Is this the year to outsource?
by Vince DiPaolo
While volatility continues to plague the economy, we've got some ideas that can help you get through the ongoing turmoil with less stress than you might otherwise experience.
In the face of the current economic downturn, many banks are cutting marketing staff and budgets. At the same time, scaled-down bank marketing and customer service teams are being asked to maintain high levels of customer experience. Some banks are turning to outsource service providers to bridge the service gap and maintain quality customer service despite significant reductions in customer support staff.
As a result of staff cutbacks, there is an abundance of unemployed talent available in all phases of the banking industry that would be more than happy to share their expertise with you part-time, enabling you to focus on what you do best.
Expect outsourcing to grow
In the long term, financial services industry outsourcing will grow as buyers seek to reduce operating costs and avoid investments in new systems and capabilities, and as they shift focus to more strategic activities, says Stan Lepeak, Managing Director of Research for EquaTerra. He bases his forecast on a 2007 survey of Information Technology Outsourcing (ITO) and Business Process Outsourcing (BPO) markets. Mr. Lepeak further suggests that outsourcing can improve performance and meet or exceed expectations regardless of market conditions.
In fact, by focusing on more strategic, long-term goals — and outsourcing tasks not directly affecting these objectives — financial institutions can become more competitive. Notes Madhavi Manth, Senior Analyst with Celent, a New York-based research and advisory firm: Unless a process and its associated infrastructure are a key basis of competition, a company should consider outsourcing the business function.
As banks focus their energies on their own strategic growth strategies, the lessons learned from these efforts will better equip them to assist their business customers, who likely are facing similar business challenges.
Customer service and retention
In the report "The Advantages of Outsourcing and Co-Sourcing in 2009," CDS Global makes several points supporting the outsourcing business model.
While providing excellent customer service is difficult in the best of times, today businesses will have to work harder than ever to keep their existing customers, says Dennis Luther, a CDS Vice President. Customer service requires many touch points and remains "one of the most important facets" of business for banks and other financial services providers, Mr. Luther says.
The CDS report notes that many outsource providers have infrastructures better suited to handle certain customer related functions, such as call center processes. A big advantage of outsourcing, Mr. Luther says, is that with communications and customer service technology evolving so rapidly, it shifts the burden of keeping up with such technology from your bank to the outsource provider.
At FPS we have experienced a recent increase in requests from financial institutions that need professional help in creating a steady stream of content to fill their client communications pipeline. This increase in demand for solutions-based content is due in part to the sense of confusion and uncertainty created by the current turbulence in the marketplace.
Clients need the reassurance that their financial institution is committed to providing ongoing assistance and partnering with them to provide relevant, timely answers to increasingly complex challenges.
Statistics show that by partnering with outsource providers to produce such communications, financial institutions are providing a level of customer service that directly correlates with improved customer loyalty and retention.
Centralizing CRM data
Another important factor influencing customer service is the issue of centralizing Customer Relationship Management (CRM) data.
One of the biggest challenges banks face is that their legacy structures have resulted in independent databases being maintained by a variety of business lines, with each line communicating with customers independently. Today, banks are trying to "break down these information silos" and develop integrated CRM systems that reflect the variety of services they provide and allow them to communicate with clients as single providers of those many services.
The challenge has been that many banks don't have the technological capability to effect such data aggregations and integrations. Accordingly, many banks are turning to outsource providers for their data integrations. This is yet another example of how banks may benefit by outsourcing a specific business challenge to a qualified vendor that may be better suited to address that challenge with greater agility and expertise.
As we've discussed in previous editions, good client data is the nucleus of relevant communications, allowing financial services marketers to identify cross-selling opportunities, and enabling meaningful, personalized touch-points with their clients.
So, as you look for ways to optimize your competitive advantage — to stay lean, yet competent in emerging technologies and more streamlined processes — it may be time for you to consider the many advantages of outsourcing.