Business process outsourcing (BPO) is an emerging area of growth in the financial services sector that involves outsourcing of an entire business process – such as treasury, back office or transaction services. Given the increasingly competitive marketplace, BPO offers tremendous benefits to financial institutions in terms of reduced costs, enhanced performance and ability to access superior expertise and industry best practices, and devoting scarce human resources to core businesses.
Some of the prominent trends in financial services sector include:
• Shift from product-centric to customer-centric strategies.
• Increasing virtualization.
• Reducing margins and increasing focus on efficiency and cost cutting measures.
• Movement from back-office core banking functionality as a strategic differentiator to application integration
In light of these trends, finance BPO is becoming increasingly important in financial services and several BPO models are emerging in this sector. Some of the critical issues to be addressed in this regard include taxation, regulation, ownership structure and presence of a cultural fit.
There is a huge spectrum of outsourcing solutions ranging from transaction processing to credit underwriting that can be applied in the banking and financial service sectors. The end result of these outsourcing solutions will be leaner, faster, more flexible and ultimately more competitive financial service providers.
The banking and financial services sector is witnessing a concerted move towards business process outsourcing (BPO) as a strategic option. This industry is ideally suited for outsourcing, given large transaction volume, structured decision-making and reliance on rule-set processes. Outsourcing in this domain has shifted along the complexity and maturity spectrums from transaction processing to true business transformation. Corporations are progressively acknowledging the potential benefits from BPO in this segment and identifying road maps for process reengineering that will contribute to greater profitability.