Financial firms, burdened with more regulations, increased operating costs and heightened pressure on their back office, are increasingly integrating technology service offerings into their software tools, such as hosting, cloud and managed services, to help them better control risks, manage costs and utilize resources more strategically.
That's according to SunGard, which recently conducted a survey looking at the global trends driving the growing adoption of managed services to help firms build smarter operations over the next 12-18 months.
The firm found that multi-system environments and siloed infrastructures can slow innovation and hinder go-to market strategies for new products and geographies, which can negatively impact growth initiatives.
This, SunGard said, can drive investment in trusted vendors for systems rationalization and a reduction in total cost of ownership, enabling firms to capitalize on third-party expertise and free up internal resources to focus on core business growth strategies. SunGard believes cloud services will play an important role to support this effort.
With more capital and resources being diverted to growing regulatory requirements, firms will consider migrating both core and non-core operations to trusted third-party managed services to help control costs.
"Regardless of the size, type and location of a financial institution, many firms will underpin business strategies with managed services models to help address the complex and wide ranging challenges facing the industry," said Steven Silberstein, chief technology officer at SunGard. "As a result, third party specialists need to offer the security, scalability, global expertise and local presence to help firms reduce complexity, enhance efficiency and focus on business objectives to drive profitability internationally and regionally."
In order to mitigate operational risk and inefficiencies and optimize system uptime and processing reliability, SunGard said firms can adopt a combination of software deployment paired with business process outsourcing (BPO) or an outsourced business process as a service (BPaaS) platform from providers with deep domain and industry expertise.
TABB Group reported that by 2016, approximately 50 percent of financial institutions will use managed services to outsource the management of their IT infrastructures. Due to the benefits of managed services - increased agility, flexibility and responsiveness, faster time-to-market for new products and tighter security - this model will become more mainstream in helping firms address the evolving challenges in our industry, the firm said.
Also, tighter vendor management will be important to financial institutions as they deploy more managed services. As firms continue to outsource more of their operations, they can increasingly rationalize the number of strategic vendor partnerships to create a cohesive network of trusted partners.
Originally published by Securities Technology Monitor. Published with permission.