Operating costs of commercial banks operating in Commercial Banks

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					Commercial banking operations of commercial banks operating cost method in the

 commercial bank operating costs application
 Abstract With the increased competition in the financial industry in China, Chinese
commercial banks are also in cost should adopt a new costing methods to improve
their core competitiveness. This paper analyzes the commercial banks with significant
operational cost of the proposed commercial banks operating cost using the specific
steps and associated precautions in order to achieve the sustainable development of
commercial bank itself.

  level with the improvement of China's financial liberalization, the rise of various
financial institutions and foreign banks after the accession to WTO entry, China's
commercial banks face tremendous competition from abroad. Further intensified
competition in the financial sector, to promote commercial banks must strengthen
their internal management to reduce costs, improve asset quality and profitability. In
this context, a new cost management - Costing (ActivityBasedCosting referred to as
ABC) commercial banks in China more and more attention and praise. At present, the
operating cost method in the West was extensive and mature applications, including
non-financial enterprises, including manufacturing, with more than 60% of the surface.
In China, the operating cost method in the application of commercial banks is not
sound, the implementation in a commercial bank operating cost concern.

 1, costing concepts and principles

  costing that is based on operating cost calculation method, based on the core
operations, identify and measure enterprise resources consumption All work will take
up the resources included in operating costs accurately, and then select the cost drivers,
all operating costs allocated to cost objects (products or services) a cost calculation.
  costing the guiding ideology is: "the cost of consumption activities and activities
consume resources." Costing the direct costs and indirect costs (including costs during
the period) as the product (service) consumption of the cost of operating the same
treatment, and widened the cost calculation, so that the calculated product (service)
costs more accurate and true. Operating cost method that: operating an enterprise in
order to achieve their business objectives for the product-related or product affect the
consumption of resources of the various activities or events.

 2, the commercial banks to implement the basic steps of costing

 costing under "activities consume resources and cost objects consume activities and"
principle, the cost will be occurred banks in accordance with all the resource costs of
different cost drivers back to the corresponding operations, and then consumed by the
cost of operations in the object assigned to cost objects. Basic steps are as follows:
 (a) identify major operational
 is the operation of commercial banks and financial services, commercial banks
associated species or varieties of financial services affecting consumption of resources.
Definition of commercial banks operating system is the basis for the use of operating
costs. Determine the need for a comprehensive understanding of operating
commercial banks to provide business operations and specific procedures, understand
the trading operation. Various business operations of commercial banks to conduct
banking division has been considered difficult to implement operating cost method,
therefore, reasonable to determine the operation is extremely important. Commercial
banks according to their characteristics, can be defined from the perspective business
operations. At present, the general operations of commercial banks mainly finance
business, credit cards, small consumer loans, intermediate clearing operations and
other major operations. Definition of operations, to avoid division of meticulous work,
which analyzed the situation of disorder.

  (b) confirm that the resource
  resource is within a certain period in order to produce a product or providing service
cost of the project. General resources of the bank divided into five categories, namely,
personnel costs (including salaries, fringe benefits, meals, etc.), venue costs
(including rent, utilities, etc.), off shared costs (including transport facilities, a variety
of equipment, etc.), services costs (including transportation, computer operations,
printing, etc.) and other non-operational nature of costs (including advertising costs,
communication costs) and so on.

 (3) to confirm cost drivers
 cost driver is used to calculate the unit cost of operating costs and the cost basis of
the object. Guiji resource costs to the operations and Guiji operating costs to product
cost driver analysis is carried out valuable, it can reveal the cost of why and how it
happens. If there is a detailed historical information on the units or the information
industry can be used for comparison, you can further analyze the reasonableness of
the cost scale, whether the value of its occurrence and the efficiency of such a use, but
also help banks reduce costs related to decision-making to develop .

