Vertical BPO in European financial services: Industry Report

Vertical BPO in European financial services

Product Type: Market Research Report
Published by: Datamonitor
Published: December 2004
Product Code: R313-8042

Description

Introduction
This report revisits vertical BPO, examining the current shape of the market, exploring the reasons why it has developed differently than expected, and drawing out the implications of these developments for both financial services institutions and vendors in the space. The report also contains detailed forecasts of vertical BPO spend in Europe to 2007.

Scope
Covers all major Western European markets
Categorizes BPO into transaction processing (e.g. payments, securities and some cards) and product administration (mortgage, L&P policy admin etc.)
Forecasts BPO spend by geography and vertical activity to 2007
Discusses the BPO vendor landscape including generalist players, specialist niche players and FSI in-sourcers
Highlights
Vertical BPO in FS includes transaction processing and product administration activities only. This includes accounts processing, asset management operations, claims processing, card processing, hedge fund administration, mortgage processing, payments processing, policy administration, securities processing and trade finance processing.

Much in contrast to the broad idea of BPO becoming a generic and adaptable service dominated by large generic vendors, the space is still showing great variety in terms of maturity of vertical offerings, acceptance of BPO across the financial services sector, and fragmentation of the vendor landscape.

Transaction processing BPO represents the lion share of the market in terms of expenditure, with product administration BPO being comparatively immature and in its earlier stages of development.

Reasons to Purchase
Understand the trends and pain points affecting the development of vertical BPO in financial services
Gain market insight to assist in your strategic planning and go-to-market strategy
Access detailed forecasts of financial services vertical BPO spend in western Europe

Table of Contents

TABLE OF CONTENTS

CHAPTER 1 EXECUTIVE SUMMARY 3

Introduction 3

Key business and technology issues in financial services BPO 4

The BPO maturity model - a journey, not a ready-made service 5

Competitive dynamics 6

The future decoded 7

CHAPTER 2 MARKET CONTEXT 14

Introduction 14

Scope of this report: defining vertical BPO in financial services 14

The three basic value propositions of BPO 16

Cost reduction through greater scale and realization of synergies 16

FSIs are re-defining the notion of core competencies and strategic differentiation 17

Transformation lies at the heart of most BPO value propositions 17

Key business and technology issues in financial services BPO 18

Transformation: who, how and when? 18

The people challenge 23

The vertical credibility challenge 23

The competitive boundary between vendors and clients is getting blurred 24

The BPO maturity model - a journey, not a ready-made service 26

Examining the vertical BPO markets 28

Accounts processing 28

Asset management operations 29

Hedge fund administration 29

Card processing 30

Mortgage processing 30

Payments processing 30

Policy administration 31

Claims processing 31

Securities processing 32

Trade finance processing 32

CHAPTER 3 COMPETITIVE DYNAMICS 33

The vendor landscape by vertical activity 33

Key success factors by type of vendor 35

Generalist outsourcers must focus on proving vertical operations capability 35

Specialist outsourcers need to build up their transformation play 36

FSI in-sourcers have to adjust their business models to secure their long-term viability in BPO 37

CHAPTER 4 THE FUTURE DECODED 39

Total vertical BPO spend in Europe 39

Vertical BPO spend by activity 41

Vertical BPO spend by geography 43

CHAPTER 5 APPENDIX 47

Future readings 47

SPP writing team 47

LIST OF TABLES

Table 1: Total vertical BPO spend in European FS, 2003-07 40

Table 2: Vertical BPO spend in European FS by activity, 2003-07 41

Table 3: Product administration BPO spend by geography, 2003-07 44

Table 4: Transaction processing BPO spend by geography, 2003-07 44

LIST OF FIGURES

Figure 1: Vertical BPO offerings in financial services 3

Figure 2: The vertical BPO maturity model 5

Figure 3: The vertical BPO vendor landscape in European FS 6

Figure 4: Vertical BPO spend in European FS by activity, 2003-07 7

Figure 5: Vertical BPO offerings in financial services 15

Figure 6: The three underlying value propositions of BPO 17

Figure 7: Who should execute transformation? 21

Figure 8: The vertical BPO maturity model 26

Figure 9: Maturity by vertical BPO segment 28

Figure 10: The vertical BPO vendor landscape in European FS 33

Figure 11: SWOT analysis: the three vendor types 35

Figure 12: Total vertical BPO spend in European FS, 2003-07 39

Figure 13: Vertical BPO spend in European FS by activity, 2003-07 41

Figure 14: Product administration BPO relative market penetration by geography, 2003-07 43

Figure 15: Transaction processing BPO relative market penetration by geography, 2003-07 43

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