Cost assignment within financial institutions requires a realistic, credible methodology for allocating the dominant category of non-interest expense: salary and related expense. It follows that time expended by work-related task activity must be measured and associated with profitability reporting objectives in order to allocate compensation-related costs. Human factors come into play. Overly intrusive “work measurement” techniques can disturb staff work flow. Simplistic statistics-based approaches will lack accuracy. TKG solves this issue by utilizing an “activity-based costing” (ABC) approach located between these extremes: basically, brief structured interviews with departmental managers and having line staff (lenders, branch staff, etc.) fill in Web based time estimate surveys. Impact on any one staff member is minimal. Our process values the unique insight of bank staff to enhance data, without disturbing the daily work flow.

TKG approaches assignment of non-salary costs using best practice industry methodology. Categories of these costs include: IT costs, electronic banking/internet costs, loan loss provision, etc. These cost assignments, along with the salary and related assignments described above, yield very actionable cost information. We document and automate the assignment process by utilizing powerful software tools along with double-entry allocation accounting in order to provide clients with clear "drill-down's" and audit trails describing the assignment process. The process is "full absorption" – nothing is hidden – all costs are allocated.

TKG will also utilize the ABC approach described above to develop "unit costs". These costs are frequently used in customer profitability systems. Each customer is billed for the resources they consume based on a number of different unit costs. For example, you might determine the cost per new loan, teller transaction, ATM withdrawal, etc. Most of our customers choose systems that allocate costs directly to products and organizational units using resource consumption guidelines, but some customers elect to develop unit costs for use in MCIF or other systems.

• Measurement and alignment of costs in order to assess the profitability performance of organizational units, lines of business, branches, products, officers, and customer accounts.
• Unit costs at the product and account-level which feed into your existing MCIF and/or CRM systems.
• Best practice activity-based Cost Assignment approach and methodology.

• Identify profitable or unprofitable organizational units, lines of business, branches, products, officers, and customer accounts.
• Improve your efficiency ratio by identifying negative trends in your direct, indirect, and general corporate overhead components of the non-interest expenses.