A business report on BPO: for back-office operations of banks/FIs with specific focus on outsourcing parts of core banking operations

Abstract

Business Process Outsourcing (BPO) has become the cost saving mantra of the day across industries, and it is more so in the banking sector, which is highly transaction intensive and has a lot of scope for outsourcing. Leveraging on BPO helps Banks/FIs to refocus on their core competencies. This, in turn, provides the management with an environment where among others, cost reduction and improvement in service quality can happen simultaneously. While reams of material has already been written on the outsourcing of non-core operations of banks and financial institutions to BPO vendors, this report lays emphasis on evaluating some of the core services and high value added services of banks as potential candidates for outsourcing, to gain full advantage of the outsourcing paradigm. Servicing strategies and business models, which are to be adopted for the same are explored in detail. Banks/FIs are particularly wary about considering core operations/parts of core operations for outsourcing due to the perceived high risk. However, if the processes and templates are well charted out, and SLAs efficiently set, outsourcing some of the major parts of the core operations shall yield huge cost savings to the banks.