Financial Services – Banking

Major international bank uses Procurement (source-to-pay) Outsourcing to reduce costs and more effectively manage spend

Scope: Procurement
Geography: Global

Situation

A leading international financial service provider with 69,000 employees servicing clients in over 76 countries suffered from one of the highest cost-to-income ratios in the industry. The bank instigated a significant cost cutting and restructuring program with a greater focus on innovative sourcing solutions and leveraging of offshore sourcing and/or outsourcing. This program included outsourcing the procurement function through a competitive tendering process.

Approach and Solution

The bank’s procurement system was replaced by the supplier’s platform, interfaced into the bank’s retained SAP systems. All procure-to-pay processes and some strategic sourcing activities were moved to the supplier; support came from local hubs and offshore locations in India and Bratislava. About US$6 billion of spend is managed through these processes. The bank retained some front-end strategic sourcing activities and can also tender individual sourcing projects to the supplier or other suppliers on a case-by-case basis.

Result

The bank can now focus on effectively managing its strategic suppliers.  During the course of the deal it is expected that the operating costs of procurement will be reduced by around 25% through offshoring and aggregation of resources within a multiclient environment. In addition to the direct cost savings, the bank expects to save around US$1 billion in improved compliance during the course of the 7-year contract.
 

Multinational financial services firm creates Outsourcing Center of Excellence to gain more value from its outsourcing relationships

Scope: Multi function, Center of Excellence
Geography: Global

Situation

A global financial services company with extensive banking and brokerage services in North American and Europe already had many IT, ADM, and BPO outsourcing relationships. The company wanted to create a common approach to evaluating, creating, and managing performance of its entire outsourcing portfolio.

Approach and Solution

We designed the enterprise level governance organization, developing detailed processes, policies, and an operating manual. We also assisted in staffing and training functional personnel, as well as in integrating a large outsourcing effort into the model as it was being negotiated.

Result

Now the company knows the real performance of its outsourcing portfolio, enabling it to adjust its sourcing strategy and focus efforts on areas that will offer maximum return. Its stronger relationships with suppliers have also resulted in numerous opportunities that would have been otherwise missed. As a direct cost benefit, standardized processes for evaluating opportunities, evaluating suppliers, and structuring deals has streamlined the overall sourcing process. Specifically, overall governance costs have been reduced by leveraging the enterprise model with common functions being performed by the Center of Excellence.