Banking’s Hidden Hero – Back Office Outsourcing

Banking’s Hidden Hero – Back Office Outsourcing

The banking industry is the sector of the economy focused on holding onto and generating wealth with customers’ assets and regulating those activities with government agencies. It is a highly competitive, volatile field and has undergone various metamorphoses to be the field that it is today. Let’s look at how bank office outsourcing helps the banking sectors.

According to the Banker’s Top 1000 Banks ranking for 2018, the total assets of these banks were worth USD 124 trillion and had a much higher Return on Assets when compared with the survey taken ten years ago.

The Indian banking industry as of 2016 was valued at nearly 80 thousand crore Rupees and is poised to become the third largest domestic banking sector by 2050 according to reports by CAclubIndia and PriceWaterhouseCoopers, respectively.

The sector has grown by leaps and bounds to become a profitable industry that it is today.

Given the unprecedented growth of India and the world’s banking industry, the industry has been known to innovate to take steps and come up with practices and initiatives that help them with meeting the demands and challenges of a continually evolving, competitive market. One of the ways the industry does this is through the process of Back Office Outsourcing.

Back office Outsourcing:

Back office outsourcing is one of many tasks or processes handled by Business Process Outsourcing units (BPOs) that enable companies to boost their productivity. It involves the delegation of tasks or process, some of which are essential and others that are non-essential to companies that may be subsidiaries of parent companies or specialized ones that offer specialize in and offer BPO processes. One of the most prominent examples would be Scope International, a subsidiary of Standard Chartered Bank. Some of the essential functions include

  • Client Acquisition: This includes activities such as telemarketing, processing applications, customer verification, approval, documentation, and onboarding of new clients for the parent organization.
  • Account Servicing: This includes providing support to the industry in terms of handling user accounts, processing loans, and risk management. And other related processes.
  • Record Processes: A key area that back BPOs provide is record maintenance. Records of clients and everything related to their investments and holdings are maintained.
  • Transaction Management: This is a key process that BPOs carry out for parent organizations or banks. While it also carried out processes such as managing card portfolios, analytics, platform management, and development.

In some companies, even crucial human resource management functions are outsourced to back-office outsourcing processes in BPOs. Another key area that back-office outsourcing aids parent companies are with the process of regulatory compliance.

Regulatory compliance refers to an organization’s abidance to laws, regulations, guidelines, and specifications that are relevant to and govern its business processes. When organizations fail to comply with these regulations and violate regulatory compliances, the organization is usually taken to task and is fined by government agencies that oversee compliances and set standards. In simple terms, the organization or bank has an internal police force that oversees all their processes and assesses whether their transactions and processes do not go outside the scope of a series of set regulations.

The most well-known set of guidelines in existence is the Sarbanes-Oxley Act of 2002. The act was passed to improve corporate accountability and disclosure. In some cases, the parent organizations may take it on themselves to hire a specialist in legal compliance, specifically the Sarbanes-Oxley Act.

However, in many cases, the BPOs have an in-house specialist already fluent with the Sarbanes-Oxley Act and other legal compliances. This reduces the burden on the parent organization to hire someone and in a lot of cases cuts costs as well. In this and many more ways, back office outsourcing acts as a bank’s or financial company’s backbone, supporting it completely.

While regulatory compliance has existed to protect consumer rights and promote more transparent business, many companies are now notably adopting compliance as a part of their growth strategy and future. This is something investors, clients, and compliance specialists can look forward to in the times ahead.

Most banking sectors require staffing support for their back office operations. Considering the fact that, the bank cannot hire many employees in their own payroll, often they opt to seek assistance from third-party payroll companies for contract and temporary staffing.  The best way to handle and minimize the risk of compliance governance will be third-party staffing model that takes care of labour compliance and contract labour statues.

TalentPro being a key player in supporting the banking sector with a number of clients like IDBI, HDFC, etc. support their permanent & temporary staffing needs and being compliant with the latest laws.

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