A medium-sized bank was under-performing relative to its direct competitors.  A poor cost/income ratio was impacting its credit rating and providing a sub-optimal return to shareholders.  Following a strategic review by Igniter, it was identified that the out-sourcing of key operational functions was a significant factor impacting the poor cost/income ratio. 

 

The bank asked Igniter to develop a business case for the possible in-sourcing of operational processes.  

Igniter's approach:  

Igniter's framework for business case development was customised with the client.  The client saw particular value in:

  • an analysis of existing performance metrics
  • benchmarking performance against internal and external best practice
  • identifying activities that could be effectively in-sourced without detrimentally impacting quality or customer experience
  • modelling the size and cost of establishing an in-sourcing function
  • modelling the impact on existing staff, and changes in revenue to providers, of out-sourcing services
  • proposing a cost model for continuing to out-source key customer-facing activities
  • analysing in-sourcing scenarios
  • developing a high-level cost model for in-sourcing
  • preparing an implementation plan

Outcomes for our client:  

The key outcomes for our client were:

  • Board recognition that significant change was required in the performance of operational activities
  • a compelling business case that established a mandate for change that would positively impact the bank's cost/income ratio
  • within one year of in-sourcing, operational budget re-forecasts were showing a $7 million saving, with an expectation that year-end savings would be in the range of $9 to $12 million.