  (4) to confirm operation center
  completion of these steps will have a lot of work, in order to establish reasonable and
workable system, the need to merge the operation of the same nature to a job center.
Operations center in accordance with the amount of each width of the scope of
banking activities determined. Commercial banks operating centers generally include
counter and operations center, front desk operations center, back office operations
center, automatic teller machine operations center, customer service department
operations center, management operations center. These operations will often be
financial services or products part of or all of the content, and each project can
continue operating segments.
 (5) a reasonable choice Cost Driver, set up costs under Cost Driver Library
 Cost Driver is the leading factor in the cost occurs, the calculation of operating costs
and cost object unit costs basis. Correct choice of cost drivers is essential commercial
banks. Select commercial banks operating cost drivers should be considered from two
aspects: First, the level of operations, mainly referring to commercial banking
operations in the unit operations, financial services, such as species composition
operations; second-driven features, where drive refers to the financial services, the
nature of species consumption operation, including volume of business-driven
economy, during the drive, direct drive charge.
 commercial banking business under the current characteristics of the existing bank
operating cost driver should be selected as follows:
 1. Pay capital business
 reward of generic information business is paid a standard rate of capital cost as the
basis, therefore, pay the operating costs and capital directly related to the workload of
the job. The more funds raised, the larger the proportion of fixed current structure of
the more reasonable, lower cost of funds rate. Paid capital in the business, financing
business pay scale should be chosen as the operation of the driving forces.
 2. Credit card business,
 credit card business operating standards set by credit card transactions are generally
based on the operating costs and credit card transactions directly related to the
business. On the one hand, the greater the trading volume, the cost of network
communication costs more; the other hand, the greater the trading volume, clearing
the more fee income, while raising the funds to the more, it should normally choose
the credit card business volume as the operating cost drivers.
 3. Small consumer credit
 variety because of the kinds of operations, the amount is small, such as the letter of
housing consumption loans, student loans. The kinds of jobs and salaries, credentials,
assessment fees directly related to the general should be chosen certificate fee,
assessment fee as part of the job's cost drivers.
 4. Intermediate clearing operations
 mostly electronic equipment and running costs, cost of funds used, direct labor costs
related to direct labor for the general cost drivers should be selected.
 cost of library operations center cost drivers by setting the real representatives of
each of the cost of library operations at the center of it is caused by the operating cost.
Cost of library costs in accordance with the cost drivers to explain changes in
operating costs by cost driver would be assigned to the final products to financial
 (f) pooling and allocation of the cost of
 in determining the various operations and the corresponding cost drivers, you can
place all kinds of bank costs assigned to products and services to. Can determine the
costs and cost drivers to calculate the cost allocation rate, about dividing the total cost
of operating the center's cost driver to determine the quantitative form, by unit
operating costs, then the cost object (product or service) by multiplying the quantity
consumed in operations unit operating costs, you can get the cost object (product or
service) of the total cost.

 3, the commercial banks to implement operating cost problems and suggestions

  (a) Commercial Banks Costing Problems
  1. System constraints
  from the current financial reporting system and our present point of view of
accounting standards, commercial banks during the operation and management fees as
a cost, typically are not required to share products, customers and departments such as
the cost object, thereby making commercial banks in the implementation of ABC
When the accounting system, and the lack of rigid system of external support, a lack
of accounting personnel and business management, subjective support.
  2. The definition of work motivation and job choice more difficult
  commercial bank operating cost method used, the purpose is more comprehensive
and rational consumption of commercial banks the resources allocated to the
consumption of these resources work on. The operations of commercial banks are
diverse, especially with the financial deregulation and Mixed trend intensifies, the
operation will be more numerous species. Thus, China's commercial banks to
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definition of division of work, cost driver selection is reasonable, is the impact of
activity-based costing to correctly use the key. However, experience and technology
issues, Chinese commercial banks operating in the division, the choice of cost drivers
will inevitably subjective and thus easily lead to the cost of not authenticity.
  3. Implementation of the cost of enormous
  necessarily requires the implementation of operating cost on the original cost of the
system properly improved. Commercial Bank of China will present a comprehensive
business system and related business management system builders, compared with
ABC's requirements, there are considerable differences. Therefore, very large
commercial banks, the current system to reform the costs such as design costs,
consulting costs will be huge, plus equipment costs, testing fees, maintenance fees
and related costs for the work costing of manpower and material expenditures
accounting cost, a cost accounting system reform can imagine the financial pressure.

