The BFSI sector has to cope with the new trends in technology to meet customer needs. As a result, more and more traditional banks and brick-and-mortar institutions transition to online banking and digital financial services. Financial services outsourcing rose to fame for this reason. It needs an expert IT team to implement new-age technology into banks’ existing systems. It needs proficient customer care management to help customers understand the change.
Business process outsourcing assists banks and Financial Technology companies reach customers worldwide by recruiting offshore services like customer care, website development, payroll outsourcing, security compliance management, accounting and bookkeeping, social media management, and lots of non-core services that were not so important until the technological evolution. Most businesses don’t prefer in-house teams because managing an in-house team is expensive, especially targeting global customer base.
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What are the outsourcing trends in financial services?
There was a time when BFSI companies hesitated to outsource their non-core operations because of the complex nature of the business. Most functions were handled in-house to protect the welfare of the institutions and customers and for added security. With financial operations being handled online and data transfer taking place over the internet, it is crucial to embrace digital channels and technology to keep up with the latest demands. Financial services outsourcing doesn’t just help with customer service but also helps build trust for customers towards the brand. There are many new services outsourced today. Below are some of the recent trends in BFSI outsourcing.
NFR or Non-Financial Risks
Non-financial risks or NFR are risks uncovered by traditional financial risk management. It defines the initial definition of operational risks and depends on the co-operation or financial organization. Before the use of the internet, businesses spent most of their time on money management. They find it easier to develop their business and make optimal use of resources while considering customer welfare, especially when the online transaction becomes a mandate.
Expansion based on government policies
With banking services taking place across different locations, institutions need to keep up with the changing government frameworks if they are looking to expand internationally. Government frameworks include the policies, compliances, and codes they have to follow for operating in different regions. BPO services are often hired today just because BPO companies are always at-par with changing regulations and have a contingency plan for volatile market situations.
External risk assessment and management
Organizations have to monitor their businesses with third-parties, whether call centers or agencies. They should make sure that their outsourcing partner works well with respect to processes, managing risks and meeting KPIs.
Data management services
Data management outsourcing is a popular practice in the financial service sector. Companies need to maintain and manage confidential data in a systematic and secured manner while keeping it ready for consumption at any time. BPO services that include data management support are in trend today. However, institutions are mindful of hiring only those third-parties that ensure 100% data protection and PCI DSS compliance. The software used for new data extraction and customer survey should also be secure so that data hacking risks could be eliminated.
Credit risks report
There are traditional performance metrics based on which credit scores are given. Futurist banks and fintech companies are looking for a systematic approach to preparing the reports. The credit score includes the number of delinquent creditors, active bank accounts, unpaid loans, and several other factors. By preparing a credit report of individual applicants, you will know whether or not to provide credit to that particular loan applicant. It will cut-down your debt chasing efforts.
What Are the Reasons to Outsource for Financial Services?
There could be several reasons for outsourcing financial services in 2021. The first, we have already discussed – technological advancement. We will take a look at some other reasons for financial services outsourcing, allowing you to focus on core competencies and make greater steps towards your goals.
- Optimized services: Financial operations should rely on the strength – finding solutions for money management. They should outsource the technical functions that come with it – like service optimization, staff allocation, payroll outsourcing support and more. Many call centers also provide website and app development for fintech companies.
- Strengthening customer relations: Financial organizations and banks should preserve the allegiance of their customers. Outsourcing customer service, sales, and marketing support is a strategic way to pull and convert customers, keep them satisfied with the services they offer and stay loyal to the brand.
- Work done by experts: Outsourced service providers for the BFSI sector usually have more expertise and an experienced team than you can afford in-house. Their payrolls are on the higher side and they specialized in a particular field, highly domain-centric. Hence, by outsourcing, you get services delivered by top industry professionals in different fields like investment research, payroll outsourcing, order management, check processing support, credit card operations support, third-party collection, portfolio administration, customer service, claim finalization and more.
- Blockchain technology support: Blockchain technology has set a firm foot in the FinTech market in 2021. Though businesses still face difficulty introducing a decentralized solution, outsourcing blockchain consulting services and solutions can help them attract customers.
- High-quality performance and cost savings: High-quality service delivery is directly proportional to cost savings. Financial services outsourcing ensures high-quality performance that simultaneously reduces the cost of operations across departments and locations. Most popular outsourcing destinations like the Philippines, India, Jamaica, El Salvador and Morocco delivers multichannel, multilingual BPO services for financial services.
What are the services currently outsourced in the financial services sector?
Blue-chip companies like Deloitte and Allianz also recognized key services that financial institutions outsource today.
- Data security services: Basically, banks are built on trust as they handle their customers’ money and sensitive information. A single breach can cost them money and consistency. Outsourcing data security and cybersecurity can help them fortify the trust factor. Inbound call centers that deal with sensitive information of customers use encrypted connections and multi-layer system security to provide confidentiality and data protection.
- Customer service: Since they have to create a good relationship with their customers, they should attend to their requirements anytime at any channel. This can be done by outsourcing call and contact centers that can take care of customer worries better.
- Accounting and payroll: Inbound call centers perform back-office operations, which include accounting, bookkeeping, and payroll services. Although every company requires financial accounting services, it is something that most BFSI organizations outsource as they have more complicated tasks to take care of. Outsourcing accounting service help in managing finances, keep accounts receivable and payable in top shape and maintain a clearer general income statement
- Compliance management: Whatever services they outsource, working with compliance is significant in a financial institution. They should ensure that their outsourcing partner regulates under applicable laws and regulations. This fortifies consumer safety and superior service quality.
Financial services outsourcing evolving with technology
Most aspects of a BFSI business, like digital marketing, accounting and asset management, are outsourced to BPO service providers in sync with the latest technological developments. One-time support can also be outsourced for remote operations. However, to improve customer loyalty and satisfaction, you should outsource to a call center specializing in financial services, ensuring proper setup, stable and encrypted connection and guaranteed compliance.
Alicia Johnson is an outreach consultant for multiple technologies industries. With expertise in corporate communications and practical knowledge about different technologies, she has spent the past 7 years working in the technologies industry and she loves to share her experience with readers.