Measure to Cut Costs: Banks to Turn off Voice Mail Service? - Analyst Blog

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As is the norm, the old always has to make way for the new.  The use of ‘Voice mail’ in banks is gradually waning, thanks to the rapid spurt of email and instant message services.  Several banks including JPMorgan Chase & Co. JPM, Bank of America Corporation BAC and Citigroup Inc. C are planning to remove or trim the voice mail service.

Voice mail is not only expensive, but it is no more viewed as an effective mode of communication.

Citing people familiar with the matter, The Wall Street Journal stated that Citigroup is evaluating the voice-mail usage for possibly eliminating the service when employees do not use the service. BofA is also mulling over a similar move.

Further, JPMorgan is set to eliminate voice mail for its consumer-bank employees to reduce costs. In an investor conference on Tuesday,  Gordon Smith, head of the J.P. Morgan’s consumer and community banking unit, said , “We realize that hardly anyone uses voicemail anymore, we are all carrying something in our pockets that's going to get texts or email or a phone call.” Smith noted that the company incurs around $10 per month per employee on voice mail service.

Per a company spokeswoman, the unit has commenced winding down landline voicemail service earlier this year for employees who do not directly deal with clients, such as employees who are engaged in operations or technology platform.  The measure is expected to result in savings of $3.2 million a year in the unit.

The move comes as a part of JPMorgan’s broader plan to cut its consumer and community banking unit’s expenses by $2 billion by 2017. Notably, the company’s investment-banking division also plans to eliminate landline voice mails to some extent.

Not only are banks considering turning off their voice mail service, several other companies are shunning away from the service. Notably, last December The Coca-Cola Company KO closed down its office voice mail service in its headquarters, to reduce costs and simplify work. The company expected savings of less than $100,000 a year by removing the service.

Bottom-Line

As banks continue to face revenue challenges in the current low interest rate environment, cost cutting initiatives have gained priority to boost the bottom line. Banks have undertaken several cost cutting measures including job cuts, branch closure, consolidation of operations and offloading non-core operations.  Further, the banks continue to embrace new technology to attract and retain clients with hassle free services and improved digital experience, while at the same time, it remains focused on removing redundant tech services that weigh on its expense base.

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