As presented in the National Seminar on Banking Divergence , Organised by Department of Commerce and Management Studies, Sri Achutha Menon Government College, Thrissur, Kerala – 21st February 2012
A STUDY ON THE TRADITIONAL OUTSOURCING VS. MULTI-SOURCING IN BANKING INDUSTRY
– with special reference to Business Process Outsourcing
Banking Sector is termed as an industry because of the vast spheres in operations. The banking industry in India has been on a boom with the minimizing of risk involved in cash trading and transactions. Banks play as secured institutions with the internet transactions being the fastest and safest mode of transferring money which is an accepted fact world over. The banks started getting closer to common people as the explored avenues in retail. Most of these banks within the banking industry have provided the consumers with so many products and services that it is impossible not to fall for their products. They offer various schemes on their products, like offering free gifts or higher returns for family savings account.
As globalization continues to grow, banks in mature markets will look to outside expertise from global providers. Technology is a key driver in the banking industry, which creates new business models and processes, and also revolutionizes distribution channels. Banks which have made inadequate investment in technology have consequently faced an erosion of their market shares. The beneficiaries are those banks which have invested in technology. Adoption of technology also enhances the quality of risk management systems in banks. Recognizing the benefits of modernizing their technology infrastructure banks are taking the right initiatives. In this context banks need to clearly define their core competencies to be sure that they are investing in areas that will distinguish them from other market players, and give them a competitive advantage. A further challenge which banks face in this regard is to ensure that they derive maximum advantage from their investments in technology and avoid wasteful expenditure which might arise on account of uncoordinated and piecemeal adoption of technology; adoption of inappropriate/ inconsistent technology and adoption of obsolete technology. This paper will provide the readers with an understanding of the transformation from traditional outsourcing to modern multi sourcing concepts in the banking industry. It also highlights the challenges and trends in the banking industry which is influenced by globalization and technological advancements.
Key words: BPO, Technological Advancements in Banks, Banking divergence, Multi sourcing in Banks