It is not often Banking Day finds sell side analysts speaking out on the cornerstone dilemmas in the Australian industry, but UBS analyst Jonathon Mott has produced a caustic comment on the state of things."While the major banks look efficient from a cost-to-income ratio perspective, their absolute cost base has blown out to A$37 billion [a year]," he wrote."This appears to be an astronomical amount of money to run a banking system across Australia and New Zealand."This is all too true.Mott said he believed that number " could be reduced materially." What, after all, is the real evidence for a progressive costs story in the sector?If costs were falling in any credible manner it would be only fair to infer that the fees charged to users should also be in decline.But they aren't in any product segment, not seriously.As Mott explained: "If we look at the banks' costs to population (including Australia and New Zealand), expenses have grown from $976 per person in FY05 to $1293 per person in FY15."This represents a compound growth of 2.4 per cent over the last five years and 2.9 per cent over the last ten years. "We believe that underlying cost growth of this level illustrates the inefficiency of the banking system."Mott said one of the reasons the banks have been so inefficient is simply that conditions have allowed them to be. "With solid balance sheet growth and revenue momentum the banks have not needed to undertake material productivity initiatives. "We believe that risk-averse management and boards have not been prepared to make tough decisions on costs given the risk of upsetting their customers and disturbing revenue momentum."