FS Purchasing Costs

In the current environment, banks are looking at cost and service levels in their support functions.  Of particular interest to many banks are the purchasing and accounts payable functions which, in many cases, are being re-engineered and in some cases, relocated or outsourced.  Key also to this analysis is the demand for growing external transparency into costs required by various stakeholders, e.g.  business lines and senior management.

Central to the process of improvement is a thorough understanding of an bank's own costs and how these costs compare to its peers.  Although there are some available figures for the overall cost of a transaction, there has been no detailed benchmarking across Financial Services (FS) and, as purchasing profiles differ widely, management have found it difficult to compare non-FS services data to their own costs.

Z/Yen has a long history of innovative work in the FS sector and, in the last 4 years, has run many annual Competitive Cost Comparison (CCC) benchmarking studies covering "back-office & IT costs" over various products & markets.  So far, over 25 major banks have taken part in these studies.

Each of these CCC studies follows a similar methodology whereby representatives from each of the participant organisations are brought together in a series of workshops facilitated by Z/Yen to define scope, standard definitions, data collection templates and report outputs.  At the end of the workshops a deadline is set for data submission.  Following receipt of data, Z/Yen perform a full validity check before reporting.

Z/Yen now propose to initiate a new CCC study into the purchasing & accounts payable area.  The format of this study will follow that of the "back-office" studies, i.e., to capture cost, headcount & transaction volume data on: 

  • Transaction types, e.g., IT, HR, facilities, marketing & promotion, legal & professional fees. 
  • Activity types, e.g., transaction capture, data enrichment, purchase confirmation, payment, accounting, reporting etc.

To ensure confidentiality, each participant is given a unique code name under which all its data is indexed.  Z/Yen, as the independent third party, acts as the repository for the data, collects information from each participant, collates the data into a set of benchmarks and then presents results to each organisation.

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