Background

A leading US financial services organization experienced a linear increase in operating costs alongside its revenue growth, resulting in suboptimal profitability and return on equity (ROE). To address this challenge, the company engaged our consulting firm to conduct a thorough review of its spending and develop a comprehensive set of sustainable cost reduction recommendations.

Approach

To achieve the client’s objective of reducing costs and improving profitability, our consulting team adopted the following approach:

1. Collaborative Analysis with Finance and Department Leaders: Our team worked closely with Finance and Department leaders to analyze past, current, and projected spending. This effort ensured a comprehensive understanding of the company’s financial landscape.
2. Reclassification of Expenditures: We reclassified five years of spending into discretionary and non-discretionary categories. This enabled us to identify, quantify, and prioritize opportunities for cost reduction across the entire enterprise.
3. Three-Year Execution Roadmap: Based on our analysis and in consultation with the senior leadership team, we developed a detailed three-year execution roadmap. This roadmap outlined key implementation considerations and provided a clear path for achieving savings targets.

Results

As a result of our engagement, the client achieved the following outcomes:

1. Identification of Cost Reduction Opportunities: Our team identified cost reduction opportunities totaling $30 million, with an additional $10 million stretch potential. The opportunities represented tangible savings that could be realized by implementing targeted recommendations.
2. Prioritized Roadmap: We developed a prioritized roadmap for implementing the identified cost savings opportunities over a three-year time horizon. This roadmap ensured a structured and systematic approach to achieving the targeted savings.
3. Realization of Annual Savings: Following the engagement, the client was on track to realize the first $10 million in annual savings within the first year. This early success demonstrated the effectiveness of the recommendations and set a positive trajectory for future savings.