Capco: Costs driving financial industry towards utility model
Scott Claus, Capco
Financial technology consultancy Capco has found that cost pressure will drive the uptake of the utility model in finance. In its latest report, ‘What Makes Utilities Useful,’ it surveyed senior banking executives’ attitudes towards adoption of a utilities-style approach.
With responses from 102 financial services professionals across 69 financial institutions in 26 countries, they found the three most significant drivers for increased uptake of utility models – cited by over 80% of respondents – to be:
- Reducing costs
- Coping with variable volumes
- Achieving predictable service and quality levels
The main targets for utility services were market and reference data management (73%) and reconciliation and exception management (61%). While utilities are prominent on the radar of most financial institutions, the results reveal a wide spread – in attitudes and progress – around practical implementation. Roughly two-thirds of those surveyed agreed compliance is a significant driver of utilities uptake, but only about a third have begun actively working towards implementation of such a model. Attitudes are changing, however, with an additional third readily admitting they would now consider a utility model to help them achieve regulatory maturity.
When asked about potential obstacles to a utility model, the most significant concerns included:
- Internal culture and territorial ownership of IT and processes
- Lack of standardisation
- Internal system, operations and business structure in need of simplification
- Issues around data security and segregation
Scott Claus, head of the Technology Services Domain, at Capco said: “Our prediction is that, in 2016, banks of all profiles will seek answers to the continuing need to reduce cost while enhancing customer service. We believe they will find many of those answers in the intelligent application of industrial scale technologies offered by third parties to enhance the efficiency and reduce the cost of technology, data and process management.”
The survey defined a ‘pooled utility model’ as utilisation of an external party that serves multiple customers to provide a pay-for-usage service in technology, data or process management.
Reported by Dan Barnes
