it outsourcing in banking - annual report 2013: banking for the next generation
TRANSCRIPT
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1 Banking, financial services, and insurance
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Background o f the research
In 2012, BFSI buyers continued to remain under pressure to increase revenues, enhance customer experience, reduce costs, replace legacysystems, and meet regulatory requirements. To address these challenges, banks are focusing on transforming themselves and increasinginvestments in technologies (such as social media, mobility, big data and analytics, and cloud computing) in order to enhance customerexperience while simultaneously reducing their operational costs, better managing risk, and improving shareholder returns.
As financial institutions gear up for these changes, they are looking to identify strategic partners that can help them develop solutions thatdrive efficiency and sustain the pace of technological advancement in this rapidly-evolving industry. In addition, with the continued trendtowards consolidation, financial institutions are signing larger and more strategic AO contracts with a fewer number of service providers, a
phenomenon that is expected to meaningfully alter the AO services landscape in the BFSI segment.
In this research, we analyze the current trends and the future outlook for large, multi-year application outsourcing relationships for
the global banking sector . We focus on:
Trends in AO in the BFSI segment Market trends and activity for large AO relationships in banking Emerging priorities of buyers and key investment themes in banking AO Future outlook for 2013
The research also captures key movements in volumes/values of banking AO transactions, evolving trends, market dynamics, and
emerging priori ties of buyers in the last 12 months.
Scope of this report
Industry: Banking (retail banking, commercial banking, credit cards, loans, and mortgages); excludes capital markets and insurance Services: Large (TCV >US$25 million), multi-year (>three years), and annuity-based application outsourcing Geography: Global Sourcing model:Third-party AO transactions; excludes shared services or global in-house centers (GICs)
Background and scope of the research
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Table of contents (page 2 of 2)
Section V: Emerging prior ities of buyers and key investment themes in banking AO 38
Summary 39
Market dynamics and emerging priorities across banking ecosystem 40
Key investment themes SMAC 47
Section VI: Outlook for 2013 60 BFSI ITO market 61
Banking AO 61
Emerging priorities and themes 62
Appendix 63
Glossary of terms 64
BFSI ITO research calendar 66
References 67
Topic Page no.
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Retail financial services (B2C1) Retail banking Lending Cards Commercial banking (B2B2)
Banking
Investment banking Asset management Custody and funds administration Brokerage Others3
Capital markets
Life and pensions Property and casualty Others
Insurance
BFSI
Services industry
Traditional IO Remote Infrastructure
Management (RIM)
Infrastructure ManagementServices (IMS) Cloud
IT Infrastructure
Outsourcing (IO)
Application development Application maintenance Independent testing
Package implementation ERP services Business intelligence / data
warehousing
IT Application Outsourcing
(AO)
BFSI-specific BPO HRO FAO
PO Contact center Knowledge services
Business Process
Outsourcing (BPO)
IT strategy / operationsconsulting
Business consulting
Infrastructure consulting Infrastructure rollouts
Consulting
This report analyzes IT applications outsourcing in the banking subvertical with a focus on large (TCV >US$25 million), annuity-based,multi-year (>three years) relationships
NOT EXHAUSTIVE
Focus of report
1 Business-to-consumer relationships2 Business-to-business relationships3 Includes other capital markets functions such as structured finance, treasury, FX, and horizontal functions including risk management
This report provides an insight into the current trends and
future outlook for large, multi-year application outsourcing
relationships in the global banking sector
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This report is a part of the Everest Groups series of nine
reports focused on AO in BFSI in 2013
Banking
Capital Markets
Insurance
Banking
Capital Markets
Insurance
Banking
Capital Markets
Insurance
BFSI ITO Service Provider Profile Compendium
Capability profiles of service providers capturing their AO services experience in specificsubverticals. Each service provider profile includes: Service provider overview details of AO services capabilities, key investments,
proprietary solutions, and technological expertise Functional / Line of Business (LoB) focusTransactions overview for application services offerings Delivery footprint
IT Outsourcing in BFSI Service Provider Landscape
Each report provides: Assessment of service provider landscape in AO services and mapping of providers on
Everest Groups PEAK Matrix as Leaders, Major Contenders, and Emerging Players Comparative evaluation of BFSI-AO capabilities of provider categories such as global
majors, offshore majors, regional players, and tier-2 specialists. Benchmarking scale,scope, domain investments, and delivery footprint of each providers BFSI-AO practice
