Press Releases

Steady As She Goes: Life and Pension Insurance BPO Maintains 8% Growth Rate—Everest Group | Press Release

By | Press Releases

Cost-savings, customer experience, and opportunity to steer top-line growth drive L&P insurers’ demand for next-gen technology, InsurTech partnerships

The global life and pensions (L&P) insurance business process outsourcing (BPO) market grew at an 8 percent compound annual growth rate in 2016, similar to 2015. Growth is expected to be at 9 to 11 percent over the next few years, according to Everest Group. This steady growth rate is buoyed by margin pressures on insurers who continue to find offshoring attractive for cost savings and is simultaneously dampened by the continuing political uncertainties in the United Kingdom, which leads the market and accounts for almost half of the global revenue.

Although the growth rate is steady, the L&P insurance BPO market is witnessing numerous changes:

  • Customers’ expectations are changing, and demand for omni-channel customer experience is rising.
  • Buyers are looking for end-to-end partnerships for faster time-to-market and enhancing customer servicing.
  • There are constant regulatory shifts, and thus services such as regulatory reporting and risk management are more in demand.
  • Outsourcing is increasingly being viewed not only as a cost-saving opportunity but also as a source of business transformation.
  • The market is seeing an increasing emphasis on more complex and judgment-intensive work, such as analytics, risk management, actuarial and regulatory reporting.
  • Robotic Process Automation (RPA) has raised the potential for cost savings and efficiency and is steadily gaining traction in the industry.
  • Innovation is also being seen in pricing, with traditional pricing models such as FTE-based and fixed-fee models being gradually replaced by outcome-based pricing models.

“In the advanced insurance markets, premium growth has been stagnant but costs are rising, which puts considerable margin pressures on insurers. Further, for top-line revenue expansion insurers must now cater to the evolving needs of their customer base,” said Skand Bhargava, practice director, Business Process Services, at Everest Group. “In fact, the key value propositions for major service providers in 2016 were based on modern platform offerings and augmented customer service delivery capabilities. In 2018, we’ll see insurers bringing in more product innovations, leveraging partnerships with InsurTech firms.”

These findings are explored in a recently published Everest Group report: L&P Insurance BPO: Move or Miss—Innovation, Execution and Adoption of Digital Insurance.

This research examines the global non-voice, third-party L&P insurance BPO market. It provides detailed analysis of market size and growth, solution characteristics, emerging trends and the service provider landscape.

***Download a complimentary, 11-page abstract of the report here.**

Other key findings in the report:

  • The market continues to be primarily concentrated in North America and the United Kingdom. While the United Kingdom accounts for a lion’s share of the market, growth is primarily being driven by North America.
  • Uncertainty around regulatory regimes continues to persist, and insurers will need to invest in flexible systems to ensure compliance and reporting.
  • Discussions around the relevance of next-generation technologies—AI, Blockchain, and IoT—in L&P insurance have intensified, and some implementations have also been initiated by insurers in partnerships with InsurTechs and technology providers.
  • Service providers are simultaneously strengthening capabilities around value-added services—such as RPA, digitalization, analytics, risk management, and regulatory reporting—via organic and inorganic routes.

New center setups in Latin America Reaches All-Time High in Q3—Everest Group | Press Release

By | Press Releases

As expected, healthcare and IT outsourcing deals fall, service provider operating margins decline

Latin America was one of the bright spots in the global services industry in Q3 2017, with location activity at an all-time high, driven by a large number of new center setups in Mexico, Colombia and Costa Rica, according to Everest Group. Overall, location activity in offshore and nearshore locations marginally decreased in Q3 (350 transactions) compared to Q2 2017 (374 transactions).

Everest Group discusses these and other third-quarter developments in the sourcing industry in its recently released Market Vista™: Q3 2017 report.

*** Webinar Playback ***

Everest Group held a webinar on November 14 in which the findings of the “Market Vista: Q3 2017” report were reviewed. The webinar also featured a discussion about the attractiveness and risks of Latin American service delivery. To listen to a playback of “Practical Insights: Tips for Managing and Optimizing Service Delivery in Latin America PLUS a 3rd Quarter Market Vista Update,” click here.

