Introduction

The global industry for Business Process Services (BPS) for Banking and Financial Services (BFS) is growing at a fast pace of over 16% annually. After a dip in 2008-09, due to the global financial crisis, BFS BPS is back on track, seeing rising contract numbers in both 2010 and 2011. Although BPO services account for only 10% of the overall market for BFS BPS, adoption of BPO is now expanding globally.

While cost reduction continues to be an important driver for outsourcing, financial institutions are also increasingly considering centralization, standardization, and improved technology as key benefits of BPO. In this competitive BFS BPO market, service providers are offering better technology and alternative pricing models to differentiate their offerings. At the same time, they are investing in acquiring greater domain expertise, resulting in a number of acquisitions in BFS BPO in 2011. The future will be exciting to watch, as service providers build more capability and financial institutions become more selective in their choice of outsourcing partners.

In this research, we analyze the current trends and the future outlook for third-party BPO services for the global banking and capital markets industry. We focus on:

• Market size and growth trends in banking and capital markets BPO, adoption trends by geography, and key drivers behind BFS BPO
• Solution characteristics in banking and capital markets BPO, focusing on analysis by Line of Business (LoB), size and term, adoption by size of financial institution, technology, global sourcing, and pricing structures
• The global service provider landscape in BFS BPO, covering market shares in banking BPO and capital markets BPO; also highlighting the M&A activity in the market in 2011

Scope of this research

This report focuses on global third-party banking and capital markets BPO and does not include shared services / captives and utility-based BPS. The report also provides coverage of the non-voice and industry specific BPO in banking, as well as capital markets BPO across the back, middle, and front office. It does not include horizontal business processes, such as F&A, HR, and procurement.

Content

This report will assist key stakeholders (buyers, service providers, technology providers) to understand the changing dynamics of the BFS BPO market and help them identify the trends and outlook for 2012. Specifically, this report provides comprehensive coverage of the global BFS BPO market including detailed analysis on market size and growth, buyer adoption trends, BFS BPO drivers, contract characteristics, and service provider landscape. Some of the findings in this report include:

• Third-party BPS in the BFS industry is now a US$20-26 billion market growing at ~16% annually
• After a dip in 2008-09, BPS in banking and capital markets bounced back with 180 new, publicly announced contracts signed in 2010-11
• In 2011, lending was the largest banking BPO segment at ~36% of the overall banking BPO market followed by credit cards, retail banking, and commercial banking
• Investment banking emerged as the largest capital markets BPO segment in 2011, accounting for ~55% of the overall market, followed by asset management and custody and fund administration
• The eye-catching aspect of 2011 was the increased M&A activity in the BPO market. Key acquisitions included Genpact’s acquisition of Headstrong, Serco’s acquisition of Intelenet, and Cognizant’s acquisition of CoreLogic, among others