Why you should outsource financial services?

One of the main outcomes of the economic turmoil in the year 2008 was the increased regulatory measures for financial services organizations. This was compounded by increased competition, sharp focus on operational activities and attempt to reduce cost. These have forced the financial service firms to outsource some of their processes. Not all the firms, but some firms like the hedge funds firms have tested the outsourcing model successfully, which have helped them to streamline their workflow and improve their performance.

Financial Services

The main reason why financial firms are reluctant to outsource their activities is the issue in handling high sensitive data. They fear to share information with a third party which is crucial for their business stability and growth.  Other main reason is the enforcement of regulations to tighten the execution of industry standard and policies. Financial firms are worried whether outsourcing their operations can lead to violation and non-compliance of these regulations. However there are some compelling reasons for financial services firms to consider outsourcing some of their operations.

Why outsourcing is required?

As mentioned above, it’s not only the cost factors that trigger the financial service firms to outsource their services. The other benefits like flexibility in the operations, improved performance, and effective risk management are also positive drivers for adopting an outsourcing model.

The key issues that influence outsourcing are:

  1. Volatile nature of the market
  2. New regulatory policies
  3. Pressure to extend product portfolios &
  4. Demand to retain high value clients and to bring in new clients.

The benefits of outsourcing financial services are discussed below:

  • In purview of dynamic regulatory policies and the volatile nature of market, outsourcer helps the firms to respond quickly and in most effective manner.
  • By outsourcing activities, firms can bring some of the best international practices which lead to operational excellence.
  • Financial services firms gain access to specialized expert services and new working methods that they cannot avail internally.
  • Risk factor is reduced to a greater extent and firms can gain better control over all the end to end processes.
  • Outsourcing reduces the cost, eliminates waste and streamlines the workflow.
  • The service provider enhances the productivity and quality of service.
  • Financial services are always in pressure to be innovative and continuously to introduce new product portfolios to stay competitive in the market. Outsourcing can ensure that the new strategy is supported by providing appropriate information and required IT infrastructure.
  • In the current economic situation, it is vital for the firms to retain their clients. Service providers support them by providing them with platform and services to analyze the existing customer base and to take appropriate decisions for ensuring customer satisfaction.

Further, the management can refocus on core competencies and add more value to their business while availing a specialist service provider to carry out the daily operations in a more effective and productive manner.




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Comments

  1. Thanks Steve for sharing the post. Outsourcing financial services even provide benefits like customer acquisition, application processing, customer care and retention, account administration, claims processing, collections etc.

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