The plight of the UKâs building societies, which are suffering from an exodus of saver deposits as customers withdraw funds in response to record low interest rates, has already been the focus of a government initiative to promote greater sharing of resources among mutual organisations.
Chancellor Alistair Darlingâs recent publication of the Reforming Financial Markets white paper explored a similar model to that which
exists in many European countries, where financial organizations share back-office functions. However, the outsourcing of IT services can provide building societies with an alternative to pooling technology resources to remain competitive. Instead of the investment and servicing costs of operating expensive in-house IT systems, mutuals are switching the management and provision of key IT functions to outsourcing specialists to increase efficiencies and reduce costs.
NIIT Technologies, a global IT specialist outsourcing provider, has started work on an initiative to develop e-commerce services of a
major building society in the UK. Managed services solutions â which provide managed back-up and recovery, desktop, e-mail, network, security and storage solutions â are being used by building societies to enhance their service offering at a time when increased consolidation among major banks is putting further strain on their resources.
Mutuals which implement outsourcing infrastructure management are following in the footsteps of organisations across different industry sectors, which have recognized the faster speed and higher levels of data security offered by specialist outsourcing companies.
Ravi Pandey, UK Head of NIIT Technologies, said: âWe are seeing growing interest among building societies. More and more of our
customers are reporting the increased business benefits of managed outsourcing in the current economic environment as the speed and security allows companies to be more competitive and agile.
âIn rapidly changing market conditions the financial flexibility and savings on infrastructure, especially routine operations, are invaluable for businesses operating across a variety of sectors.â