The Feasibility of Designing and Implementing Activity-Based Costing (ABC) in the Banking Industry of Iran

Following the business environment changes resulted of global competition and technological evolution, banks same as other modern entities face increasing demand for varied goods and services. Thus the necessity of meeting customers’ needs and survival in this dynamic, complex and deeply varied environment make banks force to turn to the modern technologies and introduction of non-traditional goods and products. Clearly, the ability of resistance in this path requires constructing of more precise tools for managers’ performance evaluation in compared with past. Consequently without determination of “profit zone” and awareness toward profitability of services, products and customers, making decision in appropriate to be success is impossible. So, for being success and getting to the more precise and economical way for services, products and customers’ portfolio management, ABC is introduced to the banks as a system which is able to valuation, providing correct and timely information about value added activities and defining of non-value added activities and as a tool for promoting performance and profitability. The importance of this system requires us to study the current status of costing in Iranian banking industry, scrutiny status of requirements of implementing of ABC in mentioned industry and answer to this question: is it possible to design and implement ABC in banking industry of Iran? Thus, in this research, following to making perception toward the status of costing and confirmation the possibility of ABC implementation in Iranian banks from point of view of banks’ experts, we present a model for implementing ABC in Iranian banks.