review of the outsource market presentation by stephen pinner fsi philip painter
TRANSCRIPT
Review of the Outsource Market
Presentation by
Stephen Pinner FSI
Philip Painter
sumgood.com Tel: 020 7422 0063
Review of 2007 (Wealth Management)
• Many Outsource providers spent most of 2007 retaining current business
• Significant demand but limited availability
• New provider joined the market space SEI Europe first client being HSBC Wealth Managers
• Major implementation difficulties
• Main winners in 2007 were the system providers,
• Majority of Wealth Managers who reviewed in 2007 either replaced systems or in-sourced
sumgood.com Tel: 020 7422 0063
Review of 2007 (Institutional)
• Very few new deals in 2007
• Majority of high profile deals completed in 2007 originated in 2005/6
- RBC Old Mutual
- BNP Aberdeen Asset Management
- JPM Threadneedle
- Soc Gen Pioneer / Unicredit
• Reason for lack of outsource activity
- Consolidation and integration of previous deal
- Focused on building functionality for alternative investments
• 2007 saw the end to the open cheque book sales process
• FSA embraced outsourcing in 2007 by outsourcing IT support services to Fujitsu
sumgood.com Tel: 020 7422 0063
Review of 2007 (Off-shoring)
• Move by smaller companies with turnover less that £5 million to outsource functions offshore
• Market trend is to move full operational centres off-shore eg BNY Mellon and JP Morgan
• Emerging trend to off-shore to near shore locations Russia, the Czech Republic, Poland
• In 2007 UBS moved 750 jobs to Poland
sumgood.com Tel: 020 7422 0063
Review of 2007 ( MiFID)
• It was felt that MiFID would stimulate the outsource market place
- Increased need to collect, consolidate and publish information
- Need for extended data storage requirements
• Greater emphasis on understanding the roles and responsibilities on the outsource providers
• Ensuring the process of due diligence is undertaken and documented
• In reality we have seen little or no impact from MiFID on the outsource market place
sumgood.com Tel: 020 7422 0063
Predictions for 2008 (Wealth Management)
• Emergence of new outsource providers in the Private and Wealth Management space
• Wealth Managers expectations have increased and they are looking for more than a one size fits all outsource
• We see a move to component outsource
Contracts and Settlement
Technology and IT
Accounting and valuation services
sumgood.com Tel: 020 7422 0063
Predictions for 2008 (Institutional)
• Volatile markets will force Institutions to revisit fixed cost
• Large custodians will return to the market with updated platforms which can service alternative investments as well as long only assets
• The large custodians are looking to move further up the value chain towards :
- Middle office and trade confirmation
- Performance Measurement / benchmarking
• We also see a move from the large providers into the outsource and administration of Hedge Funds
sumgood.com Tel: 020 7422 0063
Predictions for 2008 (offshore)
• Continuing trend for more companies to use off-shore locations
• Recent survey by Deloittes estimates 180,000 UK financial service roles will be off shored to low cost centres by 2010
• The maturity of more near shore locations
Egypt
Turkey
Hungary
Russia
sumgood.com Tel: 020 7422 0063
Outsource Case Study Lessons Learnt
• Experienced difficulties managing services in more remote location
• Issues caused by language and cultural differences
• Issues caused by time differences
• Poor management of the overall ongoing relationship
• Survey carried out in 2007 stated that 1 in 4 companies would have paid more for a higher quality outsource provider
sumgood.com Tel: 020 7422 0063
Outsource Case studyWhat could have been done Better?
• Make sure the SLA’s are better defined and eliminate ambiguity and guesswork
• Better financial bonus/penalty framework to ensure closer alignment of service and delivery
• More robust governance structure to deal with issues as they arise
• More experienced staff to manage the relationship both internally at the client and at the outsource provider
sumgood.com Tel: 020 7422 0063
Questions