Survey shows regulation is driving outsourcing
28 November 2012
By Hui Ching-hoo
The outsourcing of back office functions has become more prevalent among banks and brokers in Asia in view of emerging counterparty issues and local regulatory capital requirements, according to a survey sponsored by BNP Paribas and SWIFT.
The fourth annual Back Office Outsourcing survey interviewed over 200 banks and brokers across the region about their outsourcing choices.
Sixty three percent of respondents agreed with the notion that outsourcing best manages complexity and middle- and back-office cost functions, while 75% said that outsourcing reduces obligations in regard to regulatory and market developments.
The likelihood of outsourcing among the international brokerage community, C-level managers, and sell side players advanced 18%, 13%, and 4%, respectively, year on year.
Twenty nine percent of respondents said that requests from counterparties to put up greater collateral will be the main rationale for outsourcing back office tasks. Meanwhile, 22% said they will outsource as a result of local regulatory capital requirements.
The survey stated that 87% of buy side respondents sees their brokers’ credit ratings as “more than important”. While the operations side has been worrying about infrastructure, C-level managers are much more worried about their regulatory capital (33%). Meanwhile, 38% of brokers targeting wealth managers are driven by local changes.
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