BPO Comes to Payments: “Better, Cheaper, Faster. Now Transform That”

Bob Olson, Executive Vice President, Carreker and President, Carretek, L.L.C.

Global Concepts Payment Systems Consulting Forum
2006 April Receivables Strategy Forum
Ritz-Carlton
Atlanta, Georgia
April 3 – 5, 2006

Major banks have long had a pent-up desire to utilize offshoring for their back office operations. However, as long as the paper check dominated large-dollar payments, that was not possible – it was not economical to offshore all the paper. So banks lack necessary experience in offshoring and are avid to gain it. Now, since banking legislation and technology have enabled digitization of paper, they have also forced banks to rapidly reduce the cost of their payment operations.

This speech will describe how a leading US bank has significantly cut costs and increased quality of its back-office payment functions by offshoring them, in response to major pressures on all banks to reduce their operations costs. This speech will also describe how this bank is also setting the pace for “transformation” of the offshored functions, aware that the one-time benefits achieved by offshoring must be matched year after year, through means other than pure labor arbitrage. That can only happen if the offshore facilities are skilled in the process of transforming the offshored functions.

This speech will give delegates practical insights on:

1. How to Choose and Cadence Offshorable Functions. Depending on a bank’s business strategy and customer base, some functions are eminently more offshorable than others. Factors include volume, scalability, customer concentration, growth plans, and so on.
2. How to Build the Basic Business Case for offshoring function-by-function, including how to factor in new security and customer privacy requirements, how to estimate the timing of cost reductions, how to separate the offshorable sub-functions from those that best remain with the bank, how to consider workflow changes that can affect the business case.
3. How to Handle Security and Customer Privacy Issues. In this era of heightened concerns about security and privacy, offshore facilities come in for intense scrutiny, despite studies (like Forrester’s) that indicate the greater risk onshore. Banks need to be extra-prepared not only to address the issues but handle customer concerns.
4. How to Approach the Long-Term Business Case: Transformation. Payments are a huge business for banks, but ever more vulnerable to the high costs of processing. Most banks will expect to see expense reductions year after year, even after the initial offshoring savings. That means they need to work with offshorers who are capable of drastically transforming the functions – coming up with new ways to scale them, to expand their scope, to produce new revenue, and so on.

Contacts:
Ann Cain (acain@carreker.com)
Dennis Watson (dwatson@carreker.com)