The future of sourcing in wholesale banking

Outsourcing was once vaunted as the golden ticket to reducing costs. The reality has been somewhat different. Application complexity, siloed architectures, poor data management and bad business processes were just being passed on.  What resulted was wage arbitrage and less overhead costs, however it leaves behind complexity, silo based applications, too much legacy and the associated data issues.

Transformational sourcing takes a different approach. It concentrates on improving the business performance of IT and decreasing the total cost of IT on a sustained basis. It’s about ‘running IT as a business’.  The wholesale banking industry is just starting to sit up and take notice.

So where should wholesale banks begin their journey? They should look to partners to implement change and turn to cloud and SaaS-based services with business and IT governance to improve performance.  For some this is a big step so it’s best to take a considered approach. One way is to try a limited pilot period with a couple of providers to test out the assumptions and benefits. By engaging with partners in real-time you can see which ones meet your needs. The second step is talking to other clients who have made the change and see where they are doing business.

Transformational sourcing offers a real opportunity to move the business economics forward by leaps and bounds. Banks need to find new ways to significantly reduce their costs while maintaining or improving IT performance. Then they can focus on specific strategies like fine-tuning customer services and improving the customer experience. 

The future of wholesale banking is customer differentiation. Focus on what the bank does well and ‘transform’ the rest to a trusted partner. The result? Banks benefit from a successful outcome that transforms their business, reduces cost and most importantly actually delivers.