More and more financial institutions are choosing to outsource their account processing or other IT functions. What's behind this growing trend?
"Outsourcing is all about the need to drive efficiency in an increasingly competitive marketplace," said Teri Carstensen, president, Bank Solutions, Fiserv. "For many financial institutions, the move drives big results."
Top leaders at financial institutions that have made the strategic decision to outsource say it helps reduce compliance burdens, strengthen security and make IT expenditures more predictable. Bringing products to market faster, delivering a better customer experience and freeing up internal resources are also cited as reasons to outsource.
Even with these benefits, the decision to outsource requires careful consideration, according to Carstensen. Central Pacific Bank began the move to outsourcing by asking questions of outsourced organizations. The Hawaii bank says these conversations were essential to help key decision makers clearly see their options. In the end, outsourcing proved to be a game-changer for Central Pacific Bank.
A Commitment to Service
When Central Pacific Bank moved to outsourced account processing, the decision was driven by a commitment to serving customers more efficiently.
"We decided that running a data center wasn't the business we were in," said Adrienne Chee, vice president and division manager for information technology and deposit operations at Central Pacific Bank. "We could use those staffing resources in other areas."
Although cost savings were not the focus, Chee estimates the move to outsourcing saved the bank $1.3 million a year. In addition, Central Pacific Bank has greatly simplified daily operations, reduced internal IT staffing needs and redeployed a number of employees into higher-value functions. Outsourcing has also helped the bank move more quickly with key initiatives, including migrating to chip card technology and resolving disaster recovery challenges.
All Things Considered
Building a case for outsourcing can take time for research and analysis. If your financial institution is considering a move to outsourcing, an experienced provider can help you build a custom business case based on your unique business goals and put you in touch with outsourced organizations that have valuable insight to share.
"Many financial institutions say outsourcing provides continued control over things they prefer to control, combined with a new freedom from the demands of back-office and IT logistics," said Carstensen. "The bottom line: Outsourcing can help your financial institution redirect resources in order to pursue strategies that move the needle for your business – and help you stay in step with the way people live and work today."