Businesses in the financial services sector can take many steps to improve internal operations. Internal operations can be strengthened by, for example, deliberately outsourcing expenses in essential areas while lowering inefficiencies and improving the quality of customer service. As a result of this, businesses are putting more emphasis on technological advancements and promoting the adoption of digital transformation. A closer look at outsourcing sector trends in financial services starting in 2022 clarifies the forecast for the next year or two. Quantum computing, artificial intelligence, financial technology, and new regulations will all continue to shape the financial services sector for years to come.
Looking at the Numbers
Information technology outsourcing (ITO) had its second-best year ever after 2021, and the “everything as a service” (XaaS) and business process outsourcing (BPO) markets have seen substantial growth.
What is Quantum Computing?
Quantum computing is a new method for performing calculations that enables technology-based problem resolution at exponentially higher speeds. It is based on the principles of quantum mechanics. Finance is expected to be one of the first industries to truly profit from the proliferation of quantum computing firms.
Growth of Platform Transformation and Artificial Intelligence
Additionally, by implementing digital technologies that can cut costs and boost organizational growth, businesses are accelerating digital transformation. Platform transformation has the capacity to carry out a number of operations.
For instance, platform transformation enables internal platform development or engagement with a new platform through a third party. The entire IT operating model can be redesigned using new platforms, and back-end technology can be transformed to power important business operations. Finally, technological advancements might replace outdated architecture with a new platform.
Moreover, artificial intelligence (AI) will never go away. By investing in generative AI, financial institutions can accelerate their digital transformation initiatives. This technology can generate new audio, code, graphics, text, simulations, and video material to improve the online user experience.
Financial Technology’s Impact on Financial Services
Financial technology businesses may have been first perceived as industry competitors, but their influence is now welcomed. Banks, on the other hand, are investigating offering their own solutions or cooperating with financial technology to improve the client experience.
New Regulations
In addition, governments around the world are proposing, implementing, and reviewing laws affecting outsourcing in the financial services industry. The US Securities and Exchange Commission has suggested a rule governing outsourcing by investment advisers. The EU passed the legally-binding Digital Operational Resilience Act in December 2022. The financial services business should be aware of potential effects as talks take place and new or updated regulations are put forward.
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Reference
Morgan Lewis (2023, March 1). What’s driving digital transformation in the Financial Services Sector? Retrieved from: https://www.morganlewis.com/pubs/2023/03/whats-driving-digital-transformation-in-the-financial-services-sector.