Strategic Partnering and Outsourcing in Banking

by Edward O'Brien 0

As part of Mercator Advisory Group’s research on topical themesin banking and channels systems, the subject of strategicpartnering and outsourcing continues to come up in conversations.The underlying reason for these conversations is a generalfrustration by financial institutions at the seemingly glacial paceof innovation and deployment of new channels products in thefast-paced world of banking today.

Much of this concern is not with the underlying internal effortsor resources. Instead, it’s the complexity of integrating withvarious back office and channel systems that are the result ofseveral (and in some cases many) mergers and acquisitions, even forsmaller institutions. All of this results in a process that takesmuch longer than desired (taking many months or years to workthough testing prior to production systems being ready), andexpensive.

In some instances, particularly with such modularized channelssystems as mobile and tablet banking, working with a partner todevelop, host, and deploy new or upgraded features can make sense.Often, these partners are already working with the financialinstitution, providing core and/or online banking capabilities forthem. For others, integration with these systems is often a part ofthe overall solution set.

Working with such organizations to develop and deploy new featuresand capabilities can be less expensive and offer a faster time tomarket for financial institutions than would otherwise occur. Notonly are the product roadmaps driven by partners with subjectmatter expertise in software development, QA, and managed systemsdeployments, but many have multiple data centers with redundantsystems to ensure nearly 100% uptime with their hosted solutions.For some financial institutions, partnering efforts can mean abetter, faster, and cheaper way to offer select systems for theircustomers or members than can be achieved by a whollyinternally-developed deployment.