IT outsourcing (ITO) in the banking, financial services, and insurance industry witnessed a decline of 5% in number of transactions and a decline of 43% in total value of contracts in 2014, as buyers reduced spend due to high cost pressures from regulatory burdens, according to research by Everest Group.
Likewise, the demand for large banking application outsourcing (AO) contracts declined for the third consecutive year, and total contract value fell by 24% as buyers experimented with digital technologies through smaller AO transactions.
“In 2014, we saw three different but equally important priorities emerge for banking ITO buyers,” says Jimit Arora, vice president at Everest Group. “Banks are focusing on a triple mandate of ‘run the bank’ (focus on efficiency for cost savings), ‘manage the bank’ (focus on risk and regulatory compliance for penalty avoidance), and ‘change the bank’ (focus on transformation for growth).
Accordingly, the banking ITO industry witnessed an increased demand for AO services supporting digital channel enablement, data management, and risk and compliance monitoring.”