3.2.1. The in-, near- and off-shoring
debate continues
Achieving the right balance of on-shoring, off-
shoring and near-shoring is a continuous challenge
for many banks, but the concentration on this was
intensified by both the global financial crisis and the
consequent tightening of the regulatory landscape.
One of the banks that we interviewed explained that with
regards to off-shoring, “the physical proximity to other
financial services companies and clients is hugely important”,
particularly for the front office. But for middle and back office
teams the argument is not quite so clear. As the boundaries
between front, middle and back office continue to become
more blurred, “off-shoring is much more than just moving
everything out to Mumbai”. Another bank explained that, “it’s
about having the right people in the right place, bearing in
mind demographic sensitivities and cost implications”.
Ultimately the aim is to remain competitive, and the decision
to off-shore depends on whether the financials are attractive,
what functions a bank would consider off-shoring, and
regulatory issues around customer data and interaction.
But from a property perspective, a bank needs to be sure
that the building stock in the off-shore location meets its
global demands and standards for workplace – and in many
locations, finding the right stock is difficult, especially close to
a talented labour pool.
The effect of regulation is also a significant consideration
– banks have told us that fears of regulatory fines can
outweigh the cost and resource benefits of outsourcing and
off-shoring. Some economies have very strong rules about
needing a physical presence in the country in order to do
business there. Japan and South Korea in particular legislate
for this, so that banks must have a large presence there to
accommodate the needs of local cultures and jurisdictions.
Back office and infrastructure services in general are less
affected by laws and regulations.
23
The future of the financial workplace
|
September 2014
