In the past, capital markets firms prioritized speed over everything else. They aimed to get as close to zero-latency trading as possible, even though the efforts often became costly and inefficient.
This need for speed has only continued to grow but, elsewhere, increased pressure on margins has continued to mount. This means that, in the current operating environment, financial firms must somehow balance their need for speed with a new and perhaps equally important priority: the need to increase efficiencies and cut expenses wherever possible.
Today, fortunately, those two things don’t have to be competing objectives – at least not for those financial services firms willing to reconsider which parts of their enterprise can and cannot be outsourced.
Capital markets firms, for example, typically haven’t outsourced their infrastructure. Instead, they prefer to leverage shared IT services provided by their own institution.
They’ve used this approach because, in the past, cost was not a main concern. The priority was on accomplishing tasks quickly. For instance, if an organization wanted to add a circuit to its trading link to provide greater bandwidth, it didn’t want to face a lengthy and elaborate RFP and vendor evaluation process – it just wanted to get it done.
But because a central IT organization has its own methods and processes that also take time, shadow IT began to perform these functions. While this arrangement has served banks well over the years, it’s also created some issues that scale operations can solve.
In today’s world, the key to a fast, agile and cost-efficient operation is in moving the trading desk itself to a managed services environment that provides firms with unprecedented agility and significant cost savings.
This kind of infrastructure outsourcing model can shave significant amounts off capital market firms’ spend, while simultaneously boosting speed and efficiency. This approach can enable significant efficiencies, offering investment banks 20 percent to 30 percent cost savings.
Business Process Outsourcing (BPO) and Business Process Outsourcing-as-a-Service (BPaaS) providers can bring a Center of Excellence approach to the management of banking infrastructure. Because running banks’ businesses is a provider’s core competency, the firm will have a better handle on infrastructure management than most financial institutions. They likely have fine-tuned their methods and processes to increase productivity and efficiency. BPO and BPaaS providers can take over infrastructure management jobs across the board.
Banks have many opportunities to move processes and parts of their business, allowing them to prioritize both agility and efficiency while increasing competitiveness. And there’s no need to be hesitant about outsourcing infrastructure any more.
CSC has a broad continuum of outsourced service offerings that include Infrastructure-as-a-Service, Platform-as-a-Service (PaaS), Software-as-a-Service (SaaS) and Business-Process-as-a-Service approaches. You can learn more about what we do here.