According to a new research report released by leading independent research and advisory firm Financial Insights, financial institutions will use outsourcing extensively in 2003 to achieve a more predictable cost base and to eliminate in-house support of non-core activities. The primary beneficiaries of this trend, according to Financial Insights, will be large, diversified IT firms, who are poised to win significant contracts from tier-one and tier-two banks.
"The challenge for IT service providers will be to drive revenues from the business by decreasing headcounts, automating processes and managing contracts with the banks," said Jeanne Capachin, research director at Financial Insights. "Conversely, the challenge for banks will be to control costs and continue to meet client expectations despite the changes in processes."
The significant increase in outsourcing engagements is one of ten predictions included in the full research report which explores the key trends impacting technology spending within financial services. "2002 was a difficult year from an economic standpoint," noted Deborah Williams, vice president of Corporate Banking and Capital Markets at Financial Insights. "While we anticipate that overall spending will remain flat in 2003, we do believe that there are several pockets that will thrive, among them: outsourcing, disaster recovery planning, electronic payment technologies and several other areas outlined in our full research report."
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