Intermediary Business Cost Management Study Of Commercial Banks Based On Activity-Based Costing

In the 21st century, world economy is accelerated by globalization, marketization and knowledge. The new economy, considering knowledge as its fundamental force and core resource, changes the mode of economy development dramatically as well as the operation conception, strategy and pattern in modern commercial banks. In order to transform operational mechanism and development strategies, developing the intermediary business will continue to be the trend of development of our commercial banks.Intermediate business refers to banking operations that does not constitute assets and liabilities of the balance sheet and to form not-interest income of banks. In the development process of western developed countries, the intermediary business plays a very important role. This is partly because it offers a variety of financial services which adapted to the requirements of economic development in western countries; the other hand, intermediate business played a part in customer service, contacting customers, stabling customers, promoting the development of traditional assets and liabilities business. More importantly, the intermediary business has many advantages, such as low cost, high return, low risk and it had brought great profits to the west banks. Typically, the ratio of intermediary business revenue to the total income can be used to estimate the level of the commercial banks development in a country to some extent. In a sense, the development of intermediary business has become an important symbol of modernization of commercial banks.Chinese commercial banks have been carrying out the loose operation and management. After these years of development, the management of commercial banks have made great progress, and the intermediary business has also gradually grow up from insignificant of the past and become new profit growth point of banks. However, Chinese commercial banks are much behind the foreign banks in terms of the intermediary business cost management. At present, the Mainland's banking have overall open to the outside world, and the net interest margin narrowed, so our commercial banks face even greater pressure. To count the product cost of intermediary business accurately and to control it effectively becomes a pressing problem. According to principle of product consumes activities and activities consume resource, Activity-Based costing (ABC) adopts many distribution standards to put indirect expense into the product cost so as to make the product cost more accurately.Theoretical Study of increasingly sophisticated and the implementation of Activity-Based costing in western banking proved to be effective in the aspects of offering detailed and accurate data, optimizing business process and supporting market positioning, but our commercial banks have just put it on the agenda, especially in the part of the intermediary business. In view of the intermediary business is playing an increasingly important role in the bank, this thesis will link up the mature theory with the intermediate business practice, and with examples to illustrate its specific application, figure out product cost and customer profitability with the help of activity analysis and cost driver, and help administrator get more detailed and accurate cost information, and used it in product profitability analysis and customer profitability analysis.