Financial Services

Financial services
In today’s market, financial services organisations must offer product innovation and improve their customer service to remain competitive whilst providing a suitable return for their stakeholders. This must be achieved in an environment of increasing regulation and, in Europe in particular, an erosion of national financial borders which afforded a degree of competitive protection. Added to this is the ever present cost efficiency challenge, the effective management of risk and the more sophisticated measurements of economic capital.

The fact that many institutions have enjoyed record profit growth in recent years makes the problem harder. Where will future profits come from? How will institutions invest to gain market share or grow revenue? As the structure of the financial services market continues to evolve, these pressures threaten traditional sources of revenue which makes such questions harder to answer.

The combination of these factors means that for larger institutions size does matter. To achieve economies of scale and specialisation, complex systems and processes must be streamlined and optimised. Further participant consolidation will occur whether for pure commercial logic or because of indirect encouragement by politicians. For whatever reason, shareholders and executives need to see the benefits of mergers and acquisitions on the bottom line quickly. It is essential that companies reduce costs and deliver new services to their customers ahead of the competition.

For smaller institutions the changing landscape will heighten the need to take far reaching decisions on the direction that the organisation should take, the types of customers it serves and the ownership of product creation and servicing.

Perhaps the hardest choice faces the mid-sized institutions; those often major national, but not multi-national, players. Some will become targets for acquisition, others must decide with whom to ally and how to protect their customer base.

Shared service centres, whether purely cross departmental or a full white label operation, enable improved returns on existing investments in people, processes and technology for all financial services institutions. Consolidation of specific processes within an organisation enhances the visibility of costs, revenues and margins. Firms can select ideal sourcing models: whether to invest or divest, to insource or to outsource, based on cost reduction or revenue growth objectives. It also challenges organisations to link business, operations and technology in a seamless process.

The market dynamics are being accentuated by the growing requirement to satisfy industry regulators. This obliges financial services companies to improve and refine risk processes and management and monitor liquidity and collateral in more sophisticated ways. This should be underpinned by sound capital ratios and enhanced reporting as well as price and service transparency. Simply complying with much of the new regulation could increase overheads significantly. The trick is to use the change brought about by regulation to change the business process, improve the business model and grab new revenues. Whatever the requirement, there is a need for efficient data capture, manipulation and management.

Logica understands the business and technology issues. We work with financial institutions worldwide using our applied knowledge of the financial services market gained over the last four decades. Some 70 per cent of the world’s top financial institutions including corporate and retail banks, financial clearing houses, general and commercial insurers, central banks and regulators rely on us. Logica solutions reduce the risk for clients implementing transformed business processes.