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Outsourcing Technology for a bank is like outsourcing the bank

“In many ways, we see ourselves as a technology company with a banking license.” Michael Corbat, Citibank CEO

Consulting firms over last two decades have guided Banks to “Outsource Technology to Technology Providers”. This has helped the banks in focusing on their core competency, which is “Banking”. Based on this approach, technology teams within the bank moved
from “Development Approach” to “Outsourcing Program Management Approach”. In last two decades, they have attained skills in architecture, support, outsourcing and controlling multiple partners, while losing skills in pure technology and development.

With continuous improvement in technology, the banking knowledge has moved deep into codes algorithms. This has resulted in slow and steady reduction in banking knowledge within each organisation. In most of the banks, the intricate accounting, interest
calculation, charging algorithms is known to a very few, which was once known to each person in a branch (when this was done manually).

Digital wave arrival of Fintechs has shown the banks that technology can drive the business models.

  • Customers are now used to interacting with banks through digital channels from on-boarding to off-boarding and everything in between.
  • Sales teams are now becoming more productive through sales tools available in their tablets.
  • Operations staff continues to increase their productivity through tools like OCR, API, RPA etc.
  • Fraud management units have started relying on triggers from Artificial Intelligence Platforms running on continuous stream of transactions.

Banking Industry as such is moving from

High Value, Low Volume, High Touch, Defect Prone, Slow Processing Industry

TO

Low Value, High Volume, Low Touch, Defect Resistant, Fast Processing Industry

Business and technology are getting so close to each other that they cannot be segregated and for sure one part (technology) cannot be outsourced anymore. Some banks could sight this mega trend and had started investing in their digital strategy and technology
units. These banks have moved digital initiatives into the centre of banking to create differentiated profitable business model. They have hired best talents in the market around Artificial Intelligence, Development, Design, API, Digital Payments, Digital
Lending etc.

In these organisations, technology teams are now additionally responsible (beyond running the bank, which based on my own experience is challenging in itself) for:

  • Co-building Digital Strategy of the bank
  • Driving Digital initiatives in partnership with business teams.
  • Partnering with external entities like Fintechs / Financial Institutions for generating new streams of Business
  • Selling technology driven services to customers (like API based integrations to corporates)
  • Guiding the bank in acquiring / investing into Fintech / software companies
  • Building digital culture in the organisation

The change in role needs rebuilding technology teams in alignment with the change in expectations. Digital initiatives need knowledgeable and agile in-house technology teams. There is a need to review the areas to be outsourced and need to be in-sourced.

In the current business environment, Outsourcing Technology for a bank  is like outsourcing the bank.

Article source: https://www.finextra.com/blogposting/14105/outsourcing-technology-for-a-bank-is-like-outsourcing-the-bank

Outsourcing could become a stumbling block in public sector pay …

The union representing low-paid civil servants has rejected the Government’s efficiencies “wishlist” outlined in the ongoing pay talks and warns there can be no further productivity deals.

And one of the items on that wish list — outsourcing — could become a significant bone of contention as the Government seeks to potentially weaken the safeguards around how outsourcing can happen.

The sides held detailed negotiations on outsourcing, apprenticeships, and various other non-pay issues yesterday. As those talks were due to begin, Civil Public and Services Union general secretary Eoin Ronayne told his members in a posting on its website that the wish list tabled by the Department of Public Expenditure and Reform contains items rejected by the unions during the Haddington Road and Lansdowne Road Agreement talks.

“It is not unexpected that DPER would table fresh productivity demands although the breadth and nature is,” he said. “We will continue to hold our position that there can be no further productivity deals and that FEMPI for our grades must be ended.”

Among the measures being sought by the Government are the outsourcing of some public services; making Saturday a normal working day and therefore not subject to any premiums; and the widening of potential redeployment limits from 45km to 60km.

In spite of Mr Ronayne’s comments, other sources have speculated there will be no new deal without some productivity concessions.

In discussions regarding outsourcing yesterday, sources said the Government appears to be seeking to weaken the controls which exist on how services can be given over to the private sector. At present, a business case must be presented as to why the service should be outsourced, and that business case is not allowed to includes labour costs.

It is feared that if labour costs were to be included, the private sector could offer the service at the lowest possible wage and most basic conditions — it would leave little chance that the public service could compete.

Today, the sides are due to discuss two further controversial issues — there will be a presentation on pensions in the morning and talks on the restoration of hours in the afternoon. The Government has indicated that it will require public servants to pay more towards their pensions in any new deal and it has also signalled that it is not willing to restore public servants to the hours they were working before the financial crisis.

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Article source: http://www.irishexaminer.com/ireland/outsourcing-could-become-a-stumbling-block-in-public-sector-pay-talks-450766.html

Unions in pay talks oppose plan to allow more outsourcing

Public service trade unions have signalled they will strongly oppose any reforms proposed by the Government that would facilitate more outsourcing of services.

It is understood that at the talks on the new public service pay deal the Government indicated that it wanted to remove measures which unions view as safeguards against the external provision of existing public services.

Sources said Government representatives had not given any details of specific services which it would want to outsource in the future.

Under the existing Lansdowne Road agreement, Government departments and agencies have to consult unions on any plans for outsourcing of services and, in such circumstances, the cost of labour must be excluded from the business case supporting such an initiative.

It is understood that as part of the talks on the new pay accord, the Government wants to be allowed to consider labour cost savings in the cost-benefit analysis of any future outsourcing plan.

Union sources said their position was not that there should be a blanket ban on outsourcing but that they would strongly oppose any removal of the curent safeguards.

Sources also said that talks on Tuesday regarding Government proposals to reform rostering arrangements ended inconclusively and that the management side had not tabled any specific proposals.

Meanwhile, the Government is expected on Wednesday to begin discussing highly controversial proposals to have some public service groups – which are considered to have more valuable pensions – contribute more for their pension benefits. Strong opposition is expected from groups such as gardaí.

The talks on Wednesday are also expected to feature the requirement for staff to work additional hours without extra payment – another highly controversial area for many unions.

Article source: http://www.irishtimes.com/news/ireland/irish-news/unions-in-pay-talks-oppose-plan-to-allow-more-outsourcing-1.3093895