Companies in the financial services sector have been on a renewed mode of growth made possible by the utilization of technological applications, as part of innovative growth strategies. The changing demands of customers, budget pressures, increased competition and rising regulatory as well as risk demands have led to new trends in BFSI outsourcing.
The financial industry has evolved over the past five years in keeping with all these demands by implementing effective growth strategies. Business models have been re-evaluated for achieving key targets, thereby driving new trends in BFSI outsourcing. The main trends that have been sweeping across this sector include the improvement of multi-channel capability and productivity for the delivery of better client services.
Among the other trends in BFSI is the application of processes and technologies that enable companies to promote innovative growth strategies. In addition, there is also the need for finding new sources of revenue from new services and products as well as other geographical locations.
Changing trends in BFSI outsourcing
A leading provider of consultancy services and research insight, the Everest Group, has classified the BFSI sector into three categories: banking, capital markets, and insurance. Research by this group has illustrated the growing trends in BFSI outsourcing including the maturity of the market, changing growth strategies and functional and regional profiles, and key areas of investments.
Yet another one of the main trends in BFSI outsourcing is compliance with risk and regulatory systems for obtaining competitive advantage. More than half of the companies in the financial services sector spend 30% or more from IT budgets, on regulatory compliance. Enterprises attempt to leverage this investment by following an opportunistic approach to growth strategies in the form of regulatory compliance.
Collateral optimization, automation, and planning for strategic compliance are expected to be the key focus for achieving these goals. For example, Direxion Fund, a provider of exchange traded funds and alternative strategy mutual funds, has implemented technological tools for the purpose of monitoring the use of social media by staff. The company has applied the tools provided by a major technological services and software company SunGard, which permits employees to effectively use social media to their advantage for driving competition, while complying with regulations like FINRA notice 10-06.
Increasing pressure to reduce costs will remain the major driving factor of new trends sweeping the financial services industry. Furthermore, other factors such as handling complex regulations and the need to upgrade infrastructure will continue to play a crucial role in decisions with regard to outsourcing.