Risks, opportunities and effects of outsourcing
As all actors in the industry are facing an accelerated wave of regulatory change, variable market volumes (is this true?) and a growing need for greater efficiency, outsourcing of fundamental front, back and middle-office functions has become a major trend. Recent studies show that up to 80% of market participants are trusting third parties with part of their activities in an effort to provide additional value to their customers, while still focusing on meeting regulatory obligations.
Greater efficiency and cost reduction have been the key drivers for outsourcing in Europe and the US, whereas market internationalisation and growth have been the triggers in Asia Pacific. However, for an industry expecting an increase of regulation and transparency, the transfer of activities and processes between different institutions will not come without major challenges. Does outsourcing support transparency or create additional risk? What are the keys for a successful collaborative model: insourcing, outsourcing or co-sourcing? Can we consider this transfer as a catalyst for cost reduction, de-risking or even Fintech innovation?