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Activity Based Costing - Information without Action Is Vanity

If Finance departments take those measures and enforce the Oracle virtual banking experience (OBDX), they are able to offer their front-workplace clients a luxurious they do not have: they are able to accomplice with service providers to decrease charges.

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Activity Based Costing - Information without Action Is Vanity

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  1. Activity Based Costing - Information without Action Is Vanity ©Copyright by Jmrinfotech.com

  2. No one wants to pay for something they don't understand. The thought of an "admin fee" on a bill makes our blood boil. • Workplaces may have a similar dynamic but are less unpleasant for individuals. Frustration with digital banking solutions and back-office overhead charges has long plagued front-office departments. Administrative expenditures sometimes account for 40% of an organization's overall spending, so frustration is understandable. • ©Copyright by Jmrinfotech.com

  3. Many firms use activity-based costing (ABC) to bill back-office expenditures to front-office divisions. Methodologies frequently show the back office's services, costs, and how each service's front office divisions' share is calculated. • Many individuals believe that using these methods is the end of their journey, yet openness is simply the first step. • ©Copyright by Jmrinfotech.com

  4. Instead of merely giving additional information, ABC methods should improve service quality and cost. This is particularly true for ABC implementations due to the difficulty and temptation to focus on the relative size of the cost pie rather than reducing it entirely. • We believe this is a significant missed opportunity if you're planning or already on an ABC journey. In our view, banks can only achieve ABC's full potential after these three stages. • ©Copyright by Jmrinfotech.com

  5. Assisting customers in understanding the approach ('what') and value ('why'). • There will always be winners and losers when changing allocation methods, and those being charged more will always oppose at first. To minimize disturbance, guide the front office through the approach ('what'), explain how the costs are determined, and ask questions. Also, it may reveal methodological improvements for future times, which promotes empathy and trust. 1. Educate • ©Copyright by Jmrinfotech.com

  6. The 'why' is just as vital. The front office must understand the advantages of this increased degree of openness. There is a significant change to reduce overall costs or enhance services by fostering a better awareness of what services are done, whom, and what drives the price. • ©Copyright by Jmrinfotech.com

  7. To improve your digital banking solutions, we must first understand what is happening and why. • Does the front office obtain any substantial advantage from non-mandatory services provided? A large number of low-value services from a high-cost location? Is there duplication of service or activity across several roles or locations? 2. Collaborate • ©Copyright by Jmrinfotech.com

  8. It is vital to provide time for probing and evaluating the data to verify such queries, even if the ABC outputs do not include all the details necessary to prove a specific cost save. • We also need monthly meetings with senior frontline staff to evaluate data and agree on specific research hypotheses, or better yet, include this into current cost governance meetings. As well as being prepared with ideas, finance must also be eager to collaborate with front-office colleagues. • ©Copyright by Jmrinfotech.com

  9. Identifying and recording cost-saving options isn't enough; banks must evaluate them and, if feasible, implement them. • Stage 2 hypotheses should be documented and prioritized, and stage 2 collaboration sessions should track and assess implementation progress. Ideally, each project should be assigned to one accountable employee from the front-office and back-office, who is responsible for advancing the prospects and measuring the benefits. These goals may be coupled to balanced scorecards and variable pay if needed. • Structured governance, assessment, and incentive systems guarantee that potential concepts become a reality. 3. Execute • ©Copyright by Jmrinfotech.com

  10. If Finance departments take these measures and implement the Oracle digital banking experience (OBDX), they can provide their front-office customers a luxury they don't have: they can partner with service providers to lower charges. Conclusion: • ©Copyright by Jmrinfotech.com

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