This blog is focused on IT outsourcing but because I also cover the financial services IT sector, and there is a lot of cross-over, I am going to integrate some financial services IT stuff into the blog.
In this post I am publishing some predictions for financial services IT in 2013.
Jean Louis Bravard, director at sourcing consultancy Burnt-Oak Partners, previously headed EDS's global financial services business. In the past he was a CIO at JP Morgan.
Here are some of his predictions for 2013 in the financial services sector.
"- Financial Services firms will continue to be in the cross hairs of regulators and no matter what is outsourced the risks will continue to remain with the financial firms. While this has traditionally been an excuse not to outsource, reality is that increasingly FS firms have no choice but to outsource to cut cost and improve quality. So outsourcing will be up, probably substantially.
- The most interesting area of outsourcing will be FS firms outsourcing to FS firms. While this has traditionally been a big activity in asset management (think BONY or State Street) we believe it will be considered for most processes and probably more applications than today. The jury is out for pure IT as we do not see FS firms entering the market with unbundled offerings.
- Shared services in whatever form will be in vogue but the regulators will become anxious as they will have a hard time monitoring operational risk accounting and thinking about long tail risk or even liquidity issues... not even mentioning the living will of the "processing engine" firm. We expect action on sharing market pricing and the processing of commodity operations.
- Cloud services will be everywhere at least in name as the technology will be massively used internally but very sparingly leveraged externally (be it private or public cloud).
- FS firms will probably fail miserably in listening to customer demand for smartphone based services they can rely on. Especially retail banks will continue to insist on paper, faxes or medieval security solutions to provide a level of service provided by customer interface leaders such as Apple, Google or Amazon.
- At least one large retailer will seriously enter financial services in the UK and see that as a main activity. This will happen before Google or Amazon enter banking.
- Insurance companies IT will probably not improve as declining business and ageing portfolios cannot fund the necessary modernisation.
- One or more bank ATM networks will fail, lead to massive disruption and management will blame third-party IT or Communications providers for the mess. We would put some money on at least one bank domestic payment system to fail for several days potentially leading to questions about the fate of the firm and the system. Legacy is running out of runway!
- The FSA will be even more intrusive than in 2012 and IT firms will feel the tentacles.
Last but not least FS firms will for the first (?) time seriously look at cutting spending on IT OPEX. Not good for IT jobs at FS or IT firms."
I am interested in hearing from people in the finance sector for their views. Please leave a comment.