Client: Halbrook Regional Bank, 60 branches and $400 million of yearly costs.
Question: the board wants $40 million of yearly savings without losing many customers. Where should the savings come from?
What you have: the cost base by type, branch costs and traffic, customer revenue, and estimates for supplier and technology savings.
Done looks like: the savings from each lever net of lost revenue, the gap that remains, and a recommendation. All figures are fictional.
Cost cutting cases ask where savings should come from, and what they cost in other ways.
- Map the cost base by type: people, property, technology, third-party spend. Big buckets usually hold the big savings.
- Size each lever with the case data: which branches, which contracts, how much.
- Net out the side effects: closing branches saves costs but can lose customers and revenue. A cut that loses more revenue than it saves isn't a saving.
- Add up the levers against the target and say what fills the gap.
The trap is counting gross savings and ignoring the revenue they put at risk.