On Cost Allocation Optimization Of Commercial Banks Based On Activity-Based Costing

With China's economy entering a new normal,Commercial banks in China have entered a new period of development.In the past decades,Commercial banks in China relied on the rapid development of the domestic economy,their scale and strength has been rapidly expanded,and became one of the mainstays in China's economy.But in recent years,with the deepening of the financial system reform and the implementation of market-oriented interest rates,commercial banks also face the competition of foreign banks and Internet finance at the same time,the original profit space of commercial banks has been squeezed,and the competition among banks has become increasingly fierce.The business model that could promote profit growth only by business expansion has gradually revealed its drawbacks.Some commercial banks turned to focus on the internal lean management.Cost allocation is one of the main problems that commercial banks must face in their internal lean management.Most of the existing cost allocation methods in commercial banks are still traditional cost allocation method,the traditional cost allocation method adopts a single allocation standard which doesn't link cost allocation with cost drivers.The unscientific allocation of indirect costs will result in certain cost distortions.Although the accounting method is simple and the cost is low,with the increasing proportion of indirect costs in commercial banks and the diversification of products and services,the traditional cost method can't adapt to the existing cost accounting of commercial banks.Activity-Based Costing(ABC)combines products and resources through activities when dealing with indirect costs base on the concept of “products consume activities,activities consume resources”,which objectively reflects the process of resource consumption and provides a scientific standard for the allocation of indirect costs.With the maturity of ABC,banks have tried to imported ABC into cost allocation system.Some commercial banks have already successfully applied ABC both here and abroad.On the one hand,ABC is suitable for the cost structure of commercial banks with high indirect cost proportion.On the other hand,commercial banks also need ABC to allocate costs into products and customers with a more detailed dimension,to provide more accurate cost information and more objective reference for business decision making.This paper used literature research method and case study method.Firstly,reviewed the related research on cost efficiency and cost allocation of commercial banks and the application of ABC in commercial banks,introduced the related concepts of ABC and theoretically analyzed the application of ABC in commercial banks.Then,taking the Branch A of Postal Savings Bank as an example,after analyzing its existing cost allocation system,there are some problems,such as indirect cost allocation not combined with operation,cost allocation not refined to product customer dimension,weak cost management consciousness,lack of professional talents,incomplete management information system and high cost allocation optimization of ABC.The application of ABC can solve the cost allocation problems in the bank.Many commercial banks both here and abroad already have applied ABC,and the postal savings bank has the platitudinous economic capital and technical strength.The focus of this paper is to design how to apply ABC for Branch A of Postal Savings Bank.First,the cost is classified step by step.Then,the resource consumption and activity consumption of cost objects are calculated by confirming resource drivers and activity drivers,and finally the activity cost is calculated.For the other problems existing in the optimization of cost allocation,this paper also puts forward corresponding countermeasures and suggestions: First,pay more attention to ABC management,such as setting up ABC management project team,carrying out target assessment,etc.,so as to achieve the effect of department linkage,at the same time,strengthen the training of financial personnel and absorb new talents;Second,increase the input of complete management information system to update information technology level;Third,“step by step”,based on the principle of costeffectiveness,after the pilot project success,then promote throughout the bank.