Financial institutions turn to outsourcing

According Financial Insights, the banking world will embrace outsourcing during 2003 as they strive for a predictable cost base and eliminate in-house support of non-core activities.

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By  Greg Wilson Published  January 25, 2003

Outsourcing is likely to dominate the strategic IT initiatives of many financial institutions. According to research company, Financial Insights, the banking world will increasingly turning to outsourcing during 2003 as they strive for a more predictable cost base and eliminate in-house support of non-core activities.

“The challenge for IT service providers will be to drive revenues from the business by decreasing headcounts, automating processes, and managing contracts with the banks,” comments Jeanne Capachin, research director at Financial Insights.

“Conversely, the challenge for banks will be to control costs and continue to meet client expectations despite the changes in processes,” she adds.

Although overall IT spending is likely to remain flat across the industry, financial institutions are likely to increase investments in specific areas, such as outsourcing, disaster recovery planning and electronic payment technologies.

“2002 was a difficult year from an economic standpoint,” says Deborah Williams, vice president of Corporate Banking and Capital Markets at Financial Insights.

“While we anticipate that overall spending will remain flat in 2003, we do believe that there are several pockets that will thrive, among them: outsourcing, disaster recovery planning, electronic payment technologies and several other areas,” she adds.

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