Financial Services Utilities
Taking Outsourcing Benefits to a New Level
Take It With You
Industry utilities can provide increased efficiency of operations for financial services companies, but collaboration and transparency are required to open the door. By revisiting their definition of core and noncore operations, early adopters of utility strategies are seeking to achieve step changes toward improved performance.
Financial services companies today recognize that executing many back-office functions does not provide competitive advantage or enhance the quality of the customer experience.
A decade ago, a retail bank’s core competencies included owning and managing large branch networks. As a result, huge amounts of capital were locked up in relatively unproductive property assets. Today, the sale and lease-back of branches is the norm, and banks are free of the burden of what was clearly a noncore activity. Relatively dead balance sheet assets have been replaced with leases that offer the flexibility to find more modern premises at a later date. A clear distinction is emerging between core and noncore competencies and related activities. Core competencies differentiate a financial services institution from its competitors.