Moebs Approach to Service Costs
Moebs $ervices has been providing economic research and consulting services to our clients for over 40 years. A cornerstone of our success has been our unique data set and analysis work that no one else in the industry including the Federal Reserve has been able to duplicate. Imagine having a global database of expenses, productivity measures, and retail service prices and designs. Now imagine having the ability and vision to turn this vast array of data into practical knowledge that can be used on a day-to-day basis. You can readily see why Moebs $ervices is an industry leader for benchmarks and strategies for success.
In addition to collecting the data, Moebs $ervices has the ability to analyze the data in meaningful ways that will provide your institution with a thorough and methodical solution. Our solutions and recommendations produce results that will ensure long-term success for the institution.
Institutions know the best way to meet consumer needs and the bottom line is through sound pricing policies. Ironically, very few institutions have the ability to understand the profitability of their service, and/or branch profitability primarily because they do not understand the underlying costs for the services.
Historically, most financial institutions have relied on the Federal Reserve’s Functional Cost Analysis (FCA) studies. This study has many flaws including:
- FCA services by the Federal Reserve have not been offered since February 2000.
- The approach used to compile the data is based on industrial costing vs. service costing models. The industrial cost time and motion studies of the FCA were done in the 1950’s.
- Most institutions relied on the FCA as industry benchmarks instead of completing the survey themselves to determine their institution’s specific costs.
Moebs $ervices has developed a service costing model which allows institutions to examine and understand their costs by service, transaction, and branch.
Those institutions with the lowest ratio of operating expenses to assets are consistently the most profitable. Expense control is the first step to successful cost management.
Moebs $ervices has worked with institutions of all sizes in markets large and small. We have found that there are three keys to successful expense control:
- There is no expense too insignificant to monitor.
- You cannot control expenses with a poor chart of accounts.
- Expense control is for everybody—the more entrepreneurial your organization, the lower your expenses are.
But we’ve also found expense control to be fraught with myths:
Myth 1: Expense-to-income ratios are the best for expense control.
Myth 2: High fees offset high expenses to increase net income.
Myth 3: Transaction accounts are “free” low-cost funds.
Myth 4: It’s more efficient to service business customers than individuals.
Moebs Services can help you take control of your expenses and guide your institution to a more profitable future. We provide solid strategies and real-world expense control actions through:
- Pricing Institute
- In-house or web-based training
- Moebs Services custom consulting
- Our publication Expense Control: Book of Numbers
Following are some of the areas we cover:
- The current state of expense control
- Practical techniques for containing costs
- Dealing with the burden of compliance
- Price actions for expense control
- The 11 steps to implementing effective expense control
- Review of benchmarks for expense levels for institutions by industry, asset size and region
For more information or to schedule an appointment to discuss a Cost & Profitability analysis of your institution
email us at info@moebs.com.