Issues with outsourcing in financial services industry

In spite of all the touted benefits of outsourcing market research, the financial services industry has to grapple with a number of issues related to outsourcing before taking the strategic decision to outsource and of the activity. They are summarized in acronym RSCQT namely Regulatory, Security, Cost, Quality and Training. Financial Institutions and retail banks in particular are heavily regulated institutions resulting in significant regulatory and compliance overheads when outsourcing any customer demographic or transaction information to an outsourcing company especially overseas outsourcing companies. Consumer data security laws restrict or outright ban outsourcing of customer information to outsourcing companies in certain jurisdictions. Security and confidentiality of the customer transaction data becomes a major issue when outsourcing the core banking IT system to an outsourcing company or the customer contact center of the financial institution. The total cost of outsourcing is an important, often the primary consideration when outsourcing a transaction based process to an outsourcing company. However, the ability of outsourcing company to deliver the quality outsourced service vis-à -vis the earlier in-sourced services is an important consideration for the outsourcing data process organization. Besides these issues other issues such as the acceptability of the outsourced services to its customers and the effective working of the internal people with the exte al outsourcing companies people also plays an important part before outsourcing work by the financial institutions.