The current global banking environment offers significant opportunities for service providers to analyse the banking system and provide core banking solutions
Emerging solutions include the adoption of platform BPO for greater scalability, and social media solutions to connect with customers
Services outsourced in the banking industry mainly cater to retail banking, mortgages, card and payments, asset management, and research and analytics
Mar 2012: Banks that have survived the financial crisis are taking time to evaluate their market positioning, customer segmentation models and product mixes for their businesses. The post crisis regulations have introduced stricter risk assessment and monitoring frameworks. Service providers have been assessing this situation and have begun to offer specific banking solutions to address all their challenges.
Research from HfS Research (the leading research analyst firm focused on outsourcing and shared services strategies), and co-authored by ValueNotes (a leading provider of market intelligence), examines the impact of industry challenges on the global banking sector, in a report titled “Banking BPO Services: Getting Back to Basics”. Outsourcing in this sector has grown significantly with service providers offering core banking solutions to all major segments of banks, including retail, commercial, credit unions and investment banks.
Our research estimates that the global banking industry is showing higher growth rates in the APAC region with US and European banks aggressively investing in this region. The larger banks are evaluating their options on whether to continue with their captive/hybrid centres, with some of them choosing to surrender their stakes in captives to third-party service providers. Mid-size and smaller banks are more conservative with their investment and outsourcing decisions due to limited service offerings and constrained geographic reach. For this segment, service providers are offering greater onshore support for their services.
Some of the key findings of the report include:
Services outsourced in the banking industry mainly cater to the following segments – retail banking, mortgages, card and payments, asset management, and research and analytics. These functions comprise the core solutions of any bank. Key benefits of these solutions include greater operational efficiency, market agility, and improved regulatory compliance.
The implementation of these outsourced core banking solutions requires an integrated approach consisting of risk management, data analytics, IT support for delivery system integration, and process re-engineering capabilities, led by domain consultants in the banking field.
Emerging solutions include the adoption of platform BPO for greater scalability, and social media solutions to connect with customers. Platform BPO requires a convergence of BPO, applications and hardware integration. Banks are also capturing online feedback and sentiment from their customers before re-designing these services and products.
For this industry, geography plays an important role as service providers are offering multi-country operations with a healthy mix of onshore and offshore delivery support. Apart from South Asia, the Philippines, Eastern Europe and Latin America are emerging as the next growth spots for global banking BPO delivery centres. Service providers are also moving from niche banking specialists to a more comprehensive, end-to-end banking solutions providers having invested in banking technology and domain expertise.