment with industry standards. This approach provided actionable insights to enhance operational efficiency and financial performance.

Impact

Based on visits to branches and processing centre, observations across a wide range of unique activities related to acquisition and servicing transactions enabled accurate profitability capture across products and branches.

Designed a detailed cost allocation framework with scientific business driver-based allocation at a GL level

Carved-out P&L for digital products and computed cost of acquisition and cost of servicing

Identification of 30+ opportunities for improvement from the study at structural, processes and technological level

Branch level profitability analysis framework designed with recommendations based on various metrics including market share, capacity utilisation

Designed a detailed chargeback model for over 16 services provided by shared services entity in line with industry practices.

KPMG in India identified 30+ process efficiency opportunities, with focused recommendations and key takeaways, KPMG in India equipped the client with actionable strategies to drive sustainable growth and operational excellence!