Turmoil and struggles in the financial services sector are splashed daily on the front page of newspapers around the world. The industry faces a number of monumental challenges that are threatening and shaping its future. To remain competitive, forward-looking firms need to:
- Reduce costs
- Improve cross-sell and up-sell results from existing customers
- Shift capital expenditures to operational expenditures through variable costing and on-demand capabilities
Serving Market Growth
The financial services sector currently spends more than 2.5 times more on technology than other industries. The way they can attack challenge number one is to shift the management of desktops, data centers, and call centers to a managed services model. Companies are using this option not just to reduce costs, but as a way to reallocate investment into growth initiatives.
One regional U.S. bank came to Cisco ISBG (the company's strategic consulting arm), wanting to quickly enter a new niche market faster than a competitor and increase its market share. Its tactic: deploy an end-to-end managed service, including both technology and business processes.
The economics of managed services lower the barriers of entry to niche markets that might not have been economical before; it also helps them determine success or failure more quickly, and act accordingly.
Managed Services Increase Customer Ties
In developing markets, companies are looking to use managed services to target customers who might not have used banks at all previously. A managed service that offers the underlying network infrastructure, including phones, provides them with an on-demand and scalable service that they can roll-out ahead of competitors.
To increase the amount of business conducted with customers, financial services firms are looking beyond the traditional world of financial transactions and services. One large bank we're working with wants to expand its relationship with its small and mid-size customers by providing them with essential services as payroll, procurement, and human resources.
Because the bank wants to roll out these services quickly, they will be created, delivered and managed by another entity through a managed services model.
Next generation managed services offer a real opportunity to transform the financial services sector. But success will require creative thinking, as well as both the development of strategic partnerships with managed services providers and proper governance models.
About the author: Stuart Taylor is a Director in Cisco IBSG. Stuart leads thought leadership and engagements with key Service Providers in managed services. He has over 15 years of experience focused on strategy, corporate development, business unit strategy, M&A and operational improvement with large mobile and wireline operators and high technology clients.