Additional Q3 Trends:

  • There was an increase in research and development (R&D) center setups by technology and communications enterprises, reflecting their preference to insource next-generation services.
  • Healthcare outsourcing transaction volume declined due to uncertainty around regulatory changes in the United States.
  • Revenue increased quarter-to-quarter for offshore heritage providers (3.1 percent) but decreased 0.4 percent for global providers overall.
  • Operating margins for offshore heritage providers declined due to appreciation of the Indian rupee; operation margins for most global majors declined, reflective of declining revenue.
  • After reaching an all-time high in Q2 2017 at 49 setups and expansions, Global In-house Center (GIC) activity fell in Q3 to 36 setups and expansions.
  • The share of tier-2 locations increased compared to tier-1 locations.
  • ITO deals and application outsourcing services saw a decline.
  • Among new IT outsourcing deals and GIC center setups, the share of digital services provided increased compared to traditional services provided.
  • There are significant differences in the leading digital services supported by GICs versus those supported by IT service providers. GICs more commonly provide analytics (41 percent), cloud (24 percent) and cybersecurity (20 percent) services, whereas IT service providers offer primary cloud services (58 percent), followed by analytics (13 percent).

“The third quarter global services demand continued to remain sluggish. While on the outsourcing market, we continued to see increase in share of digital deals, number of new GIC setups marginally reduced after an all-time high in Q2 2017. What is interesting in this quarter is the resurgence of Latin America to support global services delivery to North America, with center setups at an all-time high,” said Salil Dani, vice president at Everest Group.

The Market Vista report highlights the trends in the fast-evolving global offshoring and outsourcing market, exploring the key developments across outsourcing transactions and Global In-house Centers (GICs), as well as location risks and opportunities and service provider developments.

***Download a complimentary 12-page abstract of the report findings here.*** (Registration required.)

Adoption of Service Delivery Automation in Business Process Services Grows More Than 80%—Everest Group | Press Release

By | Press Releases

BPS spending impacted by SDA can skyrocket to $10B by 2019 but will require a few kinks to be addressed.

The promise of next-generation benefits is powering explosive growth in the adoption of Business Process Service Delivery Automation (BPSDA), according to Everest Group, which reports that the number of BPS clients with SDA deployments rose by more than 80 percent year-on-year. SDA includes both Robotic Process Automation (RPA) and Artificial Intelligence (AI).

This growth in SDA is being driven not only by traditional drivers, such as efficiency and accuracy, but also by new-age drivers such as the need for enhanced customer experience.

“Increasingly, SDA is being used to enhance customer experience through much shorter response times for handling requests, round-the-clock availability, embedded intelligence, and reduced need to manually bridge gaps in technology,” said Rajesh Ranjan, partner at Everest Group.

However, although many more enterprises are adopting SDA, it is still rather nascent in the Business Process Services market today, says Ranjan. “Contrary to general belief, our data shows that the penetration and scale per BPSDA deployment is still quite low. One of the challenges is the mismatch between buyers’ expectations and reality, partly due to some inaccurate communication from service providers and automation vendors. However, the intrinsic benefits of SDA solutions, especially when combined with other digital components, the rising maturity of adopters and increasing sophistication of providers, suggest these issues will be addressed soon.”

As evidence of this low maturity of SDA, Everest Group points to the relatively meager amount of BPS spending on business processes where RPA has been applied. This amount is estimated to be US$700-800 million in 2016, or 2 percent of the addressable market, but it is expected to skyrocket in the future, reaching US$10 billion by 2019.

Another indicator that enterprises are barely scratching the surface of BPSDA’s potential is that a majority of current deployments (85 percent) involve Robotic Process Automation (RPA) only. Automation based on Artificial Intelligence (AI) is far away from widespread adoption.

