Financial BPO Companies - A 2nd Line of Defense for Investment Managers:

Financial Outsourcing is not a new phenomenon. For several decades investment firms have been transferring many of their operational functions, such as custody, to third-party service providers. Today, however, this trend is moving forward at an almost exponential rate, with firms outsourcing areas of the investment process previously untouched.

Today, we see clear signs of the global economy recovering from the recession. But the element of uncertainty still looms large. And we can clearly witness this curtain of uncertainty, across continents.

The key challenge is in ensuring that we take positive measures in boosting retail and institutional investor confidence. This is surely easier said than done. Apart from dislocated markets, the most significant change has been around regulations, which continue to demand investment in specialist staff, running expensive technology and specialist audits, certification and other operating constraints.

BPO Companies specialized in Financial services can help Investment managers in several ways to overcome those challenges:

Cost-Effective Back-office Functions:

Investment management companies and brokerage firms are stretched with maintaining expensive and high-touch middle and back-offices. In addition, these offices are also expected to constantly re-model themselves to align with the dynamic needs of the marketplace. However, efficacies and better capital management cannot be the cost of increased costs! Thus, most investment managers and brokers today, favor a global center of excellence model, which can manage back-office processes globally, leveraging the best practices in the industry.

Regulatory Compliance:

Another challenge market participants have to grapple with is that of regulatory compliance, reporting, accounting and corporate governance. Leaders in the industry are therefore looking at outsourcing certain components of their business, such as reconciliation, accounting, statutory reporting and collateral management and even KYC checks as a strategic path to achieving bottom-line growth.

The key learning is very clearly that successful businesses must be able to adapt to the dynamic market environment rapidly. And, outsourcing could ably support that endeavor. The ideal service provider will offer a strategic long-term partnership, collaborate in building the offshore program and also provide the required domain expertise and operational excellence.

Managing Client Relationships:

Perhaps, the most important success factor is client relationship management. Today, we see service providers, moving forward, aggressively, on this front, reaching out to existing customers, and providing the vital direct channel communication & reassurance that is needed.

Managing Change:

Although we have witnessed substantial changes in market fundamentals, especially over the past couple of years, they are on their way to creating an inflection point for investment managers, where new tracks across management of risk, liquidity, reporting and compliance are beginning to emerge. Changing market conditions are driving capital expenditure and putting an increasing level of stress on the operational expenditure. Such unprecedented problems call for solutions of the same order, which are unconventional and provide a panacea for a new order.

Taking the above challenges and advantages of outsourcing into consideration, each organization should carefully consider whether those will apply to them, and to what extent.

For more information about our services please contact:

Mar Hernandez m.hernandez@amicorp.com