Banks and the financial sector overallutilizeback office outsourcing to improve productivity, cut costs and generate profits.

1. Why Is Back Office Outsourcing Significant
for Banks and the Financial Sector?
Managed Outsource Solutions
8596 E. 101st Street, Suite H
Tulsa, OK 74133
Why Is Back Office Outsourcing
Significant for Banks and the Financial
Sector?
Banks and the financial sector overallutilizeback
office outsourcing to improve productivity, cut costs
and generate profits.
Managed Outsource Solutions
8596 E. 101st Street, Suite H
Tulsa, OK 74133

2. www.managedoutsource.com (800) 670 2809
Just like any other industry, the banking sector is also undergoing a significant change
with a number of banks seeking innovative solutions to cut costs and generate profits.
Banks are still struggling to deal with the hangover left by the recession, and have come
to understand that there are many economic benefits they can gain via back office
outsourcing. In fact, outsourced solutions are considered a major driver of growth for
banks. The Global Back Office Outsourcing Market in the Financial Sector is projected to
grow at a CAGR of 7.4 percent during the period 2016 to 2020, according to market
research by Absolute Reports.
The “Back Office Outsourcing Market in the Financial Service Sector Market” report
covers the present scenario and growth prospects of this market through the year 2020.
The report considers both the direct revenue and indirect revenue of the vendors to
calculate the market size. It highlights greater efficiency and productivity ensured by
outsourcing back office tasks as the main market driver. The market trend is identified
as increased use of mobile technology and digital solutions.
Why do banks prefer the outsourcing model?
 Access to skilled personnel and advanced technology: Banks deal with a
massive amount of data on a daily basis which can be handled better by skilled
personnel from an outsourcing firm, and they can also minimize the chances of
risk. Wide-ranging transactional processes that are carried out frequently such as
order fulfillment, transaction processing, application processing, and billing and
customized services can be better managed. Outsourcing firms utilizeinnovative
tools and solutions and keep them updated on a more frequent basis. This allows
banks to keep pace with technological developments, meet the evolving needs of
the customer as well as compete against competitors and fintech companies that
are entering the banking space.
 Generates growth: As mentioned earlier, outsourcing back office activities is an
essential driver of growth for banks and it has also helped banks enjoy a
competitive edge compared to those banks that opt for in-house back office
teams. Hiring such services helps to generate growth by delivering competitive
returns to stakeholders as well as competing products and services to clients. By
effectively identifying hurdles on the way, and allowing specialistback office
teams to handle the processes, banks are able to focus more effectively on the
areas in which they can deliver a more competitive edge. These services also
offer customized tools and services that match the needs of the client.
 Reduce risk of error: Accuracy is very important in financial data. With
specialist expertise, back office outsourcing teams can provide improved data

3. www.managedoutsource.com (800) 670 2809
quality and accuracy. They ensure tailor made, secure methods designed to
process relevant data in and out of data systems as required to minimize
expensive costs. The key factor in outsourcing back office activities is
transparency and customer control, and it is the responsibility of the vendor to
provide regular reporting and ensure provision of frequent updates. These
providers also offer round-the-clock service that helps banks enhance their
productivity.
 Prevents regulatory failure: Regulation has been a driver in adopting back
office outsourcing services over the past three years. The banking sector
experiences a tougher regulatory environment. This necessitates more control of
individual departments and strict distinction of certain processes and services.
Outsourcing back office activities provides strength and flexibility in this area of
operational exposure, and offers effective back office administration processed to
meet tight regulations, and ensures compliance with quality as well as security
standards.
For banks and other financial institutions, what matters is how to structure the
outsourcing management i.e. which vendor to choose and other contract-based
decisions. Banks should clearly identify the particular processes that could be outsourced
to gain maximum advantages. The larger the bank, the larger are its needs. It is evident
that back office outsourcing offers many advantages for banks and ensures improved
revenue and efficiency. It is an important driver of growth because it helps banks keep
up with regulatory changes as well as competitors. The partnering outsourcing firm must
offer customized services fine tuned to meet the bank’s specific requirements.