The 2013 BFSI-AO PEAK analyses focus on identifying the Star Performers, i.e.,providers with strongest forward movement over time both in terms of market successand capability advancements
IT Outsourcing in BFSI Annual Report
Each report provides: An overview of the application services market for the BFSI verticals, capturing key
trends in market size, growth, drivers and inhibitors, adoption trends, regional/functionalbreak-outs of the market, emerging themes, key areas of investment, and implicationsfor key stakeholders
Key movements in volumes/values of AO transactions, evolving trends, marketdynamics, and emerging priorities of buyers in the last 12 months
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Everest Groups proprietary database of 400+large, active, multi-year AOcontracts within BFSI (updated annually). The database tracks thefollowing elements of each large AO relationship: Buyer details including industry, size, and signing region Contract details including TCV, ACV, term, start date, service provider
FTEs, and pricing structure Activity broken down separately for banking, capital markets, insurance,
and by LoB (e.g., retail banking, credit cards, and loans & mortgages) Scope includes coverage of buyers geography as well as functional
activities Global sourcing including delivery locations and level of offshoring
Everest Groups proprietary database ofoperational capability of 20+BFSI AO service providers (updated annually)
The database tracks the following capability elements for each serviceprovider: Major BFSI AO clients and recent wins
Overall revenue, total employees, and BFSI employees Recent BFSI-related developments BFSI AO delivery locations BFSI AO service suite Domain capabilities, proprietary solutions, and intellectual property
investments
Everest Groups BFSI research is based on two key sources of
proprietary information
1
2
Note: We continuously monitor market developments and track additional service providers beyond those included in the analysisConfidentiality: Everest Group takes its confidentiality pledge very seriously. Any information, that is contract-specific, will be presented back to the industry only in an
aggregated fashion
Service providers covered in theanalysis
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How to read this document
Where/how to locate the informationInformation desired
The section on key messages summarizes the banking AO market insights The key messages are categorized along three dimensions:
BFSI ITO market overview Banking AO overview Emerging priorities of buyers, and key investment themes in banking AO
Summary of key
messages
The section provides future outlook of the banking AO marketOutlook for 2013
A section is devoted to each dimension of the summary of key messages (listed above) Each section contains detailed charts on relevant topics within a specific dimension Refer to the table of contents (pages 4 and 5) to identify relevant topics covered within
each section Summary pages at the beginning of each section cover the key trends
Key facts oranalyses related to a
specific topic
Acronyms or technical outsourcing terms are defined in the glossary of terms (Appendix) Refer to the related Everest Group BFSI IT Outsourcing research publications listed in
references (Appendix)
Definition for
unfamiliar terms and
related research
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This report provides an overview of the application outsourcing (AO) market for the banking industry, through an in-depth analysis of large-
sized AO contracts (i.e., contracts over US$ 25 million in TCV and over three years in duration). The report analyzes key trends in marketsize and growth, demand drivers, adoption and scope trends, emerging themes, key areas of investment, and implications for keystakeholders, with regards to such large banking AO deals
Some of the findings in t his report, among others, are:
BFSI ITO market
overview
The US$90-100 billion global BFSI ITO industry continued to grapple with a challenging business environment While the number of BFSI outsourcing transactions remained almost flat, TCV declined as compared to last year Average contract duration for banking deals witnessed a decline in 2012 (over 2011) Share of banking ITO deals declined; outsourcing within insurance firms increased as compared to last year New deals continue to make up the majority of total ITO deals within the BFSI industry Europe, Middle East, and Africa (EMEA) remained the largest source geography with the maximum number of
deals originating from this region
Overview and abbreviated summary of key messages
Emerging priorities
of buyers, and key
investment themes
Increasing profitability and improving customer experience are the most important objectives impacting the ITinvestment strategy for the banking industry in 2013
Social media, mobility, analytics, and cloud computing are emerging as key technological themes for banks forthe next 12-18 months
Banking AO
overview
Overall, the number of large application outsourcing deals remained almost flat in banking, while the value tototal contracts increased significantly in 2012
Demand for application maintenance services increased, as banking buyers continued to focus on costcontainment
