According to a research recently commissioned by Equiniti amongst senior executives of UK wealth management firms, 70% of wealth managers believe that within five years all firms will be looking to outsource some or all of their processing requirements.
Against the backdrop of increasing regulatory burdens, technological change and global competition, brokers and wealth managers are having to face up to new challenges on a number of fronts to embrace this change, Equiniti, a UK-based share registrar and financial services outsourcing specialist, said in its report.
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According to the study report, 60% of wealth managers fear loss of control through the outsourcing of their back and middle office functions, and not surprisingly sixty six per cent saw cost savings as a reason for outsourcing.
- 70% of wealth managers believe all firms within 5 years will be looking to outsource some or all of their processing requirements
- 38% of wealth managers have changed their view on outsourcing as a result of regulation
- A fifth of wealth managers blame a lack of outsourcing solutions as an argument for not outsourcing
- Outsourcing enables firms to invest in customer relationships and business growth
Also, 78% of firms that have made the choice to outsource are totally satisfied. Only 22% and 26% of firms outsource or would consider outsourcing Dealing and CRM respectively, whereas around 50% of custody is already outsourced and a further 12% of firms would consider it in future, the report revealed.
Mark Taylor, managing director of Equiniti Investment Services, commented: "Cost reduction may be the initial trigger for firms to look at the business case for outsourcing their middle and back office functions, but outsourcing is no longer just about cost saving. It is a way to gain strategic advantage.
Better results will be achieved when business strategy and IT strategy are aligned. It is now time to recognise the back office as a commoditised process which can enable companies to improve their service offer and focus on a clear customer proposition underpinned by a strong brand. Whilst many companies seem to be agnostic about outsourcing they do realise its importance."
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By GlobalDataEquiniti also said that it is developing and establishing ‘Equiniti Wealth Solutions’, a centralised pooling of custody and business processes as well as a customer interface, in response to market demand.
This new service will enable firms to derive strategic advantage through delivering greater cost efficiency, high service quality and risk mitigation, the company claims.