 (b) Commercial banks are costing proposals
 1. Combined with China's commercial banks to implement their own specific
operating cost method
 Chinese commercial banks running the operating cost method must first pass the
"cost - benefit" analysis to determine whether this is for bank efficiency. While it is
strongly advocated costing, but if their business regardless of the actual situation of
banks, mechanically without regard to costing information "cost - benefit"
relationship, that the use of the operating cost method is good, but this is wrong . If a
bank's business scope is narrow, single product structure, and information collection
and processing systems, and the transformation of a big price to pay, do not rush to
use activity-based costing.
  2. Clear commercial banks operating in a certain period
  major commercial banks are commercial banks operating in the financial services
and related species or varieties of impact on the financial services activities. Banking
business has introduced new service offerings, resulting in numerous operations, but
pay attention to specific activities of commercial banks in a given period of major
projects, focused on the analysis, grasp the principal contradiction.
  3. Management should give full support to
  refined as the implementation of the management of ABC, ABC system,
establishment, maintenance and application of the enterprises is a process of resource
consumption. For commercial banks, ABC System One is to have the support of
China's financial accounting system to ensure the smooth establishment of ABC
systems, but also for the successful application of ABC systems to provide
institutional guarantees. Because without the support of the system, then the
commercial banks on the one hand the requirements of the accounting system in
accordance with cost accounting, on the other hand for accurate cost accounting needs
to be accounted for by ABC, which is bound to increase the workload, a waste of
resources, also contrary to the intention of implementing ABC. Second, senior
managers of all commercial banks should also provide adequate support for the
successful implementation of activity-based costing can not rely on the financial
sector, it needs the cooperation of various departments, which require high-level
managers from the overall situation on regulation for support.
  4. Continuously improve the quality of
  staff operating cost because the application is not a simple cost calculation, but
rather the financial and non-financial enterprises work together to establish
information systems and applications, require significant staff participation. In
particular the application of activity-based costing is the key to job analysis and
Motivation, the financial officer of a clear work order to its causes, only accounting
and management knowledge is not enough, some banks also must understand the
work flow of knowledge. So it requires not only financial knowledge, and the need for
bank management and workflow system knowledge. For business people, because of
the combination of business and cost, not only requires knowledge of its operations
with the business, but also has a strong cost awareness and knowledge of financial
management. Meanwhile, ABC system implementation is a gradual process, but also
need to constantly maintain, improve and improve, not only a challenge to the
financial officers, business officers and managers is also a problem. Therefore,
Chinese commercial banks in order to apply ABC systems costing and cost
management, we must require employees, especially financial, technical staff and
managers have a higher quality; Otherwise, ABC system is difficult to really play in
the bank effect. Therefore, it can be said, high-quality staff will determine the
successful implementation Commercial Bank is one important factor in ABC.
  5. Point to area, gradually progressing
  costing as a cost accounting and control methods, can in our small number of
management practices, information technology, advanced accounting system,
complete with a certain business scale of the commercial bank components of the sub-
first row or the implementation of a number of departments, and gradually carried out
and grade promotion. Many results show that: even the local application of operating
cost, Duiyu for bank management to improve the level of competition enhancements,
the promotion will play a tremendous role, not Yao fully meet the conditions until
after the implementation, thereby easing the overall implementation of the Costing the
enormous cost pressure. In fact, in the long term, implementation of operating cost,
the bank increased competitiveness, increased efficiency will promote the automation
levels and technical improvement of the environment, thus further costing the
implementation of the provision of a broader world .
  short, activity-based costing as the cost of a new method of calculating its research
and application of new issues is still a need in practice, improvement and
development, needs everyone to work together to achieve.
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