What is a benchmark in banking?

A benchmark is a standard against which the performance of a security, mutual fund, or investment manager can be measured. Generally, broad market and market-segment stock and bond indexes are used for this purpose.

How do you benchmark a bank?

Companies and banks typically use ratios as benchmarks, such as liquidity ratios and debt ratios, as opposed to investment firms that typically use market index benchmarks, such as the S&P 500.

How many employees does a bank branch have?

For new branches added, the average employee headcount is 6.5 total employees per branch. Credit unions reported they would use seven total employees in the new or remodeled locations while banks reduced to 6.

What is efficiency ratio in banking?

Efficiency Ratios for Banks In the banking industry, an efficiency ratio has a specific meaning. For banks, the efficiency ratio is non-interest expenses/revenue. This shows how well the bank’s managers control their overhead (or “back office”) expenses.

How is benchmarking used in the finance industry?

In finance benchmarking, banks focus on indicators such as the amount of time it takes for finance close and invoice processing or the number of finance employees needed to support the rest of the bank. Banks typically use finance benchmarking to determine if staff levels are sufficient or if they need to reduce staff.

What is the benchmark ratio for a bank?

Benchmark Ratio #4: Banking Efficiency Ratio. The banking efficiency ratio measures the bank’s overhead costs as a percentage of its revenue. It’s an easy way to measure a bank’s ability to turn assets into revenue. A lower efficiency ratio indicates that the bank is earning more than it is spending.

Which is the best human resources benchmark for banks?

Total process gap to industry top performer ($US M) 8.0 4.0 1.0 3.0 HR operations Total rewards Talent management Strategy and program design Total process cost gap to top performer ($US M) 10.8 1.7 6.5 2.0 0.7 Company A process cost Labor rate differential Staffing efficiency differential Outsourcing differential Banking Median

Why is staffing ratio important to retail bank?

Since branch staffing accounts for approximately one-quarter of the total of costs of operating a retail bank, the retail banking staffing ratio is a key indicator of bank profitability. The lower the staffing costs, the higher the profitability.