Outsourcing in Banks
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Transcript of Outsourcing in Banks
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Outsoursing in Banks
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Traditional Reasons for
Outsourcing
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Why Companies Outsource?
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Advantages
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Disadvantages
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Determine Your Needs
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Identify the Potential Benefits
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Identify Potential Risks
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Management Time
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Outsourcing Can Deliver
8Cs
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Issues and Challenges
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In order to run the licence, the client will require a server based hardware installation that typicallycomprises the servers, storage, network, scheme access points, HSMs, DR, professional services, schemecertification costs, and the staff costs relating to the installation project itself. There will also be recurringhardware costs associated with this
Software
Migration
Ongoing Development
Staff Costs
Additional Overhead Costs
Licence
Hardware
Typical licence charge plus annual service fees
The client will require additional licences for surround components in order to run (a) the core engineand (b) any other software that forms part of their solution design.
The client will incur a large one off cost associated with migration and implementation
The staffing model for a l icence / in-house operation is different (larger) e.g. compliance,platform maintenance / development / testing, data centre.
The client will have compliance (PCI, payment scheme) costs, vendor management costs,contract costs, capacity planning costs, occupancy and utility costs etc
Any comparison needs to take an holistic view of the
cost of processing. The License Fee is just one element
of the total cost of running a solution in-house
There will be a considerable annual spend on ongoing platform development, new country rollout and response to regulatory requirements. In the processing model these are largelyincluded, however in the license model additional spend is required
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Breakdown of Present Value Cost Over 6 Years
In-house vs Outsourcing A Cost Comparison
Cost*$m
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Additional Value Of Outsourced ProcessingOutsource anything that is not core to your business.-------Peter Drucker
Processing
BenefitsOver In-House
FinancialTechnical
Strategic
Operational
Access to world-classtechnology
Continuous hardware upgrades
Industry-specific improvements
to application software
Lower development and
regulatory change cost Freedom from maintenance
concerns
Focus attention on strategic issues
Concentrate financial resourceson strategic opportunities
Leverage provider capabilities
Improve speed to market
Improve customer service
Reduce risk
Economies of scale
Make decisions with real
costs versus in-house
variable costs
Lock in long-term costs
Improve product profitability
Operational task in the hands of
industry-specific experts
Operates to measurable standards
Eliminate internal contention forprogramming resources
Gain access to industry-specific
programming skills
Reduce staffing levels
Gain access to in-depth industry
knowledge
Revenue Uplift
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