Macquarie Group hopes to extend the successful creation of a shared services function within its Macquarie Securities Group (MSG) and Fixed Income, Currencies and Commodities (FICC) group out to the rest of the organisation.
In 2010, the group started sharing some of the technology systems between the two divisions of the organisation, including derivatives and treasury product Calypso as well as trading and investment product Fidessa.
That saved $20 million "from the get-go", deputy managing director Greg Ward said in an operations briefing today.
In April 2011, Macquarie Group started to combine operations such as settlements and reconciliation. This resulted in $8 million worth of savings, which were still growing, according to Ward.
In December, Macquarie took it even further, conducting a complete merger of the back-office operations and IT teams of the two divisions, with the creation of a new group called Market Operations and Technology (MOT). This has already resulted in $20 million worth of savings and was "only the beginning", according to Ward.
Now the company wants to make use of the new MOT team, "leveraging the capability across all the business units in Macquarie", Ward said.
The consolidation of MSG and FICC operations and IT will see 25 per cent net savings by the end of the 2013 financial year, ending 31 March.
Ward said the group hoped to achieve 15 per cent net savings for across the group within the same time frame.
The consolidation will achieve operational and IT scale efficiencies, the standardisation of processes, rationalisation of the group's external spend, reduced duplication, as well as improved knowledge and skills. One of the other benefits of the consolidated team is being able to change the location of services. Now, 20 per cent of Financial and IT services were located offshore, according to Ward.
The team has reduced its headcount by 1000 over the nine months, with a significant number of the roles going from support areas such as IT.
Peter Maher, head of Macquarie Group Banking and Financial Services, said earlier in the briefing that having scalable costs was incredibly important to Macquarie because many of the group's clients often engaged infrequently with large numbers of transactions, which could lead to fluctuations in business. "Therefore, we need to be able to focus on scalability and efficiency."