Australian banks need to do more to scale their offshore sourcing, Ben Kilpatrick, partner, financial services consulting at KPMG Australia has told Banking Day.
KPMG this week has published a new study on banking transformation, based on a survey of more than 200 banks worldwide.
“The highly successful banks are more likely to enjoy bigger budgets and stronger accountability” the KPMG study concludes.
“Our data shows that a third of the most successful organizations invest more than 30 per cent of their OpEx budget into transformation, compared to 19 per cent of the less successful banks.
“And 56 per cent say they have updated their executive performance management to reflect their cost and transformation priorities, versus 39 percent of those who reported limited success.
“They also have more aggressive cost targets with 39 per cent of the most successful banks saying they plan to reduce costs by more than 20 per cent by 2030, versus 19 per cent of their less successful peers.
“And they are more likely to say they plan to accelerate their existing cost reduction initiatives.”
Nearly two-thirds of the most successful banks report “full alignment” between their transformation and cost reduction objectives, versus just 6 per cent of those reporting limited success, the study finds.
“Around half of the successful banks say they have a clearly defined cost reduction strategy and 56 per cent have clearly defined cost objectives (versus 31 percent of the less successful respondents).”
In a discussion on the implications for Australian banks, KPMG’s Ben Kilpatrick said they need to canvass more options for “labour arbitrage.”
“They have established their offshoring capability … but they have not really scaled.
“The extent to which they access a global workforce offshore compared with global leaders; they need to turn the key on that a little bit more” Kilpatrick said.
ANZ directly employs a material percentage of its workforce in India, and CBA has more than doubled its workforce in India to more than 5600 over the last two years.
Commonwealth Bank is facing legal action from the Finance Sector Union over a recent redundancy round in Australia affecting 300 staff, with the bank advertising many of the same jobs, often with the same job titles, in Bangalore, India.
The FSU allege CBA has acted in bad faith and breached its enterprise agreement.