In our recent “Race for Change” predictions report (available for subscribers here), we highlighted the need for Financial Services companies to rely more upon third-party vendors as they try and cope with the overwhelming demands of regulators, customers and new competition. The required updates and additions to their IT systems and infrastructure, particularly if they have large, stressed legacy estates, will mean that bank and insurance company CTOs will need to look to new sources of capability and competence.
This imperative has been brought into sharp focus by two recent announcements. Vernon Hill, Chairman and founder of Metro Bank, commented on the difficulties faced in the UK by challenger banks. He pointed out the contrast between the US and UK. In the US, Banks can access off-the-shelf systems which are scale-advantaged, cheap to install and where the provider keeps them up-to-date. This compares with the UK, where banks “build their own systems and you can see how far that has got them”.
UBS has decided to outsource large parts of its Fixed Income technology infrastructure to Murex and Ion Trading (according to Reuters). This follows similar deals, such as the decision by UBS to outsource part of its reference data operation to a joint venture between Markit and iGATE, see here. As Financial Services companies search for ways to increase their agility and to transform their costs, they will look to capable, well-resourced suppliers with good domain knowledge to meet their strategic needs.
In our FinancialServicesViews Market Trends & Forecasts and Supplier Landscape reports we have considered this theme at greater length and we will be returning to it later in the year. If you would like to subscribe to FinancialServicesVIews, please contact Deb Seth of our Client Services team.