As the owner of a financial institution, you continually seek ways to fortify your bottom line. When you encounter financial challenges, employing out-of-the-box strategies to reduce costs can help them maintain their stability and reputation. 

In an environment ridden with risks, traditional ways of doing things may not suffice to keep your organization thriving. For example, take the case of the United States, where banks are currently facing numerous financial challenges, leaving them highly vulnerable to collapse.

The U.S. is currently facing a regional banking crisis, according to a new report. U.S. banks face substantial unrealized losses due to rising interest rates, increasing vulnerability to bank runs, and destabilizing the banking system. Losses may reach $1.7-2 trillion by the end of 2022, close to the banking sector's total equity capital of $2.2 trillion.

To maintain financial stability and competitiveness in such a scenario, you need fresh strategies that go beyond the conventional playbook. In this blog, we'll explore four non-traditional, yet highly effective, cost-saving tips that can make a significant impact on your institution's financial health.


Focus on Cybersecurity

In an era where digital threats loom large, focusing on cyber security has become paramount for your institution. The stakes are higher than ever, with sensitive financial assets at risk. You might wonder, how serious is the threat to the financial sector? A new survey found that more than 70% of fintech companies named information security as their top concern organically. 

The COVID-19 pandemic has only intensified these concerns, as revealed by VMware's Modern Bank Heists study. Since the onset of the pandemic, there has been a 238% increase in cyberattacks on companies in the financial sector, the study found. It's clear that safeguarding your institution against cyber threats has become imperative.

Embracing cybersecurity solutions can help these companies save money by:

  • Mitigating the possibility of costly data breaches and the resulting legal responsibilities.
  • Streamlining compliance efforts, avoiding hefty fines, and minimizing regulatory expenses.
  • Boosting operational efficiency through improved incident response and recovery, ultimately reducing downtime and associated losses.


Prioritize Third-Party Risk Management

Third-party risk management (TPRM) simply monitoring the outside partners your business depends on for smooth operation. These external parties, such as vendors, suppliers, and partners, can introduce vulnerabilities and risks that may affect your operations and reputation.

The market now offers a plethora of TPRM tools, making it easier for you to handle complex tasks efficiently. Exiger states that these tools assist compliance teams across a range of functions. For example, they help in smoothly onboarding, continuously monitoring, and assessing the risk of third parties in real time.

Here's how prioritizing third-party risk management can be a savvy cost-saving strategy for your business:

  • Reducing legal and regulatory costs: Vigilant third-party oversight helps ensure compliance with industry regulations, mitigating the risk of costly fines and legal expenses.
  • Preventing operational disruptions: Effective risk management minimizes the chances of service interruptions or disruptions caused by third-party failures, saving money associated with downtime.
  • Optimizing vendor relationships: Establishing clear expectations and monitoring vendors closely can lead to more favorable terms, resulting in long-term cost savings for the institution.

To efficiently use TPRM, you first need to become familiar with it, which can be time-consuming. Therefore, it makes sense to leverage industry specialists who have years of experience in optimizing such tools for financial businesses. You can learn more by exploring reliable resources available online.


Explore Sustainable Practices

Incorporating sustainable practices into the operations of your business presents a compelling avenue for cost savings. By embracing sustainability, you can reduce operational expenses and mitigate risks associated with environmental factors. To explore sustainable practices as a cost-saving strategy, you can:

  • Energy efficiency: Implementing energy-saving measures in offices and data centers can significantly cut utility bills, contributing to long-term cost reductions.
  • Paperless operations: Transitioning to digital documentation not only minimizes paper waste but also streamlines administrative tasks. This reduces the need for physical storage and associated costs.
  • Responsible investment: Prioritizing sustainable and socially responsible investments can generate competitive returns while reducing the risk of holding assets.
  • Green initiatives: Engaging in eco-friendly initiatives such as carbon offset programs and reducing carbon footprints can lead to positive public perception.

The time is ripe to adopt sustainable practices, especially when your competitors are doing the same. As per a report, about 97% of U.S. banks have integrated sustainability into their business strategies. Additionally, roughly 85% of U.S. banks are actively promoting sustainable behaviors and outcomes.


Provide Exceptional Customer Experience

Exceptional customer experience is invaluable for you as it not only fosters customer loyalty but also yields significant cost-saving benefits. Satisfied customers are more likely to stay with your institution, reducing customer churn and the expense of acquiring new clients.

To provide an exceptional customer experience and reap these rewards, you can:

  • Personalize services: Tailoring offerings to individual customer needs fosters a sense of value and satisfaction, reducing the likelihood of attrition.
  • Embrace digital channels: Investing in user-friendly online platforms and mobile apps simplifies transactions, reducing the cost of brick-and-mortar operations. According to McKinsey, customers who frequently utilize a bank's mobile app or website, or both, tend to experience the highest levels of satisfaction.
  • Efficient issue resolution: Swiftly resolving customer issues not only enhances satisfaction but also prevents long-term damage to your reputation and potential losses.
  • Proactive communication: Keeping customers informed about relevant financial opportunities and updates can build trust and boost their loyalty. This leads to significant savings through client retention.


Harness Data Analytics

Harnessing data analytics represents a potent tool, offering substantial value in terms of cost-saving opportunities. By leveraging data analytics effectively, these entities can gain valuable insights into customer behavior. This allows them to make data-driven decisions that translate into tangible financial benefits. 

Here’s how data analytics can enable you to reap cost-saving benefits:

  • Risk assessment: Data analytics enables better risk assessment and prediction, reducing potential losses and the need for excessive capital reserves.
  • Operational efficiency: Analyzing data can identify inefficiencies in processes, leading to streamlined operations, reduced overheads, and lower operational costs.
  • Personalized offerings: Tailoring financial products and services based on customer data increases customer retention and acquisition, saving on marketing and customer acquisition costs.
  • Fraud prevention: Data analytics can detect irregularities and patterns indicative of fraud, enabling proactive measures that prevent financial losses.


In Conclusion

In an era where adaptability reigns supreme, these unconventional strategies are the keys to ensuring a prosperous future for your business. By adopting these approaches, you not only fortify your defenses against risks but also uncover new avenues for cost savings and growth. So, take the leap and discover how these unconventional tactics can lead to lasting success in the ever-changing world of finance.