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The cooperative bank. 1. Cost and profitability information on Personal
Service Products Background As the first attempt, the bank ...
... 4. Specialized Banks: Zari Tarqiati Bank Ltd., Industrial Development Bank of Pakistan,
Punjab Provincial Cooperative Bank Limited INTER-FIRM RIVALRY With a ...
... The third pillar of the banking system is the cooperative bank sector, which accounts
for slightly less than 20 percent of banking sector assets. ...
... Mahila cooperative SEWA bank, Sanghamithra Rural Financial Services, Basix Group
are some of the micro financial institutions successfully adopting this model ...
... The World Bank is like a cooperative, where its member countries are shareholders.
The share holders are represented by a Board of Governors. ...
Submitted by baewpro on May 21, 2007
Category: Business
Words: 1279 | Pages: 6
Views: 199
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1. Cost and profitability information on Personal Service Products
Background
As the first attempt, the bank consolidated personal and corporate account processing task. For example, the back office tasks of personal banking operators, previously processed in branches, were consolidated into a Personal Customer Service Center. At the same time, the bank increased cross-selling activities and offering many kinds of financial products and service. However, still its cost-income ratio was high and it was a small player in U.K.
So, the bank started the second project to classify unprofitable products and customers, to improve its cost-income ratio by modifying its products and services. Key elements were overhead reduction, re-engineering of business process, product profitability, customer profitability, and segment profitability.
Cost Information - Applying ABC
Existing cost system was based on a traditional responsibility accounting system that measured expenses for geographic and departmental cost centers. The bank measured product revenues using fee income and net interest, but the estimated costs of producing these revenues were not identified. The bank tried to change it to Activity based Costing system, and allocate operating expenses to products and customers. To establish ABC model, cross-functional team was formed and began to gather process data. At the same time, the bank hired consulting company in order to assist mode development and obtain advice for re-organization and action-implication.
The team considered in terms of its activities, cost driver (product or customer base), and period. They identified about 210 resource cost pools divided into operational staff, infrastructure, and miscellaneous from last 3 months. And they identified 235 activities undertaken at the bank and mapped them. Matching resource costs to the activities, the team assigned the total costs to each activity. The cost of each activity...
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