It’s time for North American banks to get serious about efficiency
North American banks have historically accepted a high cost-to-income ratio, standing at 60% as of June 2024, compared to their global peers. While structural factors like wage rates and the fragmented US market play a role, inefficiencies also arise from branch-heavy operations and reliance on outdated practices like paper check payments.
Some banks are now shifting focus towards improving core business operations instead of relying solely on digital ventures. Strategies include streamlining branch locations, automating back-office functions, and equipping relationship managers with digital tools for improved productivity in lucrative areas.
If North American banks could reduce their ratio from 60% to the 42% seen in Nordic counterparts, it could lead to an estimated $200 billion in cost savings.
Source: https://www.bain.com/insights/will-north-american-banks-get-serious-about-efficiency-snap-chart/
