Bankers have hacked away at their expense base for years, holding countless quarterly conference calls in which they talk about run rates, best practices and so-called "low-hanging fruit." At one point, every big and midsize bank seemed to be boasting of an initiative that would cut spending to the bone.

Yet bankers and consultants agree: Companies could trim still more fat if they are willing to dive deeper into their operating expenses. Some believe that another 20% of spending can be cut from annual budgets, with the best targets being outsourcing contracts for software, transaction processing, property maintenance and other services.

PNC Financial Services Group Inc. was one of the companies that completed a major efficiency drive in recent years, wringing out $400 million in annual costs, with 30% tied to third-party relationships. Though the $279.8 billion-asset Pittsburgh company's "One PNC" effort officially wrapped up two years ago, executives contend that employees are still cutting.

Richard J. Johnson, PNC's chief financial officer, said the program's completion "did not mean the end of efficiency enhancements." He said, "Continuous improvement and a rigorous approach to expense management is a part of our corporate culture. We constantly evaluate the allocation of resources and deploy them to the highest risk-adjusted-return activities."

Terry Moore, the managing director of North America banking at the Accenture Ltd. consulting firm, said banks can still eliminate plenty of expenses, particularly in dealings with outside service providers. "We not talking about one-and-done programs," he said, estimating that the average bank could still reduce third-party expenses by 6%. He said obvious areas to consider include processing, technology and purchasing.

"There is a gold mine in savings still out there," Moore said. "We're talking about hundreds of millions of dollars in savings."

To do so, banks must have ongoing evaluations and discussions with software providers, facilities managers, card processors and other companies that provide outsourced services. And while efficiency experts see several ways to attack expenses without sacrificing revenue growth, in some instances, it may take spending money to save money.

Gwenn Bézard, research director at the Aite Group, said recent interviews with chief information officers revealed that more are taking a hard-line approach with vendors. A big banking company — that he would not name — started the trend a year ago, he said, asking all its outside providers for a 15% cut. "Many other institutions decided to follow suit," he said. "We expect that trend to continue over the next 24 months."

Banks also need to invest more in their departments responsible for monitoring and negotiating contracts, experts said. Many have understaffed those departments, making it difficult to regularly evaluate contracts. Also, there should be a greater emphasis on hiring specialists to focus on specific areas, they said. A good specialist, Moore said, can cut enough to justify his or her hiring and then find more ways to cut and save. "The key is figuring out how to get the talent into the bank."

David Dierker, SunTrust Banks Inc.'s chief administrative officer, said the $176.7 billion-asset Atlanta company continues to scrutinize spending nearly a year after completing its $600 million cost-cutting effort. Procurement officials and business units create annual "playbooks" designed to scrutinize spending, he said. "It's not a perfect document, but it does involve rigorous tracking project-by-project," he said.

SunTrust outsourced most of its facilities management operations, and the outside provider is helping the company reduce its energy use.

Technology is another realm in which banks can become more efficient, experts said. Moore touted the need for procurement offices to invest in better technology, such as programs providing analytical tools to map out spending priorities. Though it might be costly, "this is about getting a fast return on investment after spending that money," he said.

Bézard recommended that banks take a second look at lower-cost software firms. He estimated about 80% of the costs of contracting with a well-known software firm reflect maintenance fees, not new programming. "I was surprised to see very few institutions looking at that area," he said.

The understanding is that more banks will take a second — and in some cases, third — look at expenses. PNC's Johnson, for instance, said the company is still reviewing ways to cut costs after buying National City Corp. last year. "We are currently on track to achieve a two-year cost savings target of $1.2 billion" from the former Cleveland company, he said. Executives are drafting a multiyear plan to "help maximize the value" of office space, "as well as streamlining and consolidating operations."

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