These findings and more are discussed in Everest Group’s newly published report, “Business Process Services Delivery Automation (BPSDA)—State of the Market Report— 2017.”  This report provides an in-depth view of the state of the BPSDA industry, offering a market overview, solution characteristics, an analysis of the service provider landscape, and recommendations for buyers and service providers on how to prepare for the future.

Other key findings:

  • Finance and Accounting (F&A) and contact center emerged as the leading areas of application of SDA in BPS, followed by banking and insurance. The banking, financial services and insurance (BFSI) industry accounts for the majority of the clients with BPSDA deployments.
  • Customer satisfaction with BPSDA is rather low, primarily because there is a mismatch between buyer expectations and reality. Also, many providers and buyers look at SDA in isolation and lose sight of the bigger benefits of digital transformation powered by not only SDA but also other digital levers such as cloud and analytics.
  • Encouraging signs abound in the market. Awareness of SDA benefits is increasing, investments in advanced AI-based automation are rising, and recognition of the utility of models such as automation-as-a-service is growing.
  • SDA is likely to significantly impact the BPS industry in the near- to medium-term along five dimensions – service provider revenue and margin; pricing model; shoring model; talent model; and contract composition.
  • In the face of this disruption, enterprises should adopt a set of best practices to ensure success with BPSDA. Service providers must develop robust strategies to ride the wave of BPSDA disruption and back those strategies with smart investments.

***A complimentary 13-page abstract of the report is available for download here.*** (Registration required.)

Sourcing Professionals Face Increasing Complexity as Stakes Rise, Driving Changes at Everest Group | Press Release

By | Press Releases

Everest Group expands and deepens research in PEAK Matrix™ to address needs of sourcing professionals as industry turbulence swells.

Sourcing professionals face formidable challenges in the global economy as 2018 approaches, and they are looking for better strategies in an industry experiencing unparalleled turbulence. To provide sourcing professionals with broader and deeper data and insights for decision-making, Everest Group is expanding its research efforts while consolidating a diverse portfolio of comparative analyses under its flagship PEAK Matrix™ brand.

Sourcing Complexity Soars

The sourcing industry is changing fast, disrupted by digital technologies, shifting talent requirements and evolving service provider capabilities. Moreover, fluctuating geopolitical and legislative issues are causing enterprises to rethink substantial, long-held sourcing strategies and provider relationships.

***Read more about the turbulence in the global sourcing industry and the complexities faced by sourcing professionals in the blog “Sourcing Professionals Have a Tough Job”***

In the midst of this complexity, buyers of global services require fact-based research that assesses a growing body of providers, locations, products and solutions in order to make the critical decisions that so often impact a company’s top-line, bottom-line and viability.

Everest Group Expands Comparative Analyses Offered Via PEAK Matrix

Responding to these needs, Everest Group has announced that it is doubling down on its commitment to provide fact-based comparative assessments. The firm is consolidating its comparative analysis offerings—previously offered under a variety of product names—under its flagship PEAK Matrix brand and is expanding the market segments addressed in its research to include new functions, processes and industry verticals that market is demanding.

Everest Group’s PEAK Matrix™ is well known in the industry as a proprietary framework for assessing service providers and categorizing them as Leaders, Major Contenders, and Aspirants. (Companies that demonstrate strong upward movement in successive reports are recognized as Star Performers.)

Now the PEAK Matrix framework will be applied to the relative positioning of other key global services players and functions, such as location talent and cost, technology vendors, and digital adoption maturity. The robust research methodology associated with Everest Group’s PEAK Matrix will remain; PEAK Matrix assessments are based on a diligent process of collecting, validating and analyzing data points as well as interactions with various market constituents that include providers, enterprises and industry/country associations.

“Making decisions in today’s rapidly changing global services market is growing more challenging —whether you are recompeting an outsourcing contract, selecting a location for a global in-house center, choosing a new product/solution, or contracting for new tech services,” said Eric Simonson, managing partner and head of research at Everest Group. “These decisions can significantly impact an organization’s performance and an executive’s career. So we are expanding our hallmark service provider PEAK Matrix assessments to include the other key players and functions that sourcing professionals must consider. For simplicity sake, this expanded portfolio of comparative assessments will fall under our PEAK Matrix brand, since it’s instantly recognized as the industry’s unbiased, non-pay-for-play assessment framework.”

