Introduction
Introduction
Investment banks looking to the future amid shifting market dynamics should consider relinquishing expensive internal infrastructure and move towards a connected flow model where outside providers offer services for both critical and non-critical functions, according to Deloitte. Amid the current rapidly-changing market dynamics, investment banks are readily adopting a connected-flow model, where even more complex tasks or core operations are being outsourced to a third party offshoring vendor. Investment-banking firms are early adopters of knowledge process outsourcing (KPO) and have been offshoring their non-core functions for more than two decades. Offshoring was popular among only a few bulge-bracket investment banks a few decades ago. Today, this concept is at a major inflection point, with more investment banks, irrespective of their size and geography, adopting this model and changing the way they operate, with an increased focus on cost savings, efficiency and flexibility.
Need for off-shoring and its benefits
Cost efficiency and focus: Investment banks are increasingly turning to reliable offshoring partners to reduce operational costs and improve margins. This model also enables them to focus on core activities and strategic decision-making
.Improved client-facing activities: By freeing up capacity for more-value-added activities, bankers can devote more time to core revenue-generating or client-facing activities, resulting in higher rates of deal conversion and revenue recognition for the firm.
Increased revenue generation: By strategic offshoring, investment banks are also improving the customer experience and increasing their revenue. By strategically offshoring the optimum mix of operations based on criticality and urgency, banks can focus on operations that generate revenue.
Employee retention: Offshoring significantly improves the work-life balance of onshore junior bankers. It also keeps them motivated, as they have time to engage in more-value-added tasks, with the tedious and less-critical tasks taken care of by the offshoring partner.
Access to global talent: More and more investment banks are facing challenges in terms of attracting and retaining the right talent due to heightened competition from other sectors. Offshoring firms help them gain access to a large pool of global talent at a fraction of the cost.
Embracing technology and innovation: Adopting technology is critical for competing and growing. Partnering with an offshoring partner enables investment banks to leverage advanced and emerging technologies and innovative solutions so they can focus on their banking business.
What can be off-shored?
In addition to core tasks, investment banks are also considering offshoring the following areas of support:
Business information services (BIS)/library services: Offshoring BIS or library services has become attractive due to the value proposition it generates.
Presentations and graphics (P&G): The offshore team of creative presentation specialists can help format and design presentations and other content such as client-ready pitchbooks, collateral, brochures, posters and invitations.
Paralegal support: Offshoring paralegal support offers a flexible solution, providing cost-efficiency and specialised expertise.
Marketing support services: These services may broadly be leveraged in areas of developing communication strategies, brand positioning and customer-engagement initiatives.
Middle-office/back-office services: Middle-office functions support processes related to revenue-generating activities with no client-facing activity. Examples include risk management and treasury.
Conclusion
Investment banks and advisory firms have already embraced the dynamics of the changing environment of operations and started to partner with renowned offshoring firms. They are benefiting significantly by including offshoring in their basket of operating strategies. Our experience has shown that partnering with an offshoring vendor enables managers to scale their operations cost-effectively and secure incremental capabilities to increase the breadth and depth of analysis at each stage of the deal lifecycle, while ensuring key personnel remain focused on critical tasks and core analysis. In this white paper, we present several tasks that currently form part of an investment bank’s deal lifecycle that could be offshored. By establishing hundreds of mutually profitable offshoring relationships, Acuity has already demonstrated its capabilities and success stories that have saved over USD5bn for its clients.
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