Global Sourcing Market Update: September 2008 Preview Deck Topic: Global Sourcing in Banking, Capital Markets and Insurance

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1 Global Sourcing Market Update: September 2008 Preview Deck Topic: Global Sourcing in Banking, Capital Markets and Insurance

2 Background and scope of the research Background of the research As pioneers of global sourcing, financial services organizations played a significant role in the growth and maturation of the offshore services industry. Subsequent to the success of offshoring IT Application Development & Maintenance (ADM) and customer service functions, these organizations are now sourcing core, industry-specific business functions, and also IT infrastructure from lost-cost locations. In light of the credit crisis in the United States that has adversely impacted the financial services industry worldwide, all key stakeholders (i.e., buyers, suppliers, captives, investors, technology providers, and country associations) are interested in understanding key global sourcing trends in financial services. Further, given the increasing adoption and high growth potential in Business Process Offshoring (BPO), an understanding of the current market maturity and the future outlook for BPO in financial services is also becoming increasingly important. Scope of this report This research examines global sourcing trends for three key financial services segments banking, capital markets, and insurance. We focus on: Overview of global sourcing for financial services BPO trends for financial services Market maturity and future outlook Key implications 2

3 Table of contents (page 1 of 2) Topic Page no. Section I: Introduction and key messages 4 Background and scope 5 Scope of study 6 Key messages 7 Section II: Overview of global sourcing in financial services 9 Summary 10 Adoption trends 11 Supply trends 14 Section III: Global sourcing trends for BPO in financial services 16 Summary 17 Market maturity 20 Value drivers 23 Delivery models 25 Supplier landscape 30 Section IV: Market maturity and future outlook 34 Summary 35 Banking deep-dive 39 Capital markets deep-dive 44

4 Table of contents (page 2 of 2) Topic Page no. Section IV: Market maturity and future outlook (continued) 34 Insurance deep-dive 50 Future outlook 57 Section V: Implications 63 Implications for buyers 64 Implications for suppliers 65 Section VI: Appendix 66 Case example: American Express 66 Case example: Aviva 70 Glossary of terms 74 References 78

5 Overview and abbreviated summary of key messages (page 1 of 2) This research report provides an overview of global sourcing trends in financial services with a special focus on BPO in financial services. It examines and contrasts market maturity and adoption trends, value drivers, sourcing models and the supplier landscape, across the three key financial services segments banking, capital markets and insurance. This report also provides a detailed assessment of the current BPO market maturity and future BPO opportunity areas for each of the three financial services segments. In addition to providing key implications from the research for financial services buyers and suppliers, this report also provides two detailed case examples of global sourcing leverage by financial institutions. Some of the findings in this report, among others, are: Overview of global sourcing in financial services The financial services industry, which pioneered the adoption of offshoring, continues to account for approximately 40-45% of the global sourcing industry worldwide Financial services buyers across banking, capital markets and insurance, have large footprints offshore in terms of headcount, functions being sourced, and delivery locations Global sourcing trends for BPO in financial services Insurance is the most mature segment of financial services. Horizontal functions are currently more mature than vertical-specific functions Financial services buyers have pioneered multiple sourcing models and continue to innovate with more complex delivery models using a mix of captives and suppliers, across multiple locations 5

6 Overview and abbreviated summary of key messages (page 2 of 2) Market maturity and future outlook The five-year market opportunity for financial services BPO is US$ billion for India alone. This represents a growth opportunity of times the current market size for banking and capital markets, and times for insurance While horizontal BPO processes have pioneered growth to date, future growth is likely to be driven by industry-specific BPO delivery 6