****Learn more about the PEAK Matrix portfolio of assessments here***

Life Sciences BPO Experienced Healthy Growth in 2016, But Political Uncertainty May Dampen Outlook—Everest Group | Press Release

By | Press Releases

Life Sciences companies, typically laggards in technology adoption, face increasing pressure to leverage analytics, IoT, automation and omnichannel marketing

The Life Sciences Business Process Outsourcing (BPO) market grew at a healthy pace of 10 to 12 percent since 2014 to reach US$4.6 billion in 2016, according to Everest Group. Increasing adoption by first-generation buyers, the rising cost of drug development and clinical trials, and a shifting focus towards a patient-centric model are some of the key contributors to growth in life sciences BPO market during this period.

Looking ahead, Everest Group expects the global life sciences BPO market to grow at a lower but steady pace of 9 to 11 percent over 2016-2018. Political uncertainty and other industry challenges in the key buying geographies of the United States and the United Kingdom (which together represent nearly 90 percent of the buying base) will contribute to a slight dampening of the growth rate. However, life sciences companies will continue to be highly motivated to optimize costs through BPO. Life sciences companies will look to their BPO service providers for help in expanding their businesses, reducing time-to-market, removing inefficiencies, reducing costs, achieving higher customer mindshare, and building multi-channel capabilities.

Adoption of life sciences BPO by first-generation buyers will continue to be a primary growth driver, but expansion of contract scope will contribute as well. Deals will increasingly include services around drug discovery and clinical trials, regulatory compliance support, analytics, and sales and marketing.

“Even though service providers in the life sciences BPO market are strongly positioned to help their clients capitalize on new technologies, life sciences companies are slow to adopt,” said Manu Aggarwal, practice director at Everest Group. “The reticence of life sciences companies to move beyond the occasional pilot program is stifling momentum in the market, which is hurting these enterprises and delaying the ROI they could be enjoying today.

“Nevertheless, analytics certainly has a greater role to play in the industry, and we’ll begin to see more advanced analytics solutions, as well as IoT and omnichannel marketing solutions, especially as the concepts of Real World Evidence and personalized medicine take hold,” continued Aggarwal. “We’ll also see more growth in Robotics Process Automation, driven by the more progressive service providers in the market as they seek to relieve the pressures on their profit margins.”

These findings and more are discussed in a recently published Everest Group report, “Life Sciences BPO—Annual Report 2017: Personalization Bug Biting the Market.” The report provides an overview of the Life Sciences BPO market and service provider landscape. It also explores key solutions (such as analytics, automation, omnichannel marketing, and IoT) that buyers and providers can leverage to mitigate challenges prevalent in the life sciences industry.

Other Key Findings:

  • While North America continues to be the most significant market for life sciences BPO, Europe and Asia Pacific have witnessed significant growth.
  • Slower growth in developed or mature markets of North America and Europe, along with increasing adoption of generics, continues to be one of the key challenges faced by biopharma companies.
  • Increasing pressure from regulatory bodies, especially to reduce prices and move jobs back to onshore, and rising expectations of customers are also likely to play a significant role in the future strategy of life sciences companies.
  • Increasing focus of biopharma companies on personalized medicines presents a whole new set of opportunities and challenges.
  • Despite a decline in share, the input-based pricing model (fixed fees and FTE-based) still dominates the life sciences BPO market.
  • Share of big pharma (revenue greater than US$20 billion) in the life sciences BPO market has declined over last few years.
  • Adoption of analytics is at a more advanced stage when compared to adoption of RPA in the life sciences BPO market; however, currently the primary focus area for adopting analytics involves the use of basic analytics (reporting and descriptive); use of advanced analytics solutions, such as predictive and prescriptive, is less common.
  • The market continues to remain consolidated at the top, with Accenture, Cognizant, Genpact, and TCS together accounting for more than 60 percent of the market by revenue.
  • While pharmacovigilance emerged as the most outsourced segment, sales and marketing emerged as the most competitive segment within the life sciences BPO market.
  • Emergence of startups and the entry of BPO+IT players has caused significant disruption in the life sciences outsourcing market, especially among some of the more traditional players.

