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COST REDUCTION STRATEGIES IN BANKS
Mirbilolova Zilola
Email:
Mirbilolova572@bfa.uz
Banking and Finance
Academy of the Republic of Uzbekistan
https://doi.org/10.5281/zenodo.15032796
Abstract.
In this article, the strategies of cost reduction are illustrated by using different
ways to accomplish the costs of the banks in Uzbekistan. Cost management is a continues process
of banking, aimed to bring more benefits. According to Taylor (2017) Cost control encompasses
cost reduction as well, which is the sum of business managers' efforts to keep an eye on, assess,
and reduce expenses. These initiatives could be informal in character and restricted to a single
department within the company, or they could be a part of an official program for the entire
corporation. To effectively manage costs, bank managers must possess a solid understanding of
legal, accounting, and marketing issues in addition to production and service methods, and
commercial bank services. Dopson (2015)
Key words:
cost control, AI tools, corporate functions, commercial banks, banking
Banks are traditional businesses that are averse to altering their ingrained procedures.
However, in order to survive the pandemic, even small banking institutions had to implement some
level of basic digitalization.
With a global recession rapidly approaching, banks are turning to
tried-and-true cost-cutting measures like bonus reductions and layoffs. However,
cutting
employees is not a sustainable strategy because it can lead to unhappiness among workers and
the loss of valuable talent. Further, labor expenses only make up a percentage of the costs
associated with running a bank. Banks spend almost $1.4 trillion a year on corporate functions,
front office work, IT support, and operations. Reducing banking costs effectively necessitates an
integrated strategy that carefully restructures personnel, technology, and outside components.
Below, some vital parts of reducing cost in banks performance are depictured. They are
investing in digital technology, improving workplace productivity, build a clear portfolio and
downsize physical workspaces, outsourcing business project management.
The foundation of cost-management and revenue-generation strategies is the customer.
Millennial clients anticipate excellent digital experiences from online banking platforms and
applications. To stay ahead of the competition, banks now need to provide a smooth omnichannel
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customer experience and personalization. Digital processes like big data analytics, generative AI
tools, and robotic process automation (RPA) can do the following in addition to enabling a
customer-centric model: streamline and automate processes find areas where money is being lost
and make embedded finance and banking as a service (BaaS) possible. enable upselling and cross-
selling of products; enable focused marketing tactics Permit the segmentation and personalization
of customers. Technology is cost-effective in the long run, despite its initial outlay of funds.
In the banking industry, reducing costs requires maximizing productivity. You can set
short- and long-term goals, reorganize departments, rethink roles, and get rid of pointless
procedures with the assistance of a productivity consultant. In order to create a feeling of purpose
and raise employee morale, performance management tools like goal-setting, reminders, rewards
and recognition, and productivity apps are indispensable.
Banks frequently launch new services and products while keeping the same features of
previous ones. This results in a large portfolio that doesn't increase the organization's worth or
profitability. Banks can focus on relevant products and lower the costs of managing a large
portfolio by eliminating redundant offerings. This improves customer satisfaction and increases
return on investment (ROI).
Significant overhead costs are associated with brick-and-mortar workspaces, such as
infrastructure, maintenance, and rent. Banks now have to normalize the hybrid working model,
just like other industries. Flexible work arrangements are one of the best-rated post-pandemic cost-
cutting and employee satisfaction initiatives.
Numerous banks that are performing well contract out non-core services like customer
support and IT support to specialized vendors, which results in significant operational cost savings.
Banks can increase service quality, maintain operational efficiency, and concentrate on strategic
initiatives with the aid of business process outsourcing, or BPO.
With the use of digital tools and technologies, Infosys BPM's services for the banking
sector can assist banks in transforming their business models, streamlining operations, cutting
expenses, and generating value. Our team of more than 10,000 knowledgeable experts and value-
added services is capable of supporting both core and non-core banking operations and coming up
with creative answers to problems facing the company.
It is not anticipated that the work will only save costs. Because defining roles and
responsibilities is necessary to make these improvements, the bank's decision-making capabilities
should also improve. Although the past two years have forced many businesses—including
financial institutions—to operate under never-before-seen pressures, they have also created new
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opportunities by requiring us to adjust swiftly. Overall, the bank will have accomplished a great
deal, but it is motivated to do even more and has a clear plan for future advancements
.
REFERENCES
https://www.bcg.com/publications/2017/financial-institutions-seven-rules-cost-
https://www.researchpublish.com/upload/book/THE%20IMPACT%20OF%20COST-
3.
https://www.infosysbpm.com/industries/financial-services/service-offerings/banking.html
4.
https://www.fpsgold.com/blog/cut-costs-at-your-financial-institution
