New directions offer innovation but carry new demands

The Financial Services industry has been facing considerable challenge and competitive pressure in the last decade - regulation and compliance, globalisation and consolidation, legacy systems and increasing competition. The current sub-prime lending crisis has, if anything, heightened the need to address these issues. Financial services institutions need to focus on core operations more than ever, while ensuring that support functions are effective, efficient and compliant.

In the past, outsourcing has played a key role in helping to meet these challenges. However, there are three key trends emerging that are breaking up the established pattern of large scale outsourcing in the Financial Services Industry. These are:

• Acceleration of Business Process Outsourcing
• Increasing appeal of Shared Services
• Move to Multi-source agreements

This vertical disaggregation and the new off shoring and near shoring options make creating the optimum solution a more complex process. However these solutions can generate value on a different scale from the traditional single supplier deal. There are also opportunities for innovation and the creation of new operating models that the older outsourcing deals often tended to stifle.

Datamonitor suggests that financial services institutions need to develop global sourcing strategies that enable them to choose between operational locations and sourcing set-ups. To do this they must weigh up factors such as political and operational risk, regulatory issues, cultural barriers, cost considerations, vendor offerings and local skill sets. This is a complex equation - but one with which EightyTwenty Insight is very familiar.

For more information on how we can assist you, please download the 'Can the trends in outsourcing contracts continue to modernise Financial Services Institutions?' document or contact us.