7 This study offers four distinct chapters providing insights into key aspects of global sourcing by financial institutions; below are four charts to illustrate the depth of the report Offshore leverage by financial services companies Aviva Deutsche Bank Standard Chartered American Express HSBC ABN Amro Citigroup Morgan Stanley JPMorgan Chase UBS Bank of America AIG ILLUSTRATIVE Delivery locations for key financial services organizations Mexico Mexico city Chile Santiago Brazil Sao Paulo UK Olsztyn Glasgow Lodz Poland China India Shanghai Mumbai Delhi Metro Manila Chennai Singapore NOT EXHAUSTIVE Bank A Bank B Bank C Financial services BPO maturity Market value creation Banking BPO Insurance BPO BPO market for financial services Capital markets BPO Pioneers Emerging rapid growth Reaching maturity Maturity Source: Everest Research Institute (2008) Offshore market maturity Insurance Vertical-specific BPO processes Processes Functions Horizontal Functions Product development and business acquisition Actuarial data processing Actuarial analysis and review Proposals, illustrations Agent and broker Regulatory and compliance Product testing New business Initial policy creation Underwriting Premium collection and accounting Policy issuance Member enrollment and Customer interaction and support Finance & accounting Human Resource Management Procurement services Knowledge services Mature Credible Emerging Policy servicing and reporting Policy servicing financial Policy records Eligibility requirement and verification Claims processing Initial claims processing Claims Claims review and investigation (adjudication) Claims adjustment and disbursements Fraud detection and Claims litigation, recovery/ subrogation 7

8 Appendix: Additional research references The following documents are recommended as complementary content that may be of interest to the reader of this report 1. Bank of the Future (ERI R-0169); With the increasing use of outsourcing and offshoring in the banking industry, the fundamental operating model of banking is changing. This report will assist companies in understanding the changes in the banking operating model in order to better anticipate the emerging trends and responses required to manage the increased complexities and risks. 2. BPO Market Update: Indian Supplier Landscape (ERI R-0160); This research includes comprehensive coverage of key Indian business process outsourcing suppliers including evolution, market segments, functional and vertical capabilities (with a view on financial services capabilities of buyers). 3. Indian Captive Market Trends and Implications (ERI R-0162); As suppliers mature, there is a strong buzz in the market that the captive business model is under threat. However, in contrast, this Everest study indicates that captives are a large and significant section of the Indian offshore services market and continue to grow rapidly. The study explores the Indian captive landscape in detail and indicates that captive adoption is spreading to new industry verticals and functions. For more information on this and other research published by the Everest Research Institute, please contact us: Jimit Arora, Research Director: Sarthak Brahma, Senior Research Analyst: jarora@everestgrp.com sbrahma@everestgrp.com Everest Research Institute Two Galleria Tower Noel Road, Suite 2100 Dallas, TX Phone: info@everestresearchinstitute.com 8

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9 Get the answers today that lead to tomorrow s success Everest Research Institute has the resources, experience, and capabilities to provide companies with the strategic intelligence, analysis, and insight that are crucial to making the right decisions in today s outsourcing marketplace. With the vision of our leadership team, the personal commitment, and indeed, the passion of our professionals to deliver real value to our clients, our organization is unsurpassed in its ability to guide your company s future success. Everest Research Institute Two Galleria Tower Noel Road, Suite 2100 Dallas, TX U.S.A info@everestresearchinstitute.com Everest Group 150 E., 52 nd Street, 16 th Floor New York, NY U.S.A Everest India Ground Floor, Tower A Unitech Business Park South City - I, Gurgaon National Capital Region India Everest Australasia Level 6, 90 Mount Street North Sydney, NSW 2060 Australia Everest Canada The Exchange Tower 130 King Street West, Suite 1800 Toronto, ON Canada M5X 1E Everest UK 1 st Floor, Accurist House 44 Baker Street London, W1U 7AL United Kingdom Everest Netherlands & Continental Europe Atrium Building 3 rd Floor Strawinskylaan ZX Amsterdam Netherlands Everest Australia 409a Wattletree Road East Malvern Melbourne, VIC 3145 Australia

Topic: Global Offshore Captive Landscape and Trends Focus Geography China

Topic: Global Offshore Captive Landscape and Trends Focus Geography China Global Sourcing Report: October 2011 Preview Deck Background and scope of research The global sourcing market has evolved and grown