BPO Opportunities in

Banking: 2011
~~~

Market Assessment
March 2011

NelsonHall

BPO OPPORTUNITIES IN BANKING: 2011

About NelsonHall
NelsonHall provides buy-side and sell-side organizations with deeper research and
analyses in front office, mid-office and back office BPO than any other research firm in
the world. The companys subscription-based model provides subscribers with robust
market analyses, case studies, vendor assessments, contract analyses, market
reports and access to a content-rich BPO contracts database. The firm covers a wide
range of industries including financial services, government and utilities sectors, and
tracks worldwide and regional BPO activity. NelsonHalls home page is www.nelsonhall.com.
The company tracks business services activity. In particular, NelsonHall focuses on
the following business services and process areas:

Front-office customer management services

Middle office industry-specific processing services such as policy

administration, claims processing services, and payment processing

Back office support services such as HR services, finance &

accounting services, and procurement services

NelsonHall provides information to its clients in a variety of forms, including within:

NelsonHalls BPO subscription services, to assist organizations in

developing sourcing strategies and in supporting individual sourcing
projects including vendor short-list development

Workshops, to assist organizations in identifying the most

appropriate areas of BPO for their organization

Business case development, to assist organizations in deciding

whether BPO is appropriate for individual processes

For more details, contact:

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Phone: (617) 663 5737
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Phone: +44 (0)1344 393036

2011 by NelsonHall.

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75012 Paris
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Phone: +49 (0)221 5540 545

March 2011

BPO OPPORTUNITIES IN BANKING: 2011

NelsonHall

Abstract
The purpose of this study is to assist sourcing managers in understanding sourcing
developments within the banking sector and to recommend options for vendors in
addressing the business process outsourcing market in the banking sector. In
particular the study uses senior executive interviewing to establish:

Client requirements, in support of business initiatives

Market drivers and inhibitors

Planned BPO purchasing intentions.

The study complements NelsonHalls earlier market assessments of Business

Process Outsourcing in the banking sector by including an updated analysis of user
expectations and attitudes towards use of business process outsourcing.
NelsonHalls BPO Opportunities in the Banking Sector market assessment report is
designed for:

Sourcing managers investigating sourcing developments within the

banking sector

Marketing, sales and business managers developing strategies to

target service opportunities within the BPO market

Financial analysts specializing in the support services sector.

The term business process outsourcing (BPO) is defined as the outsourcing of

business functions or processes. In order to qualify under this definition BPO contracts
must involve the vendor taking responsibility for operational management of the
business activity.
Potential BPO activities include:
Front-office services, including customer management services &
billing services, and document management services

Middle-office administration services

Industry-specific processing services e.g. mortgage processing services and card

processing services
Back-office support services

Finance and accounting services

HR Services including payroll services, HR administration services, managed
recruitment services and training provision and administration
Services for procurement of indirect goods and services

Copyright 2011 by NelsonHall. All rights reserved. Printed in the United Kingdom. No part of the publication may be reproduced or distributed in
any form, or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher.
The information provided in this report shall be used only by the employees of and within the current corporate structure of NelsonHalls clients,
and will not be disclosed to any other organization or person including parent, subsidiary, or affiliated organization without prior written consent of
NelsonHall.
NelsonHall exercises its best efforts in preparation of the information provided in this report and believe the information contained herein to be
accurate. However, NelsonHall shall have no liability for any loss or expense that may result from incompleteness or inaccuracy of the information
provided.

2011 by NelsonHall.

March 2011

NelsonHall

BPO OPPORTUNITIES IN BANKING: 2011

Table of Contents
Chapter 1: Introduction
A.
B.
C.

Objectives and Scope

Methodology
Structure of the Report

1
2
3

Chapter 2: Executive Summary

A. Investment Banks to Change Operating Models in Investment Research & Retail

Banks in Customer Care
4
B. BPO Continues in Support of Emerging Market Initiatives within Banking Sector
9
C. Twenty-One Per Cent of Banks Planning to Purchase Additional BPO Services in
Next 12-Months
10
D. Net Migration Offshore Continues within Multishoring Approach
12

Chapter 3: Market Size & Growth

A.

