The banking sector is still affected by the great depression witnessed a decade back. Numerous procurement cost including real estate, ATM maintenance, transaction and card processing services, collections, risk management, security services, and in-branch marketing are burdening the banks bringing down their profitability. To remain competitive and sustain in the market banks and financial institutions are looking for various cost containment strategies. The banking sector is looking for innovative ways in their procurement process to control the procurement costs.
Pooling Resources for Cost Containment
The banks and financial service providers have come up with innovative solutions to pooling of resources for a particular line of business, allocating a dedicated entity to manage the processing. Pooling of resources to share infrastructure and operational costs across the organizations can lead to massive cost savings and at the same time increase the investment efficiency by making capital-intensive projects more viable.
Vendor Consolidation or Supplier Rationalization
Vendor consolidation is one of the procurement strategy used by banking and financial services industry to achieve cost savings. Banks look forward to reducing the number vendors across geographies and business units to focus on selecting preferred vendor per spend category. Implementing such vendor partnerships allow banks to increase their operational efficiency and productivity and thereby save valuable time and money. Additionally, such procurement cost reduction strategies eliminate the need for lengthy training procedures for the staff and also ensure compliance with the procurement process.
Investment in Technology
The financial industry has always been resource intensive and over-reliant on human expertise. Although the majority of the banks invest heavily in ERP systems, the usage of technology is still limited mostly due to lack of people who understand such technology. Blockchain technology is the next big thing in the financial services industry which can eliminate lengthy transaction processes along with costly third-party verification. Such technologies can rapidly increase the efficiency of the procurement process within the financial industry.
Adoption Of Public Cloud Services for Digital Banking
Banking service providers are turning towards applications and storage space available in the public cloud eliminating the need to invest in dedicated hardware and software resources. Opting for various engagement models such as SaaS, PaaS, and IaaS, banks can digitize their services without having to maintain data centers.
Read more about the procurement process in the banking services market along with pricing strategies, supply market landscape, pricing trends, negotiation strategies, procurement cost reduction strategies, and procurement insights in SpendEdge’s upcoming report on the global banking services market.