The Mobile RDC Cost-savings Myth

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22 August 2013


  • It sounds like the argument for 'do nothing' is based on uncertainties about economics - which can be readily addressed - and fear of channel cannibalization / sunk-cost.

    I agree 100% that recognizing value from mRDC requires more than just a cosmetic tweak to front-office operations... instead, given the evaporating interest / demand for Branch based support, Banks ought to consolidate street-level stores and transition advisory services into off-street level office buildings. Branches and related activities account for 60%-70% of the total cost base for Banks (particularly true for Community and Regional Banks). The opportunity to achieve enormous value should not be fully explored...

    The details of the business case for rationalization is obviously a pre-requisite for small and large Bank alike, and the effort is not as challenging as some believe. Both small and large Banks have more than sufficient data that is readily available to build such business cases. If such expertise is not resident in-house, Banks ought to look to external consultants for support.

    What about ATMs? There are many options for managing existing ATMs, including relocating them to stand-alone ATM-only facilities. Even an expensive investment such an ATM should not preclude doing the right thing especially when 2 - 4 ATMs with total investment of around $200k does not come close to the savings opportunity associated with a single Branch location that can easily run into several million dollars annually.

    The trends are obvious - it isn't a question of 'If'... it is a question of 'When'. When do we begin to recognize that our earlier investment decisions are no longer consistent with consumer preferences? When do we begin to accrue cost savings?

    My view: Sooner is better than Later.