Market Forecast

14
14

Chapter 4: Key Business Issues & Initiatives 16

A. Key Business Issues
B. Business Initiatives

16
30

Chapter 5: Need for New Operating Models

A. Need for Change in Operating Model
B. Operating Model Changes Planned

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48
48
57

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BPO OPPORTUNITIES IN BANKING: 2011

Chapter 6: Planned Use of BPO Services

A.
B.
C.
D.

Changes in BPO Expenditure Planned

BPO Purchasing Intentions
BPO Purchasing Objectives
BPO Purchasing Intentions by Process

61
61
64
65
68

Chapter 7: Attitudes to BPO Service Delivery 71

A.
B.
C.
D.

2011 by NelsonHall.

Attitudes to Service Bundling

Attitudes to Gainsharing
Changes in Use of Offshoring
Sourcing Strategy Intentions

71
75
77
79

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BPO OPPORTUNITIES IN BANKING: 2011

List of Exhibits
Business Issues Faced: Investment Banking .......................................................................................6
Business Issues Faced: Retail Banking ...............................................................................................7
Operating Model Changes Planned: Investment Banking ....................................................................8
Operating Model Changes Planned: Retail Banking ............................................................................8
Initiatives Planned: Investment Banking ..............................................................................................9
Initiatives Planned: Retail Banking ......................................................................................................9
BPO Purchasing Objectives: Investment Banking..............................................................................10
BPO Purchasing Objectives: Retail Banking ......................................................................................11
BPO Purchasing Intentions by Process: Investment Banking.............................................................11
BPO Purchasing Intentions by Process: Retail Banking .....................................................................12
Changes to Use of Offshore Third-Party BPO Services .....................................................................12
Sourcing Strategy Intentions: Investment Banking .............................................................................13
Sourcing Strategy Intentions: Retail Banking .....................................................................................13
BPO in Banking Sector Market Forecast: 2010 - 2014 .......................................................................14
BPO in Banking Sector Market Forecast by Service Type: 2010 - 2014 .............................................15
Business Issues Faced .....................................................................................................................20
Business Issues Faced: Investment Banking .....................................................................................21
Business Issues Faced: Retail Banking .............................................................................................22
Business Issues Faced: Asia-Pac .....................................................................................................23
Business Issues Faced: Continental Europe......................................................................................24
Business Issues Faced: U.K..............................................................................................................25
Business Issues Faced: U.S..............................................................................................................26
Importance of Business Metrics.........................................................................................................27
Importance of Business Metrics: Investment Banking ........................................................................27
Importance of Business Metrics: Retail Banking ................................................................................28
Importance of Business Metrics: Asia-Pac.........................................................................................28
Importance of Business Metrics: Continental Europe .........................................................................28
Importance of Business Metrics: U.K. ................................................................................................29
Importance of Business Metrics: U.S. ................................................................................................29
Cost Reduction Initiatives by Sub-sector ...........................................................................................30
Cost Reduction Initiatives by Geography ...........................................................................................35

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BPO OPPORTUNITIES IN BANKING: 2011

Customer Experience Improvement Initiatives by Sub-sector.............................................................37

Customer Experience Improvement Initiatives by Geography ............................................................37
Speed-to-Market Acceleration Initiatives by Sub-sector .....................................................................41
Speed-to-Market Acceleration Initiatives by Geography .....................................................................42
Emerging Markets Opportunities Initiatives by Sub-sector .................................................................44
Emerging Markets Opportunities Initiatives by Geography .................................................................44
Need for Change in Operating Model by Sub-sector ..........................................................................48
Need for Change in Operating Model by Geography .........................................................................49
Intended Change to Operating Models by Sub-sector ........................................................................49
Intended Change to Operating Models by Geography .......................................................................49
Satisfaction with Operating Models....................................................................................................54
Satisfaction with Operating Models: Investment Banking ...................................................................55
Satisfaction with Operating Models: Retail Banking ...........................................................................55
Satisfaction with Operating Models: Asia-Pac....................................................................................56
Satisfaction with Operating Models: Continental Europe ....................................................................56
Satisfaction with Operating Models: U.K. ...........................................................................................56
Satisfaction with Operating Models: U.S. ...........................................................................................57
Operating Model Changes Planned ...................................................................................................57
Operating Model Changes Planned: Investment Banking ..................................................................58
Operating Model Changes Planned: Retail Banking ..........................................................................58
Operating Model Changes Planned: Asia-Pac ...................................................................................59
Operating Model Changes Planned: Continental Europe ...................................................................59
