Onshore, Offshore & STP

Transcription

1 Onshore, Offshore & STP Jonathan Willis Operations Director 27 th June, 2006 Agenda 1. Onshore Current UK Pressures Market and resource availability Trends 2. Offshore Countries Market costs and resource availability Lessons to date 3. STP Current market and Platforms Current Penetration What should the market look like in

2 Onshore Onshore - Current UK Pressures Costs Workforce costs in UK vs. Offshore markets UK premises, pension and overall employment costs Cost of doing business in UK (taxation etc) Ethic and education standard UK work ethic vs. Offshore ethic Poor UK education and literacy standards 2

3 Typical administration expense profile 10% 11% 9% 70% Salary & Benefits Computer Hardware and equipment Occupancy All other Onshore Market and Resource availability First time Graduate numbers (source National Statistics office) 2001/02 267, /05 306,365 Article in People Management 15 th June 2006 Labour turnover is up, but companies still struggle to recruit the right staff Eight-two per cent of firms had recruitment difficulties last year John Philpott, CIPD chief economist, told PM: "There was a downturn in the jobs market last year and there wasn't an improvement in candidate quality. Quarterly Survey Report spring 2006 KPMG & CIPD Pay Outlook fewer employers are expecting increases in the range 0-2% and more are expecting increases in the range of 3-4% 3

4 Onshore Trends Reduce operating costs Offshore the easiest areas with the highest return Initially call centers Especially out bound / cold call areas Out of hours support areas Simple processes in terms of data entry type activity. IS THIS CORRECT? With falling quality of candidates in the UK where do you build expertise in the future? Offshore 4

5 Offshore Countries First debate is near shore or far shore Near shore locations: Cardiff Belfast Eastern Europe Total cost pressures generally rule out UK based locations Lack of infrastructure and current market have historically discounted Eastern Europe although this is changing with the drive of cross border fund ranges and costs in the traditional service areas of these funds being Luxemburg and Dublin Offshore Countries Analysis Criteria Short list - Net Cost differential 1. India - Security 2. South Africa - Language 3. Thailand - Infra-structure - Staffing Discounted - Time Zone 4. Low cost UK areas - Culture 5. USA - Client Reaction 6. Canada - FS Experience 7. Sri Lanka 8. Russia 5

6 Offshore Market Wide resource pool High birth rates Improved life expectancy rates Well educated and trained workforce Motivated Salary related costs typically between 25-50% of UK costs Indian Example Resource Availability Qualifications B.COM ICWA / CA (Inter or Final) MBF MBA M.COM LAW, DBF 0-1 yrs. 35% Experience Profile (Years) > 7 yrs. 14% 1-5 yrs. 38% 5-7 yrs. 13% Target Sources: - Mutual Funds/ Brokers - Stock Exchanges - Depositories - Custodian Banks - B.Com Graduates from Reputed Institutes 6

7 Offshore - Lessons to Date Personal contact does not work offshore Backlash against offshore call centres Powergen relocating call centre to UK Indian offshoring company now looking to open a call centre in Belfast Must train in culture as well as operations Turn over high in call centre activities but much less in standard BPO activities Treat offshore operations as though they were in the same building STP 7

8 STP Current Offerings EMX SWIFT Clearstream Vestima+ Crest/Euroclear Fund Settle NSCC Yesterday s UK distribution model Tied agents Life & Pension Providers Proprietary products Direct IFA Banks / Building Societies Retail Customer Investment management companies UT, OEICS, PEPs, ISAs Direct IFA Retail Customer 8

9 The changing UK model Life & Pension Providers Tied Agents Direct Bank / Building Societies Open architecture Proprietary products Platforms IFA Retail customer PRODUCT AGGREGATION Investment management companies UT, OEICS, PEPs, ISAs Collective retail administration Direct Fund Supermarket share through IFA channel 2004 Gross Sales 2008 Gross Sales (estimated) Fund Supermarkets 75% 25% 75% 25% Source: CSTIM, collectives only 9

10 What will happen to the direct consumer? Go to an IFA and end up on a platform? Go to a direct platform? Stay on the main register? European Distribution Evolving to 3 rd Party Distribution 100% Manufacturing Perspective % Distribution Perspective 80% 60% % 60% % 20% 0% % 20% 0% Sales via quasi in-house channels Sales via own bank branches Sales via 3rd party distributors Proprietary funds From 3rd party suppliers Source: IFST ISSA Symposium Fayez N Akhras 10

11 How do you deliver standardisation across so many markets? Others (16) 14.0% UK 9.3% France 20.1% Spain 4.2% Lux 22.3% Italy 6.5% Ireland 8.6% Germany 15.1% Source: EFAMA - Stats as at 30 September 2005 The biggest challenge in Europe 11

12 What should we do? What should 2010 look like Retail investors supported by either direct ecommerce applications for main register holders or platform ecommerce applications with settlement via BACS Institutions using a single message standard across a range of delivery mechanisms with settlement via Crest/Euroclear The range of services that should be fully automated should include all areas of current service. Is Offshore only an interim step? 12

13 Thank you 13