***Download complimentary report abstract here***

Value-Based Care Initiatives—a $5.8 Billion Shot in the Arm for Healthcare IT Market—Everest Group | Press Release

By | Press Releases

Everest Group Evaluates VBC Adoption, Financial Performance of 40 Largest Health Systems

After enduring a slump in recent years, demand in the healthcare provider IT market is rebounding, driven primarily by value-based care (VBC) initiatives. In fact, according to Everest Group, growth of the overall healthcare provider IT spend over the next eight years will be completely driven by VBC initiatives, and by the year 2025, VBC will account for more than 50 percent of all healthcare provider IT spending.

VBC refers to efforts to align physician and hospital rewards with cost, quality and outcomes measures rather than quantity of services provided.

More than 75 percent of provider organizations have either adopted or are looking to adopt VBC in the near future, a trend that will drive the next wave of IT investments among healthcare providers.

“We expect that the VBC reimbursement model will take over the traditional fee-for-service model by 2025,” said Abhishek Singh, practice director at Everest Group. “Between now and then, healthcare providers make their most significant IT investments in the areas of patient engagement and compliance. In fact, in the next eight years, we forecast that an additional $5.8 billion will be spent on VBC-driven initiatives. Of that, $2.1 billion will be tied to patient engagement initiatives, and $3.3 billion will be tied to compliance initiatives.”

Other VBC-driven IT investments will fall into one of two general categories: diagnostics, treatment and monitoring; and financials and network management.

These findings and more are discussed in a recently published Everest Group report, “Healthcare Provider Annual Report 2017: Will the Real Value-Based Care (VBC) Please Stand Up?

This report describes the current state of value-based care and provides an evaluation of the 40 largest health systems with respect to their VBC and financial performance. The report also recommends a framework that health systems can use to accelerate their value-based care initiatives and describes the expertise and service capabilities required for service providers to serve the needs of the market.

 The State of VBC Adoption: Key Takeaways

  • Over a third of healthcare providers have undertaken VBC to some extent.
  • Despite the progress, there is significant work to be done to meet goals of the Centers for Medicare & Medicaid Services (CMS).
  • Providers see a greater financial risk as compared to payers, thereby hampering progress.
  • VBC adoption has a strong dependence on the nature of risk undertaken.
  • Health systems tend to be better than hospitals in terms of VBC performance.

 Background on VBC

In the past, the U.S. healthcare system operated primarily on a fee-for-service model, which rewards healthcare providers for the volume of services delivered; for example, a physician is paid for every visit or procedure, regardless of patient outcome, the provider’s operational efficiency or the quality of the providers’ service delivery.

In contrast, in a VBC model, healthcare providers are reimbursed and incentivized based on quality of care rather than quantity. Although there are many different models and approaches to VBC, the objectives are to provide better care for individuals, improve population health management strategies (that is, how providers coordinate to provide the best care for patients), and reduce healthcare costs.

The relative success of VBC initiatives can be measured in many ways. Common patient care objectives include lowering readmission rates, mortality rates, and Medicare spending per beneficiary (MSPB); increasing patient satisfaction; reducing the number of hospital acquired conditions (HACs); and minimizing the time between check-in and check-out at the Emergency Department.

***Download complimentary report abstract here***

Michael Hedegard Promoted to Partner at Everest Group | Press Release

By | Press Releases

Everest Group has announced the promotion of Michael Hedegard to the role of partner. Hedegard, who joined the consulting and research firm in 2007, is known for his keen focus on helping clients from across industries solve complex problems and reap optimal value from initiatives related to go-to-market strategies, IT and business services sourcing, and operational design and delivery.

