Sunday, June 23, 2024
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South Africa’s banking sector grapples with among the highest operating costs relative to income worldwide, a concerning trend exacerbated over the past decade. Despite resilient performance amidst economic challenges, South African banks trail more than half of their global counterparts in profitability, ranking 35th out of 133 countries in terms of operating costs.

Kwaku Debrah, a seasoned banking executive and partner at Partners in Performance, underscores the urgency for banks to bolster cost efficiency through strategic operating initiatives. He outlines four key tactics for achieving sustainable cost control and enhancing profitability:

Empower Employees: Cultivate a culture of open idea generation throughout the organization, allowing teams to identify efficiency opportunities and execute them effectively to reduce costs sustainably.

Align the Organization: Secure buy-in and ownership from within the organization by clearly communicating the cost optimization plan and vision, ensuring alignment of roles and responsibilities to foster accountability.

Assign Accountability: Establish clear accountability for driving performance improvements, with specific individuals or teams responsible for addressing cost challenges, supported by stretch targets and regular progress reviews.

Build Necessary Capabilities: Equip employees with the skills and tools needed to identify and address cost drivers effectively, offering training and coaching to close skill gaps, particularly in data analysis and technology utilization.

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