New research published by docHarbor Document Services, a division of Anacomp, identifies that UK banks could be releasing £583 million of working capital per year by outsourcing their document management processes. The research is a welcome reminder of the real value that outsourcing can deliver to the banking sector, a message which is often unfairly eclipsed by a handful of highly publicised, negative experiences of offshoring. Equating to savings of some £3.97m per organisation per year, banks are pinpointed as having the most to gain of all UK industry sectors by harnessing the skills, technology and legal knowledge of a third party to bring their document deluge under control. The savings accrue from freeing up capital that would otherwise be tied up in equipment, buildings or other facilities.
Spiralling regulatory compliance, and pressure to cut overheads whilst maintaining customer service standards, have led to document-related processes becoming one of the most competitive – and litigious - areas of today’s business. But the banking sector carries the greatest burden of document-related regulatory compliance of all sectors studied, which is increasing with the implementation of Sarbanes-Oxley, IFRS, anti-money-laundering rules, the reporting requirements of Basel II, and a host of other FSA regulations around mortgage and other products. This may explain why banks will benefit the most from outsourcing the critical processes of document archiving, management and retrieval.
Furthermore, the wide range of products provided in retail banking makes for especially complex document archives, all of which need to be easily accessible to provide competitive levels of customer service. In the capital markets, vanilla trades, such as FX and money markets, tend nowadays to be very much a matter of processing structured data in databases (rather than unstructured documents). Nevertheless, more complex instruments, such as derivatives are extremely document-heavy, and carry high risk as the instruments themselves are dealing with such huge exposures. As a result, the cost of manually processing all the background checks and balances is very high, and any document management efficiencies that can be introduced will usually result in very considerable savings for the institution.
Anacomp’s research also adds credence to the view that ‘back-office’
Chris Haden, Managing Director, Anacomp, comments, “Managing the cost of the increasing burden of regulatory compliance is top of the agenda for most UK banks, and the obvious economies of passing business processes to an expert third party is attracting a growing number of organisations to the outsourcing option. Our research focused on quantifying financial savings, because one of the major benefits an organisation gains from outsourcing – whether onshore or offshore – is to free up working capital. Nowadays, third-party services have developed to meet the whole range of banks’ outsourcing needs, from secure offsite back-up of email archives, to long-term storage of customer documents for legislative purposes, to remotely hosted, web-based systems for simultaneous, secure access to online documents.
