How is Outsourcing Transforming Businesses in Financial Services Companies?

The financial services sector has been rapidly adopting outsourcing over the past few years to drive transformation. Outsourcing business activities to external specialists enables financial institutions to enhance efficiency, resilience, and competitive edge. This trend is set to expand exponentially, given the customer-centricity, innovation, and agility demands of a dynamic world. This blog closely examines how apt outsourcing solutions and meticulous outsourcing management are together transforming the business models of financial services companies in today’s climate.

Transformational Role of Outsourcing on Financial Services Company

Financial services can be easily outsourced, and companies can benefit in the following way by doing so. 

Cost Optimization in Banking, Insurance, and Capital Markets

Strategically leveraging outsourcing services has emerged as a key avenue for financial enterprises across banking, insurance, capital markets, and beyond to substantially optimize operating and capital expenditures across numerous critical business functions and processes. As per multiple reputable industry reports, a properly designed and implemented outsourcing strategy helps financial firms reliably achieve 30-60% in total expense savings over time by

• Accessing specialized in-demand skills across emerging areas at significantly lower market-benchmarked labor costs through outsourcing consulting, ensuring optimal ROI on talent acquisition.

• Holistically streamlining and integrating complex operations into higher-quality, lower-cost end-to-end processes using cutting-edge outsourced delivery platforms and methodologies.

• Notably minimizing incremental spending needed on in-house IT infrastructure upgrades, new software purchases, licensing fees, and related areas by leveraging flexible, Utility-based outsourced IT services.

• Consolidating several overlapping and redundant finance processes along with associated overhead expenses by tapping into the economies of scale offered by outsourcing management achieved through years of focused domain excellence.

This enables allocated budgets across people, processes, and technologies to be optimally channeled toward new business revenue growth and customer experience enhancement needs. Consequently, appropriately planned outsourcing engagements are compelling financial enterprises across sectors to beneficially shift from pure capital expenditure (CapEx) centric business models to more flexible operating expense (OpEx) centric frameworks for better overall cost economics.

Expert Capabilities On-Demand for Financial Institutions

As financial products/services and customer engagement models are undergoing tremendous innovation recently across digital, analytics, and other spheres, the growing need to quickly yet seamlessly integrate new-age futuristic capabilities safely, securely, and affordably assumes immense significance. Outsourcing management helps expertly fill this critical capability and skillset gap extremely reliably by providing highly convenient, modular access on-demand to various specialized emerging expertise in cutting-edge areas like

• Cloud, efficiently leveraged Open API architectures and appropriately scaled microservices-based technology platforms

• Advanced data analytics techniques, predictive modeling capabilities, and invaluable business intelligence gathering based on internal and external datasets

• Automation enablement across processes using sophisticated Robotic Process Automation and cognitive Artificial Intelligence solutions customized for the financial domain

• Highly reliable enterprise-grade blockchain platforms and extremely resilient multilayered cybersecurity frameworks

• Comprehensive digital transformation strategy formulation and consulting across channels, architectures, data, and customer journeys

• Omni-channel customer interaction management services across both assisted and unassisted paradigms

Instead of attempting to build such niche capabilities purely in-house through significant investments, aptly designed outsourcing services allow financial companies across banking, capital markets, and insurance to stay continually updated on the latest technologies to serve both retail and institutional customers better while achieving exponential ROIs.

Focus on Core Financial Offerings

By strategically outsourcing various ancillary activities around essential systems, business processes, and critical support services, financial companies across banking, insurance, and asset management gain substantially more valuable leadership bandwidth to then consistently strengthen, enhance, and elevate core financial offerings. For instance

• Compliance experts can proactively focus on optimizing monitoring frameworks, enhancing risk management protocols, and updating regulatory policy repositories.

• Investment advisors can allocate more high-impact time exclusively towards thoroughly understanding evolving client needs as well as crafting tailored solutions.

• Insurance agents can channel energies exclusively on sharpening their core consultative skills further for assessing policy suitability diligently across both retail and commercial segments.

• Banking relationship managers provide highly personalized engagement experiences across channels by collaborating more with their customers over long trusting partnerships.

• Visionary leadership steers strategic efforts increasingly towards constant experimentation, innovation, and rollouts of newer cutting-edge financial products and investment services.

Efficiently outsourcing the appropriate non-critical tasks thus emerges as an invaluable and pivotal enabler in empowering such enhanced focus on core financial offerings ultimately essential for delivering successful client-centric digital transformation across institutions in the financial services sector.

Operations in Capital Markets

As trading spans multiple interconnected global time zones, capital markets firms across banking and investments are strategically outsourcing various critical functions like trade processing/support, high-frequency quantitative analytics, and dynamic portfolio management to optimal offshore locations. This facilitates the enablement of seamless 24×7 workflows round-the-clock in mission-critical areas like

• These technologies include automated advising engines, investment analysis tools, high-speed trading platforms that use algorithms, and other related technology.

• Real-time market monitoring capabilities that are robust, frameworks for risk management that are predictive, and portfolio optimization modules

• Workflows for high-volume trade reconciliation, post-trade reporting procedures that are completely foolproof, and audit trails that cover the whole transaction

• Instant capacity provisioning modules, secure access control mechanisms, and infrastructure monitoring systems that are robust are now being implemented.

Such non-stop productivity consistently across nights and weekends is vital for global financial services institutions across capital markets to stay continually compliant, rapid-responding, and always available in today’s world with instant flows of high-volume data. Location-agnostic outsourcing solutions inject this indispensable round-the-clock advantage into the dynamic capital markets domain.

Risk Mitigation for Financial Services Firms

By proactively spreading operations across multiple geographically distributed outsourcing partners, financial companies can firmly embed “always-on” resilience into their operating models to effectively combat various critical risks like

• Minimizing adverse impacts of unpredictable regional incidents causing prolonged downtimes or business disruptions

• Implementing robust cybersecurity controls to address emerging sophisticated information security threats and manage escalating data privacy concerns

• Leveraging outsourced compliance support to prevent non-compliance scenarios as well as predict and handle related cascading regulatory effects

• Instilling adequate redundancies across channels to minimize customer-impacting disruptions and preserve high service levels

If any single location, unfortunately, undergoes any major incident, business processes are quickly and seamlessly rerouted in real-time across trained partner sites globally through inbuilt redundancies. This capability is contractually enhanced by incorporating adequate SLAs. Appropriate governance-based outsourcing also substantially aids financial services firms in other related risk management functions like cybersecurity, data governance, and compliance audits.

Conclusion

The utility of aptly planned outsourcing engagements for financial services organizations thus spans optimizing costs, adding specializations, focusing on core offerings, enabling round-the-clock workflows, and instilling resilience. As the sector experiences convergence with fintech innovations in the backdrop, outsourcing emerges as a flexible lever for institutions to gain sustainable transformation. Strategic outsourcing services undoubtedly help financial companies improve process efficiency, resilience, and business outcomes holistically.

Transform your financial services business with ProHance! Our specialized outsourcing solutions help banking, insurance, and capital markets firms optimize costs by 30-60%, achieve round-the-clock productivity, embed resilience into operations, and access niche capabilities in AI, data analytics, cybersecurity, and more. Partner with ProHance for end-to-end outsourcing consulting tailored for financial enterprises and gain a competitive edge driven by 20+ years of domain expertise. Achieve more by outsourcing with us!