The Great Debate UK
The silent revolution in banking
By Sanjeev Sinha
Media coverage of the banking industry was once confined to newspapers’ business pages, but has now spilled over to headline coverage. Recently the remuneration of bankers has been treated with even more interest than the salaries of top football players.
Yet while newspaper readers have become familiar with the LIBOR rate and discussions about cash reserves, there has been a long process of banks restructuring operations that has nothing to do with mergers or nationalisation. A behind-the-scenes revolution has been taking place, driven not only by the need for cost saving but, more importantly, to improve efficiency, and enable them to compete in global markets. Increasingly, banks have been looking at outsourcing a wider range of functions as a response to global market challenges.
High street banks have long embraced outsourcing in order to have the freedom to focus on their core business. But the independent expertise of an outsourcer becomes even more valuable when facing competition from new entrants such as Metro, the first new high street bank to be set up for a hundred years, and Tesco and Virgin, companies that grow by using their brand value won in other areas to enter financial services.
According to the World Retail Banking Report 77 percent of retail banks now outsource at least one part of their operating model, from their back office functions such as collections and the processing of payments to IT. Common industry estimates shows that outsourcing provides clients with 20-40 percent savings, depending on whether processes are located onshore or offshore.
from The Great Debate:
Outsourcing faces new era of scrutiny
-- Eric Auchard is a Reuters columnist. The opinions expressed are his own --
Outsourcing, Indian-style, is challenged as never before by an erosion in business confidence that makes corporate spending, even to generate quick cost-savings, harder to justify.
"No New Investment" is the order of the day; cost avoidance, the mantra; zero percent, the growth target in the current era of uncertainty.