Outsourcing in retail and commercial banking declined in 2012. Outsourcing activity in cards and lendingincreased
Majority of the large banking AO deals originated from Europe, followed by North America Mid-sized retail banking firms in North America accounted for the majority of banking AO TCV
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This study offers three distinct chapters providing a deep dive
into key aspects of banking AO market; below are four charts
to illustrate the depth of the report
Source: Everest Group (2013)
Number and TCV of large-sized transactions in banking AO Number of BFSI ITO transactions by source regions
AO subfunctional demand across var ious banking Lines of
Business (LoBs)
Adoption trends by buyer size
Transaction distr ibution by buyer size
Percentage of transactionsTCV split by buyer size
Percentage of total TCV
>US$100 billion
US$50-100 billion
US$10-50 billion
US$5-10 billion
US$100 billion
US$50-100 billion
US$10-50 billion
US$5-10 billion
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BFSI ITO research calendar
Topic Release date
Published Current
October-2012Application Outsourcing (AO) in Insurance: PEAK Provider Landscape Policies for Growth and Differentiation
IT Application Outsourcing (AO) in Insurance Service Provider Profile Compendium J anuary-2013
February-2013IT AO in Capital Markets Service Provider Profile Compendium
October-2012Application Outsourcing (AO) in Banking Service Provider Profiles Compendium
J anuary-2013Webinar Deck: State of the Global Services Market: 2013 Predictions
October-2013Application Outsourcing (AO) in Capital Markets Annual Report Change is the Only Constant
December-2012IT AO in Capital Markets: PEAK Provider Landscape Need for Speed: Capturing the Capital Markets Momentum
J une-2013Analytics in Banking: War is Ninety Percent Information
J une-2013IT Outsourcing in Banking Annual Report 2013: Banking for the Next Generation
Q3-2013IT Outsourcing in Banking Service Provider Landscape with PEAK Matrix Assessment 2013
Q3-2013IT Outsourcing in Banking Service Provider Profile Compendium 2013
Q3-2013IT Outsourcing in Insurance Annual Report 2013
Q3-2013IT Outsourcing in Insurance Service Provider Landscape with PEAK Matrix Assessment 2013
Q3-2013IT Outsourcing in Insurance Service Provider Profile Compendium 2013
Q4-2013IT Outsourcing in Capital Markets Annual Report 2013
Q4-2013IT Outsourcing in Capital Markets Service Provider Landscape with PEAK Matrix Assessment 2013
Q4-2013IT Outsourcing in Capital Markets Service Provider Profile Compendium 2013
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For more information on this and other research published by Everest Group, please
contact us:Jimit Arora, Vice President:Rajat Juneja, Practice Director:Kiranjeet Kaur, Senior Analyst:
The following documents are recommended for additional insight into the topic cov ered in t his report. The recommended documents either
provide additional details on the topic or complementary content t hat may be of interest.
1. Analytics in Banking: War is Ninety Percent Information (EGR-2013-11-R-0888):This report provides a comprehensive understanding of theanalytics services industry with focus on banking domain. Analytics adoption in the banking industry is covered in depth, exploring various aspectssuch as market size, key drivers, recent analytics initiatives, and challenges. The report also analyses the trends in analytics deals for various bankingsubverticals (cards, retail, commercial, and lending) and evaluates analytics capabilities of 20+service providers in the banking space
2. IT Application Outsourcing (AO) in Capital Markets Annual Report Change is the only constant (EGR-2012-11-R-0766): This report providesan overview of the Application Outsourcing (AO) market for the capital markets industry, through an in-depth analysis of large-sized AO contracts (i.e.,contracts over US$25 million in TCV and over three years in duration). The report analyzes key trends in market size and growth, demand drivers,adoption and scope trends, emerging priorities of buyers, key investment themes, and future outlook for 2012, with regards to such large capitalmarkets AO deals
3. Application Outsourcing (AO) in Banking: PEAK Matrix Provider Landscape Evolution at Play (EGR-2012-11-R-0732): This report provides acomprehensive assessment of the service provider landscape in AO services for banking and maps them on Everest Groups PEAK Matrix. It alsobenchmarks the scale, scope, domain investments, and delivery footprint of each providers banking AO practice. Finally, the 2012 banking-AO PEAKanalysis focuses on identifying the Star Performers, the providers with strongest forward movement over time in terms of market success andcapability advancements
[email protected]@[email protected]
Additional research references
Phone: +1-214-451-3110Email: [email protected]
Everest Group
Two Galleria Tower13455 Noel Road, Suite 2100Dallas, TX 75240
https://research.everestgrp.com/Product/12120https://research.everestgrp.com/Product/11859https://research.everestgrp.com/Product/11775mailto:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]:[email protected]://research.everestgrp.com/Product/11775https://research.everestgrp.com/Product/11859https://research.everestgrp.com/Product/12120 -
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