Wed, May 19, 2004 - Page 10 News List

Financial sector urged to outsource more work

By Jessie Ho  /  STAFF REPORTER

The nation's financial services sector may have to consider outsourcing non-core businesses to stay competitive, industry representatives said at a forum yesterday.

Companies that are unaware of the potential cost savings of contracting out non-core operations, such as information technology and call centers, should research the opportunities they are missing out on, they said.

"Taiwan's banking sector is in the middle of consolidation," Egbert Chan (陳永康), senior service executive of IBM Corp's financial service sector in Hong Kong and Taiwan, said at the forum.

"After completing the consolidation work, banks will find outsourcing a key to successfully transform their business," he said.

In view of a wave of banking mergers and acquisitions across the region, the forum also invited a Singaporean banker to share his experiences.

"The financial environment has become more complex and competitive, and so contracting out non-core operations, including the IT sector, procurement and call centers, is the best way to achieve cost-efficiency," said Francis Ng (吳維清), IT director at the Singapore-based DBS Bank (Hong Kong) Ltd.

The total value of merger and acquisitions among banks in Asia (excluding Japan) reached US$24.5 billion in the first quarter of the year, up 61 percent from a year ago, Ng said, citing a research report from consulting firm Thomson Financial.

Ng said that his bank had saved 20 percent of its IT costs since outsourcing the work to IBM in 2002.

Kim Gun-woo, a financial sector associate partner of IBM's business consulting services division, later joined the discussion with an example of South Korea's largest bank, Kookmin Bank.

Kim said IBM had helped the bank to tackle problems such as operation process redundancy, inconsistent customer information and IT product design after it merged with various banking institutions in 2001.

Although local industries have generally acknowledged the benefits of outsourcing, few companies took advantage of the benefits because of concerns over data confidentiality and resistance to change, said Jason Chen (陳永生), a manager of IBM Taiwan's business consulting service sector.

Currently, Bowa Bank (寶華銀行), formerly known as Pan Asia Bank (泛亞銀行), is the only local bank outsourced its information technology department. Bowa and IBM signed a seven-year contract last month, through which Bowa expects to cut costs by 25 percent.

"Taiwanese banks have realized the importance of providing one-stop service by establishing holding companies, like the banking industry in other countries, and I believe they will further adopt the outsourcing model as others did," Chen said.

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