Niyamath Parveez

One thing that the recent economic instability has caused is a larger degree of mistrust or displeasure at the banks. It appears that the banks around the world are being viewed as the cause for the recession ad the relationship between client and bank has changed extensively in the past year. Whether the relationship is able to be rebuilt is unclear but there is no doubt that the banking institution and industry has a lot of work to do to get people onside once more.

This means that bank managers and industry bosses will have to spend more time contemplating what decisions they should take. Previously, the financial bottom line would have been the only issue of note for the industry to worry about. Pursuing profits is not unreasonable for any firm to attempt but give the impact it has caused the world, there will be many who believe a bank should behave in this manner. Therefore, any decision now made by a bank has to be balanced against a number of other issues.

This can be seen in the way that the Bank of Tanzania (BoT) has changed its attitude towards outsourcing as a solution to their labor costs and problems. Outsourcing is one of the most effective ways for any company to become more efficient and effective with respect to their daily activities. There are many different tasks that a banking institution can perform through utilising outsourcing, hence why it has been so popular in recent times. That has changed though with the massive swing in public perception towards the bank. The money grabbing and cost cutting behavior which was not a concern to the public in the past has now become a major political issue for people all around the world. All of which means firms have to be give more deliberation to what they undertake.

BoT has decided to enforce restrictions on the number of banking companies and financial institutions throughout the country. This move has been taken to improve the stability of the banking industry and financial systems. Considering the impact the world economy will have on smaller nations, being able to implement matters such as these are vital to ensure any disruption is minimized. A change in attitude for the banking industry is sure to be seen as a good way of increasing consumer confidence in the system, hopefully making it less of a “them and us” situation, which currently prevails.

A change in the way that firms manage and regulate themselves will also lead to more management involvement, which will hopefully improve the level of management practises. There is no doubt that outsourcing brings a great deal of benefits to a company but it can lead to a loss of skills or knowledge. Placing a block on outsourcing will enable all management levels to reconnect with their business and hopefully their consumer base. The long term benefit by the BoT moves may not please those that are pro outsourcing but for the greater good of the local economy, this decision should be greeted with quiet optimism.

Not many people in Britain have trust in banks or the banking system these days but the one where they have a lot of mistrust towards is the Royal Bank of Scotland. Such is the hatred towards Sir Fred Goodwin, the former chief executive of the group, who has coined in huge bonuses despite being at the helm for the banks demise; his homes have been attacked by graffiti artists and local thugs. Goodwin has spent a lot of time out of the country but this has not dampened public anger over him and this looks set to continue for a long time to come. The bank is now majorly owned by the government, over 70% is in the hands of the government but this does not appear to be an indication that controversy surrounding it is going to die away at any point soon.

Job losses in the banking industry have come far and wide in recent years and have been the source of much unhappiness. When the pension and bonus payments claimed by the fat cats in charge of these organizations are discussed, it is inevitable that people at the bottom end of the market who have lost their job will feel angry. Given that RBS is now in the hands of the government, the news that the company may be looking to outsource a large batch of its work is not going to be met with public acclaim. In fact, a whole new degree of public hate and animosity may be on the cards with regards to this famous bank.

The company has a huge need to trim its labor costs and sees outsourcing as a fantastic way of doing this. The organization has so many backroom jobs and maintenance projects that streamlining their actions and utilizing outsourced skills at a far lower rate of pay is a solution that will be a great help. For any firm needing to rapidly and drastically reduce the amount of money it pays on labor, outsourcing to a location like India is a great solution. It just may not be a popular one with the people who lose their jobs, their friends and family or indeed the local community who will also feel the tremors of job losses. The overall aim of lower labor costs needs to be balanced out with the public needs but when you have to reduce costs by over $4m before 2011, it is hard to hear the cries and pleas of those being made unemployed.
RBS does appear to have a strategy for their outsourcing plans and they mainly revolve around the non IT elements of their business. This should allow them to keep a safe control over the data protection requirements they need to adhere to but should allow them to benefit in other areas. It is far too early to say whether RBS will be successful in cutting the costs they have aimed to but outsourcing key tasks to India is the right move for doing so, even if it is not the popular choice.

