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Swedish bank Sparbanken Syd has turned to outsourcing to improve the cost-efficiency and quality of its trading business.
The organisation – Sweden’s oldest savings bank – has signed a five-year outsourcing agreement with Finnish service provider Tieto, which covers IT systems, operations and back-office services.
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“Over the last ten years the fixed costs of running operations have increased and the margins of the business have gone down,” Hans Nelfelt, vice-president at Sparbanken, told Computer Weekly. “So if it's not your core business and you don't have the necessary scale, you should outsource.”
The deal expands on Sparbanken’s existing relationship with Tieto. The bank already uses trading management software from Tieto, which will now be migrated into software as a service (SaaS). New to the collaboration is business process outsourcing (BPO) of the back-office services, including system support and process management, as Tieto will take charge of the entire securities process from ordering to settlement.
Nelfelt said he believes this combination of software and process outsourcing will help to develop its securities offering more cost-efficiently.
“We have to be able to supply good savings products and advice, but trading is not a core service for us,” Nelfelt said. “Of course cost savings are a goal for outsourcing, but also to be able to deliver a good service.”
Read more about IT in Nordic financial services
- Swedish banking and finance services company Cerdo Bankpartner outsources close to home with fellow Nordic firm Tieto.
- Norwegian financial services firm becomes the latest Nordic-based organisation to sign a major IT outsourcing deal with an India-based supplier.
- Norwegian bank DNB is closing branches and cutting jobs as more customers move to digital channels.
In addition, the bank hopes the agreement will streamline Sparbank’s trading processes with its existing outsourcing strategy. The bank has a small IT team of six people and relies heavily on partnerships.
Most of Sparbanken’s IT infrastructure, maintenance and development is handled by Skandinavisk Data Center SDC. However, Nelfelt said the decision to outsource securities trading to Tieto was simple, as it was the only supplier in the Sweden’s securities sector to cover both SaaS and BPO outsourcing.
“It was also a natural choice. We already use their system so it won’t be a complicated transformation process,” Nelfelt said.
He said there will be minimal impact on Sparbanken’s 65,000 private and business customers, as the user interface will largely stay the same, he said.
Preparation essential to yielding benefits
Nelfelt stressed that, while the outsourcing is not a dramatic change for the bank, the transition of all trading processes has its challenges. “It's very tempting to take shortcuts and try to make it easier by keeping part of the processes in-house, but then you wouldn't be able to get all the benefits you want,” Nelfelt said.
"We have done quite extensive work in mapping and defining the processes Tieto will be doing for us. It has taken time, but it is very important to do because you save that time and money in the actual outsourcing.”
The software migration is currently being finalised and the transfer of its back office services will be concluded in early September 2016.
Sparbanken is not alone in its move to outsourcing. According to the 2016 Nordic IT outsourcing survey, published by PA Consulting and White Lane Research, 50% of Nordic companies in the finance sector plan to increase their outsourcing. This is slightly higher than the average of 46% across all industries