By Tony Collins, CEO, OPAL
Outsourcing product development and administration to a third party is bringing significant benefits to financial services providers, says Tony Collins, managing director at OPAL. Is this a formula for successful recovery as we emerge from the recession?
During the past years of economic turmoil, the financial services sector has become more competitive than ever, with many companies now fighting to differentiate themselves in an overcrowded and struggling market. The ability to quickly launch innovative financial products that are appealing to increasingly cautious investors is key to overcoming this competition.
A common concern for financial firms is that they will need to build whole new systems, acquire new software or address a large-scale IT change in order to launch a new financial product, particularly with regulatory compliance playing a major role in today’s landscape. However, this is not always the case. Most organisations are actually set up to develop new and innovative products as they are able to access the relevant software through a third party.
Delegating the majority of the development process involved in a new product launch allows financial institutions to make use of specialist software and IT systems without having to make long-term commitments of their own, and can focus on the fundamentals of creating a product that is in tune with the current market and what customers want.
A cost and time-effective advantage
Even for an established provider, the cost of developing and launching a completely new product and/or distribution channel can be very high. Product development is also a medium to long-term commitment, as firms will need to tailor their IT systems and acquire specialist software in order to achieve this, in what can be a costly and lengthy process.
Third-party experts often have instant access to the highly sophisticated software and IT systems required during the development and launch phases of a new financial product. These outsourcing providers can effectively mirror the activities that would normally be handled by the financial services industry in-house, including issues related to actuarial support, compliance, business administration and IT.
In addition, by using an outsourcer, financial services institutions can also delegate the responsibility for other time-consuming tasks, including product distribution, marketing, client communications and more, with technological advances now allowing providers to seamlessly link in with their day-to-day activities, procedures and operations.
These time and cost-saving benefits are therefore, persuading an increasing number of banks and insurers to work with outsourcers to develop, launch and administer a wide range of new products. A specialist third-party can also help ensure that all implementation stages are routinely quantified and assessed against industry standards and regulatory requirements, with management reports provided on a regular basis.
Keeping up with technological advances is key
As technology continues to develop at a dizzying pace, financial services providers will increasingly need to make sure that they have access to a robust technological platform that will enable them to offer and support any new products through multiple channels, whether this means via the internet, on mobile devices, an extranet site or through the post/by telephone. Access to this kind of technology and software is already playing an essential role not only when launching new products, but also in supporting them once they’ve been brought to market.
We are already seeing a number of high street retailers and supermarkets breaking into the financial services market and launching products of their own. As companies outside the financial services sector begin developing and selling unique 'own-brand' insurance and pension products, expert advice and technological know-how in these areas will be essential. Companies like these will therefore benefit greatly from working with outsourcers, since they may not have the in-house expertise required to bring these new products to market quickly.
Taking on an outsourcing partner who is able to produce comprehensive technical specifications and delivery plans within very short time frames, using systems that are bespoke to the company's specific needs, allows financial services firms to maximise their efforts to successfully develop and launch new products in turbulent times. By making the most out of new software and technology that is readily available, financial organisations can achieve product success in a cost and time-effective manner, giving them a head start on the rocky road to recovery.
www.opal-uk.com
|