“Michael is a versatile problem solver. He has an ability to unravel complexity and help clients adopt strategies that put them on the path to operational excellence and corporate growth,” stated Peter Bendor-Samuel, founder & CEO, Everest Group. “It’s a promotion well earned. Michael consistently demonstrates the firm’s core values in how he services clients, leads teams, and builds the firm.”

One of Hedegard’s areas of focus includes developing innovative thinking related to the impact of automation, such as cognitive and Robotic Process Automation (RPA), on services. Recognizing the large unrealized value potential, he is guiding enterprises through the transformational opportunities and operational issues of managing a digital workforce. He has developed strategic thinking on fundamental changes traditional service providers can make to shift their business model to embrace the value of automation. Michael advises automation tool providers on creating value in a rapidly evolving services market.

As partner, Michael will be the primary leader of client teams focused on helping clients drive change across a range of IT and business process services models that result in material business outcomes.

Capital Market IT Outsourcing Deals See Double-Digit Growth in Number and Value in 2016 — Everest Group | Press Release

By | Press Releases

Artificial intelligence, cloud, blockchain technologies driving digital disruption of capital markets ITO industry.

Capital market IT outsourcing (ITO) deals experienced double-digit growth in 2016; legacy modernization and adoption of digital technologies drove a 29 percent increase in the number of capital market ITO deals, with the average total contract value rising 23 percent, according to Everest Group.

Technologies such as artificial intelligence (AI), cloud and blockchain were key components of digital adoptions. The demand for virtual assistants, automated investment advisory capabilities, and improved agent/broker and customer experiences drove a 64 percent uptick in the number of capital markets ITO deals that included AI in their scope. Similarly, the impetus to improve agility and reduce costs led to a 47 percent surge in cloud-based initiatives in capital markets ITO deals.

Another major driver of capital market ITO deals in 2016 was risk and regulatory compliance initiatives. These saw a 58 percent increase over 2015, largely attributed to an overall tightening of regulatory grip in the capital markets industry, especially in Europe.

“Everest Group anticipates that the capital markets IT outsourcing market will grow modestly in the next 12 months, as many of the trends we have documented in 2016 continue,” said Ronak Doshi, practice director at Everest Group. “Risk and regulatory compliance will remain a primary focus; deal sizes will shrink as enterprises demand cost-reductions through automation; and artificial intelligence, cloud, and blockchain technologies will drive the next wave of digital disruption.”

These recommendations and research findings are explored in “Simpler, Smarter, and Seamless Capital Markets – The Digital Revolution: Capital Markets ITO Annual Report 2017.” This report examines the global activity and trends in the capital markets segment and the implications for enterprises and service providers.

 Other key findings:

  • Brokerage and investment sub-vertical witnessed an increase in transaction activity, led with a central theme of adopting digital to enhance the front-office user experience.
  • The capital markets industry witnessed a decline in demand for traditional IT application development and maintenance service while the demand for consulting and integration services surged in 2016.
  • Asia remained the most lucrative destination for application outsourcing service delivery, despite improvement in the cost effectiveness of Central Eastern Europe and Latin America owing to currency depreciation.
  • The capital markets vertical witnessed a significant increase in the number of small-ticket size and short-duration deals in 2016.
  • Deals over US$14 billion will be coming up for renewal in the next four years.

***Download complimentary report abstract here***

Banks Embrace Digital in More Than Half of ITO Deals in 2016—Everest Group | Press Release

By | Press Releases

Number of banking ITO deals including automation in scope increases nearly triple; a future of banking built on AI, open banking architecture, and cloud is imminent.

According to Everest Group, banks embraced digital in 54 percent of ITO deals in 2016, and the number of banking ITO deals including automation in their scope increased 175 percent. As banks increasingly leveraged digital across both front- and back-office, the demand for traditional IT services flat-lined. New technologies such as blockchain and artificial intelligence (AI) have witnessed significant traction, as banking enterprises explore various use cases. Seven new deals specifically for blockchain were signed in 2016.

Everest Group also reports that the number of automation deals with AI in their scope increased over 80 percent in 2016. Key themes for these deals included engagements for adopting virtual assistants, pilot programs to explore machine learning in the risk and regulatory compliance space, and pilot programs for cognitive robotic process automation (RPA).