Not too many people are going to have sympathy for those in the baking industry but there are definitely hard times in that industry. Many observers believe that the reckless behavior of banks for the past few years has been the major factor in the current economic downturn and that their happiness to dish out loans to all and sundry has left many people in a bad way financially. This has led to many consumers to believe that whatever happens to bank staff is fair game but it should be remembered that they are people too with families to look after. This means that any consumer which finds it funny to gloat at anyone who loses their job, even if they are in the banking industry is probably a bad person. That said, there are definitely job losses taking place in this industry and there will be a lot more to come too.

Many banks now have to look at their structure and determine where they can make savings to give themselves a better opportunity of staying solvent. In recent years, outsourcing has proved to be a tremendous way for companies to save money and lower their labor costs and this is something that is definitely happening within the banking industry at the moment. There are many areas in which a bank or building society can look to place their work with an external agent without causing any great detriment to the work or service they provide customers.

This is very important because although there is a great need to lower costs and be far more streamlined and efficient, there always needs to be the focus on customer service. With so many banks operating at the moment, there is a lot of competition and if one bank starts to under-perform the rest of the banks operating in the area would be keen to swoop on their customers. Today’s modern consumer has changed and brand loyalty to entities like banks no longer exists. Your parents may have been happy signing with a bank and staying with them for their entire life but that no longer needs to be the case. If a bank provides poor service or lower savings rates or charges higher rates for an overdraft, they are likely to miss out on a great deal of customers. This is where outsourcing is a great opportunity as it can solve both of these problems. Yes, it will help lower the labor cost involved with operating a bank but it should also maintain the high standards that customers demand.

This is because some of the firms who are supplying the outsourcing capabilities are market experts in their respective fields. If they are providing support to a number of banks around the world, they will develop an opportunity to gain experience and become better equipped at dealing with problems and issues that may arise. This is why so many banking firms are looking to a third party agent to assist them with all their banking needs.

It never ceases to amaze how many different issues or industries are turning to outsourcing as a solution to some of their problems. Not every problem at the moment is related to cash flow and debt recovery, although it may seem like that for some people, there are issues with trying to keep up with demand and pushing technology forwards. These are also important reasons to use a form of outsourcing and two of the major banks in India are looking to use outsourcing to aid the installing and maintaining of their ATM systems in the year ahead. This is part of a general rise in the trend of outsourcing ATMs and also linked to these two firms hopes of dramatically increasing the size of their network in the year ahead.

Although negotiations are in the early stages, it is believed that the Axis Bank is currently in discussion with a number of firms including BAIL, Euronet Worldwide, Prizm Payments as well as another two firms in order to conclude an agreement. At the same time, the Bank of Baroda has welcomed tenders from a number of companies who would be interested in installing and supplying ATMs as well as assisting with the maintenance of them. It is expected that the Bank of Baroda are looking to set up 500 new ATMs at a mix of locations both at their own premises and at other locations.

Using firms in this manner indicates that the benefits of outsourcing can be used to promote expansion and not just be about cost saving techniques. In fact, one of the major reasons why the Bank of Baroda are planning this rolling out of new ATMs is to further the firms hope of introducing bio-metric ATM machines. This would see the need for traditional chip-and-pin or number recognition ATMs fall and hopefully greatly improve the security aspect of the ATM. This is clearly not something that is cheap but given the customer concerns about safety and security, this move to bio-metric ATM machines could be a great leap forward for the banking industry. The Bank of Baroda is hoping to have 70 of these bio-metric machines available at the end of their roll-out.

In some countries around the world, the introduction of ATMs is greeted with displeasure and many of the outsourced machines incur a cost for the user anytime they use the machine. In more rural areas where there is not an abundance of cash machines, this can be an extremely costly affair for the user and has led to many people being unhappy with their banks for following this method of outsourcing. However, this is not the case in India with the Reserve Bank of India issuing guidelines saying customers cannot be charged for using an ATM machine which means it is not so costly an experience for bank customers in India. This guidelines means there is not the same level of stigma or anger attached to outsourcing companies working with banking firms to provide a better service for customers and hopefully make it possible for more people to gain access to their funds.