Operating Model Changes Planned: U.K. ..........................................................................................59
Operating Model Changes Planned: U.S. ..........................................................................................60
Changes in BPO Expenditure Planned ..............................................................................................61
Drivers for Decrease in BPO Expenditure..........................................................................................62
Drivers for Increase in BPO Expenditure ...........................................................................................62
Changes in BPO Expenditure: Investment Banking ...........................................................................62
Drivers for Decrease in BPO Expenditure: Investment Banking ........................................................62
Drivers for Increase in BPO Expenditure: Investment Banking ..........................................................63
Changes in BPO Expenditure: Retail Banking ...................................................................................63
Drivers for Decrease in BPO Expenditure: Retail Banking .................................................................63
Drivers for Increase in BPO Expenditure: Retail Banking ...................................................................63
BPO Purchasing Intentions by Sub-sector .........................................................................................64
BPO Purchasing Intentions by Geography.........................................................................................64
BPO Purchasing Objectives ..............................................................................................................65

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BPO OPPORTUNITIES IN BANKING: 2011

BPO Purchasing Objectives: Investment Banking..............................................................................65

BPO Purchasing Objectives: Retail Banking ......................................................................................66
BPO Purchasing Objectives: Asia-Pac ..............................................................................................66
BPO Purchasing Objectives: Continental Europe ..............................................................................67
BPO Purchasing Objectives: U.K. .....................................................................................................67
BPO Purchasing Objectives: U.S. .....................................................................................................67
BPO Purchasing Intentions by Process .............................................................................................68
BPO Purchasing Intentions by Process: Investment Banking.............................................................68
BPO Purchasing Intentions by Process: Retail Banking .....................................................................69
BPO Purchasing Intentions by Process: Asia-Pac .............................................................................69
BPO Purchasing Intentions by Process: Continental Europe..............................................................69
BPO Purchasing Intentions by Process: U.K. ....................................................................................70
BPO Purchasing Intentions by Process: U.S. ....................................................................................70
Business Environment Impact on Sourcing Attitudes .........................................................................71
Business Environment Impact on Sourcing Attitudes: Investment Banking........................................72
Business Environment Impact on Sourcing Attitudes: Retail Banking ................................................72
Business Environment Impact on Sourcing Attitudes: ........................................................................72
Asia-Pac ...........................................................................................................................................72
Business Environment Impact on Sourcing Attitudes: Continental Europe ........................................73
Business Environment Impact on Sourcing Attitudes: U.K. ................................................................73
Business Environment Impact on Sourcing Attitudes: U.S. ................................................................73
Reasons for Increased Preference for Multi-Sourcing ........................................................................73
Reasons for Increased Preference for Multi-Sourcing: Investment Banking.......................................74
Reasons for Increased Preference for Multi-Sourcing: Retail Banking................................................74
Willingness to Adopt Gainsharing by Sub-sector ...............................................................................75
Willingness to Adopt Gainsharing by Geography ...............................................................................75
Reasons Against Adoption of Gainsharing ........................................................................................75
Reasons Against Adoption of Gainsharing: Investment Banking ........................................................76
Reasons Against Adoption of Gainsharing: Retail Banking ................................................................76
Appropriate Value to Share by Sub-sector.........................................................................................76
Appropriate Value to Share by Geography ........................................................................................76
Changes to Use of Offshore Third-Party BPO Services by Sub-sector ...............................................77
Changes to Use of Offshore Third-Party BPO Services by Geography ..............................................77
Reasons for Planned Increase in Level of Offshore Service Usage....................................................77
Reasons for Planned Decrease in Level of Offshore Service Usage ..................................................78
Reasons for Increase in Level of Offshore Service Usage: Investment Banking .................................78

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BPO OPPORTUNITIES IN BANKING: 2011

Reasons for Decrease in Level of Offshore Service Usage: Investment Banking ...............................78
Reasons for Increase in Level of Offshore Service Usage: Retail Banking ........................................78
Reasons for Decrease in Level of Offshore Service Usage: Retail Banking.......................................79
Sourcing Strategy Intentions .............................................................................................................79
Sourcing Strategy Intentions: Investment Banking .............................................................................79
Sourcing Strategy Intentions: Retail Banking .....................................................................................80
Sourcing Strategy Intentions: Asia-Pac..............................................................................................80
Sourcing Strategy Intentions: Continental Europe..............................................................................80
Sourcing Strategy Intentions: U.K......................................................................................................80
Sourcing Strategy Intentions: U.S......................................................................................................81

2011 by NelsonHall.

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March 2011