Barclays has revealed a 4.5 percent fall in its costs due to initiatives including increasing automation and digitisation.
Since February 2013, the bank has put millions of pounds into a programme dubbed ‘Transform’, which aims to cut operating costs and make Barclays the ‘Go-To’ bank. Costs to achieve Transform amount to £1.703 billion to date, nearly two-thirds of the £2.7 billion that the bank originally estimated it would spend on the project.
“Core costs [were] down 4.5 percent, across all businesses year on year, with further savings expected through to 2016,” the bank said in its interim results today.
Transforming personal banking
In a breakdown of its Transform initiatives, Barclays said that it spent £499 million to date (£115 million in six months to June 2014) on the project in its personal and corporate banking division. This involved increasing digitisation and automation to enable customers self-serve more, and streamlining its wealth business model.
“The number of customers using digital channels continued to grow substantially. Mobile banking users almost doubled to three million customers and [mobile payment service] Pingit users more than doubled to 1.7 million,” the bank said.
Barclays announced earlier this month that it was getting rid of the traditional bank cashier role, retraining cashiers to play a customer advisor role, leaving simple transactions to be processed digitally.
Although the bank had said it would retrain 6,500 cashiers to provide financial management services to customers, it revealed today that it had reduced the number of full-time roles by 1,700 in the division, thanks to the increased self-service.
In its Barclaycard credit card business, the bank again said that spending £85 million to enable customers to self-serve more had produced savings.
“Innovation remained a key priority, with the launch of the open-market bPay band - a wearable contactless payment device - and Barclaycard Anywhere, a new mobile point-of-sale solution that makes it easy for businesses to take card payments securely, anywhere in the UK,” the bank said of its Barclaycard business.
“The business looks to improve the customer experience through operational enhancements, improved technical capability and digitalisation.”
The second largest ‘Transform’ spend was in its investment bank business, where it has spent £471 million on the project to date (£282 million in first half of 2014). The bank recognised savings from changes in infrastructure as well as redundancies in its front office of about 800 full-time roles.
The bank’s headcount is at its lowest since 2007, Barclays said.
However, the efficiency gains from a digital transformation were not enough to stop a decline in the bank’s profits. It reported a seven percent fall in profit to £3.3 billion for the first half of 2014.
Barclays is aiming to reduce its group costs from £18.7 billion in 2013 to £16.3 billion in 2016, it said in a presentation slide outlining its group cost targets today. It expects to have reduced its costs by nine percent to £17 billion by the end of 2014.
Originally, the bank had said that the aim of Transform was to help the bank reduce its net operating expenditure by £1.7 billion to £16.8 billion by 2015. It has so far closed data centres and and reduced thousands of servers to achieve this goal.