Perspective

How effective cost optimization can redefine your banking future

Ayesha Kareem,

Sr. Vice President, Chief Architect - Banking and Financial Services SBU

Published: February 5, 2024

Effective cost management and optimization are paramount for banks amid technological advancements and continuous innovation. It effectively allocates resources, drives operational efficiency, and enhances customer experience to modernize financial services. Banks can achieve financial resilience and a competitive edge through adept technology cost management.

However, continuous innovation comes with the challenge of reducing costs and associated risks. Replacing legacy systems, eliminating technical debt, and adopting innovative solutions require continuous investment. Learn the best cost optimization strategies your bank can use to prepare for the future. 

Roadblocks to cost reduction initiatives

Reducing costs often requires a substantial investment. Many banks face roadblocks due to the technical debt of their outdated legacy systems. These systems consume most of their IT spending, making organizations less operationally efficient.

Another concern is the potential disruption of customer experience and service quality while transitioning from legacy systems. Despite recognizing the need for technological evolution, banks often delay modernization and require more extensive transformation. Embracing modernization solutions and addressing technical debt is imperative to enhance banks' operational efficiency and cost-effectiveness. 

Cost optimization strategies

Banks require a comprehensive and multi-faceted approach to overcome cost optimization challenges. Here are a few cost optimization strategies that enable banks to drive efficiency.

  • Leveraging automation for business efficiency
    Automations streamline business processes, technology operations, and customer interactions while reducing costs. Banks can reallocate resources by automating repetitive and routine tasks for more value-added services. 
  • Redefining legacy systems
    Discarding legacy systems and outdated approaches while integrating modern contemporary standards is a business imperative. It involves migrating to cloud-based solutions, adopting microservices architecture, and embracing agile methodologies. 
  • Driving developer productivity and efficiency
    Empowering developers and enhancing their productivity can lead to accelerated, streamlined, and efficient software development cycles. It requires developers to access integrated and optimal tools, comprehensive training, and conducive collaborative workspaces.
  • Embracing innovation and fostering collaboration
    Banks must partner with fintech and solution providers to nurture an innovative culture and bring new perspectives to banking operations. Furthermore, these collaborations lead to innovative solutions and streamlined processes.
  • Leveraging outcome-based vendor models
    Adopting outcome-based vendor models enables achieving outcomes rather than meeting contractual requirements. It’s important to note that the success of these models is directly derived from measuring outcomes, and the consumer should define their desired measurable targets before adopting this model. 
  • Contact center optimization
    Efficient and optimum call center operations are essential for banks to deliver exceptional customer experience. Call center operations can be optimized by employing IVA agent chatbots and self-help portals to promptly address customer needs, reducing prolonged wait times and enhancing efficiency. Additionally, timely data and streamlining knowledge searches can improve the desktop agent's capabilities. These optimization strategies strengthen the quality of service and customer experiences while saving costs.

Cost optimization impact on banking operations

Cost optimization initiatives have a profound impact on banking operations while reducing costs. For instance, automation has the power to eliminate mundane, repetitive tasks and increase efficiency, but the same can turn into top-down cost-cutting measures. Such an initiative might compromise service quality and employee morale.

Instead, banks should establish a bottom-up culture that fosters employee engagement through strategies like upskilling, robust rewards, and cultural shifts. They should be encouraged to contribute to cost-saving ideas and empowered by rewarding their involvement. This approach enables a culture of innovation and efficiency while empowering employees to take ownership of the cost optimization journey.

Partner with Virtusa to redefine your banking operations

Effective cost optimization is a strategic imperative. Collaborating with the appropriate technology partner is a game-changer in reshaping the future of banking.. Virtusa’s Engineering First approach to cost efficiency and management sets us apart as a strategic partner for banks. By embracing continuous optimization, reducing technical debt, and fostering a culture of innovation, Virtusa enables efficient implementations and modernization. 

Virtusa's seamless call center operations expertise enables banks to deliver exceptional customer experiences. Our innovation platform facilitates third-party collaboration with cutting-edge technology module developers that can be seamlessly integrated while replacing legacy systems more efficiently.

Contact us today and see how our holistic approach helps banks stay ahead of the competition in a constantly evolving financial landscape.

Ayesha Kareem

Ayesha Kareem

Sr. Vice President, Chief Architect - Banking and Financial Services SBU

With over 19 years at Virtusa, Ayesha serves as Chief Architect for the Banking and Financial Services SBU in North America. She focuses on developing GTM strategies, industry solutions, and technology solutions, contributing to business development and thought leadership. Ayesha has held various roles at Virtusa, including Head of Global Infrastructure Services Sales, Head of ADM services for North America, Chief of Staff for Media & Entertainment, Telco, Diversified SBU, and Head of Media and Communications Segment. Before Virtusa, she led J&B Software's Western Regional Division. Ayesha holds an MBA from U.C. Berkeley, an M.Sc. in Computer Science from Drexel University, and a B.E. from Anna University, SRM College of Engineering.

Related content