Frankfurt-on-Main, April 28, 2010 – Shared Service Centres (SSC) – organisational units in companies that centralise, bundle and provide process oriented services– have become key success drivers for the Financial Services Industry. This is the result of a current survey by management and technology consultancy BearingPoint (www.bearingpointconsulting.com), which has been conducted with support of the E-Finance lab among 138 European Banking and Insurance Companies. According to the survey, over 40 percent of the current running SSCs have been operating for more than three years. The respondents stated significant cost benefits. Nearly four out of five participants realised cost savings of 20 percent and more. Most were able to achieve a pay back within three years and faster. The majority of SSCs has improved standardisation of processes and methods, cost per transaction and time availability for value-adding services. About 50 percent of customer care and payment services are already or will soon be offered via SSCs. “The Shared Service model has definitely been accepted and will be widely adopted in the future as it delivers significant cost savings and enhanced process quality in Financial Services core and support processes to deal with the latest challenges in the market”, says Jens Raschke, Partner at BearingPoint.
Future SSCs
Due to the continuous fragmentation of the Financial Services value chain, structural changes, market consolidation and regulation, SSCs will soon have to meet even more requirements. The study identifies several trends that will shape future SSCs and their functional scope:
- New organisational models will gain more importance. Centres of Expertise (32 percent), which centralise expert know-how and make it available company-wide, or providing services to external clients (11 percent) are most likely to replace the traditional SSC model.
- Traditional “colleagues” change more and more to SSCs’ internal customers who pay for the service. Thus, quality, risk management concepts and service level management will gain greater importance to ensure the continuous operation of theSSC.
- Additional complex “non-transactional” processes performed by SSCs will enlarge the offered services and added value to the internal customer.
- Eastern Europe’s relevance for SSCs is rising: Whereas today’s SSCs are mainly located in domestic entities (47 percent), Eastern Europe
(currently 23 percent) is emerging as major location with 35 percent as well as Asia (incl. India) with 30 percent of the respondents planning future activities in these regions.
Size and strategy key to success
The study points out that large international Financial Services institutions achieve higher cost savings than smaller ones. Four out of five companies with more than 50.000 employees are able to realise cost savings of 20 percent or more by setting up SSCs. In addition, a top-down implementation strategy stands out as a key for success. Nearly all of the 70 percent following this approach achieved significant cost savings and were more successful than companies where the use of SSCs is optional. Furthermore, all qualitative criteria and aspects of process excellence improved through SSCs are supported by advanced IT infrastructure and managed service level agreements. Companies that consider themselves innovative also turn out to be more successful: They started earlier with implementing and operating SSCs and have been able to overcome some of the difficulties and to realise more cost benefits.
"Despite the substantial success experienced with the currently operated SSCs, the industry is yet focused on the ‘low hanging fruit’. The next steps will be to improve the existing services, to increase client satisfaction, to include further processes and develop new services that offer added value to the clients”, adds Jens Raschke. “The financial and quality benefits could be further increased with the adoption of smart process excellence and IT optimisation initiatives.”
About BearingPoint:
BearingPoint is an independent management and technology consultancy. Owned and operated by its Partners throughout Europe, BearingPoint is offering its clients the best possible value in terms of tangible, measurable results by leveraging business and technology expertise. The company currently employs 3.250 people in 14 European countries and is serving commercial, financial and public services clients.
BearingPoint offers its clients a seamless cross-border approach, strong focus on results, an entrepreneurial culture, profound industry and functional knowledge as well as solutions customised to clients’ specific needs. The firm ranks high in client satisfaction, has long-standing relationships with reputable organisations and is seen as a trusted adviser. BearingPoint has European roots, but operates with a global reach. For more information, please visit: www.bearingpointconsulting.com
About E-Finance Lab:
The E-Finance Lab is an industry-academic partnership between Frankfurt and Darmstadt Universities and partners BearingPoint, Deutsche Bank, Deutsche Börse, DZ Bank Gruppe, Finanz Informatik, IBM, T-Systems, 360 Treasury Systems, DAB bank and Interactive Data Managed Solutions located at J. W. Goethe University, Frankfurt.
Goal of the E-Finance Lab is to jointly develop scientific yet managerial methods for rearranging the business processes of the financial service industry. The overall approach is to apply industrial methods well established in other domains, such as automotive supply chain optimization, to the financial supply chain. Using this industry metaphor, the main challenges are the design of smart production infrastructures, including the development and evaluation of advantageous sourcing strategies, and smart selling concepts to enable new revenue streams for financial service providers in the future. Prof. Dr. Wolfgang Koenig, speaker of the E-Finance Lab, states that "our goal is to contribute methods and views to the realignment of the financial supply chain". For more information, please visit: www.efinancelab.de
