The Study On Application Of Activity-Based Costing In Bank Of China

With the entering of foreign banks,domestic commercial banks are facing more and more industry competition. The State-owned commercial banks, which are making institutional changes,must perfect their management mechanism and improve their core competitiveness to be the winner in the financial market. However, the modes of the cost control over the commercial banks in our country are considerably rather extensive and the management approaches rather simple so that the cost control is unable to give full play to the necessary function as decision making and to be adaptable to the instantaneously changing external environments, and the interior resources are unable to give fill play to the greatest benefit.The Activity-based costing (ABC) is a completely new corporate cost control theory and approach that started extensively in the western countries in the end of 1980's and was first applied by the advanced manufacturers.It establishes the basis for business process reengineering through distinguishing value-added activities and non-value-added activities. Based on the cost driver of every activity, ABC can overcome many defects in the conventional cost accounting, provide plenty of relevant and accurate cost information to help managers implement the strategic management and seek for sustainable development opportunity.ABC has been adopted by more and more international commercial bank such as CITI bank , etc. In the commercial bank in our country, it is not such a success to apply the ABC as the cost management. The reason lies in the fact that most of businesses are not modernized and there is still a lack of some coordination in the management work, so they are not completely qualified for the application of ABC. Based on the study of application of ABC in Bank of China, the article analyses the differences between the conventional cost approach and ABC on cost analysis and management, inquire into how to raise the core competitiveness of domestic commercial bank.Finally, the article points out several advices for the application of ABC in Bank of China.