However, banking ITO transactions overall showed a significant decline in 2016. The number of new deals signed dropped 27 percent, the average total contract value fell 24 percent, and the average deal duration declined 11 percent. An uncertain macroeconomic environment, political uncertainty, and an increase in insourcing by global banks attributed to the reduction in number of deals. An increase in automation and price competition among service providers impacted the average ticket size of deals.

“Banks are reinventing themselves, leaving behind the legacy brick-and-mortar business model and becoming customer-centric rather than product centric,” said Ronak Doshi, practice director at Everest Group. “In the near future, banks will become an ambient fabric, coordinating a network of allied businesses and third-party providers and orchestrating end-to-end customer experiences. The IT foundations of this new banking model are technologies such as artificial intelligence, API-enabled open banking architecture, and cloud. As our research demonstrates, we’re now seeing banks wholeheartedly adopting digital—a sure sign that the transition to the future of banking is rapidly accelerating.”

These findings and more are discussed in Future of Banking – “Experience First”: Banking ITO Annual Report 2017. The report contains insights into the future of banking and a comprehensive analysis of the banking application outsourcing market.

***Download complimentary report abstract here***

End of the Line for Traditional Sources of Bank Growth Drives Urgent Interest in FinTech, Business Process Service Providers | Press Release

By | Press Releases

Robotic process automation, analytics and consumer-facing technology solutions will sustain 5-9 percent growth in banking BPO market through 2020

The proverbial advice “if you can’t beat them, join them” is particularly apropos for banks who find themselves competing against FinTechs (financial technology companies) in the digital age, according to Everest Group in newly published research addressing the business process outsourcing (BPO) market in the banking industry.

Everest Group reports that the traditional banking model with its legacy technologies and ways of doing business has reached the end of the growth curve, so banks must now focus on new technologies to survive. To remain relevant in an evolving market of new-age consumer preferences and unprecedented external pressures, banks are turning to technology solutions such as robotic process automation (RPA), analytics, artificial intelligence (AI), open application programming interfaces (APIs) and blockchain to decrease costs, improve operational efficiency, offer more personalized solutions, and deliver a seamless digital experience to customers.

In some cases, banks are building these technological capabilities in-house, but in many cases, banks are turning to service providers and making allies of former FinTech competitors in order to survive in the ecosystem and offset marketplace challenges.

“Banks can combine their strengths—such as access to resources, trust of customers, and expertise in core banking services—with the innovative offerings of technology players to cope with the significant challenges they are facing in the marketplace,” explained Anupam Jain, practice director at Everest Group. “This is why we are seeing a sustained growth rate of 5 to 9 percent in banking BPO. Service providers are supporting banks by leveraging their expertise in technologies such as analytics and blockchain. And we’re also seeing banks establish collaborative, win-win partnerships with FinTech players who have deep technological assets. This will be a dominant strategy for the bank of the future.”

These results and other findings are explored in Everest Group’s recently published report: Banking BPO Annual Report 2017: Disruption Does Not Discriminate — Banks Embracing Digital to Stay Relevant. The report provides comprehensive coverage of the global banking BPO market, including detailed analysis of the state of the market and challenges faced by banks, market size and adoption by lines of business (LoBs), technology adoption, and the future outlook for banks.

 Other key findings:

  • The global banking BPO market is expected to grow at a steady pace of 5-9 percent over 2016-2020.
  • While North America continues to be the most significant market for banking BPO, Continental Europe and Asia Pacific have witnessed significant growth.
  • Bank LoBs are facing challenges to remain profitable with the pressure of regulations, competition from non-banks and rising expectations of customers.
  • The overall BPS industry has witnessed significant RPA adoption; however, its adoption in the banking BPO industry remains low.
  • Analytics in BFSI (the banking, financial services and insurance market) is starting to differentiate in its usage, and BFSI is poised to remain the largest market for analytics.

***Download complimentary report abstract here***