DALLAS, January 19, 2011 ─ Global lending Business Process Outsourcing (BPO) is a US$21-23 billion market that is only 12 percent of an estimated US$190-194 billion market potential, according to a Financial Services BPO research study by Everest Group, an advisory firm on global services.
Everest Group’s study, Global Lending BPO Across Credit Cards, Consumer Loans and Commercial Loans finds the United States accounts for more than 50 percent of the market, followed by the United Kingdom, with financial services firms leveraging third-party service providers, shared services/captives or both models for business acquisition and account servicing of credit cards, consumer loans and commercial loans.
The Everest Group study includes analysis of market size and potential of global lending BPO by business segment and function; adoption trends measured across buyer size and geography; prevalence of various sourcing models; maturity of lending BPO sub-functions across business segments; and the service provider landscape across business segments. The analysis coverage spans across third-party outsourcing and shared services/captives and leverages information from about 6,000 financial service organizations with assets over US$1 billion; interviews with executives of leading financial organizations and coverage across more than 30 lending BPO service providers.
“The top 100 financial services organizations are mature clients of lending BPO with well-established models,” said Saurabh Gupta, vice president, Research. “Organizations with assets between US$10-500 billion represent the most attractive segment going forward due to relatively limited outsourcing penetration and significant scale of operations for a viable sourcing business case.”
Smaller organizations with less than $10 billion in assets, which account for nearly 75 percent of all financial services firms across the globe but control less than 10 percent of total assets, represent a fragmented market segment.
Other study findings include:
- Asia Pacific is one of the emerging markets for lending BPO with India showing a strong appetite for adoption; meanwhile adoption in Rest of Europe is challenging due to lack of uniformity in laws, languages, processes and culture.
- Consumer loans BPO, including mortgages, represents the largest lending BPO segment accounting for nearly 50 percent of the market, followed by credit cards at more than 30 percent and commercial loans accounting for less than 20 percent.
- Account servicing comprises nearly 80 percent of the market and business acquisition accounts for the balance 20 percent.
- There is nearly a 50-50 split between shared services and third-party providers serving the lending BPO market.
“Concerns about perceived risk, loss of control, and complexity often lead an organization to leverage the shared services model,” said Rajesh Ranjan, research director and co-author of the report. “Drivers for sourcing a third-party provider include cost reduction, productivity and effectiveness gains. Many large firms leverage a combination, or hybrid, to gain benefits from both models, maintain flexibility and track market evolution.”
Utility-based service providers, including FIS, Fiserv, LPS, First Data, and TSYS, dominate the lending BPO market with nearly 90 percent market share of the US$11-12 billion lending BPO third-party market. The current share of BPO-centric service providers, including Genpact, HP, Tata Consultancy Services, ACS-Xerox and others, is currently only at around 10 percent but they are growing nearly three times faster.
For more information about the report, Global Lending BPO Across Credit Cards, Consumer Loans and Commercial Loans or other Financial Services BPO reports and research services, please visit research.everestgrp.com, email [email protected] or call +1-214-451-3110.
Additional Everest Group research reports with insights on this topic or complementary content that may be of interest include: