Making a Corporate Finance Function More Efficient
Learn how BCG helped a bank lower its corporate finance function costs while enhancing service to its business units.
AmeriBanCo is a globally top-tier bank from North America that offers a full range of financial products and services. The bank approached BCG to assist it in transforming the finance function by improving both efficiency and effectiveness.
In addition, several key issues had to be considered:
Cost-reduction initiatives and financial information technology projects had failed because of a lack of stakeholder buy-in.
Customers thought quality in the financial department was exceptionally high but often for low-value-add services.
Senior finance staff aspired to spend more time with customers focusing on high value-add activities.
Few activities were conducted by the central finance group.
The organization was frustrated at the scale of the challenge and had shown an inability to make progress.
BCG approached the problem by analyzing the finance functions and addressing their performance drivers. Several immediate initiatives were recommended:
Design an efficient organizational structure for each subfunction, based on baselining to provide a solid data set and benchmarking to include the outside perspective and reveal improvement potential.
Review accountabilities to ensure ownership for initiatives and project management.
Assess service agreements with business units to increase transparency regarding the functions' responsibilities and services.
Define key performance indicators for continuous process streamlining.
BCG recommended an integrated four-step action plan that consisted of the following elements:
A clear vision of a world-class finance function shared by senior leadership was established. The key element was to lower function costs by more than 20 percent, while at the same time enhancing reporting capabilities, mitigating data quality issues, and focusing on value-added services.
An optimized operating model was created to support the shared vision. This included reviewing and redefining roles, as well as resetting accountabilities with widened scopes and layers to improve ownership. In addition, well-defined performance targets and new review processes were put in place.
An effective engagement model was developed to foster cooperative conduct with the business units. New transparent service agreements reduced costs for dispensable services. Business unit CFOs became the key link between the finance leadership team and the business units and facilitated cooperation.
A continuous optimization process was put in place as part of a roadmap to further reduce costs and improve service quality.
Our client adopted a new organizational paradigm and improved relevant services for the CFOs and business units. A multiyear roadmap of initiatives was put in place to improve capabilities and reduce costs by 20 percent.
Furthermore, the project initiated a move in the organization toward a high-performance culture — thereby addressing not only the obvious cost problem but also the underlying problems of responsibility and accountability in the finance function.