ABA Banking Journal Competitiveness Survey 2008 - (Page S5) Exhibit 7 >Which best describes the approach your But much of the invisible backbank takes to processing RDC, or will take? shop that makes today’s plank and two barrels work can be rented out, Outsourcing was much more common for banks under $500 million (53.2%) than for banks over leased up, contracted for, consulted $500 million (37.7% of banks $501-$999 million with…in other words, outsourced. and 34.4% of banks over $1 billion). Combination Customers want the community 18.1% (16.3%) banker—they don’t care who hanOutsourced >What type of outsourcer dles his or her compliance, process49.4% (50.4%) do you use? ing, and such. At its extreme, this implies community banking as a brandBankers bank Correspondent bank In house 2.7% (2.2%) 4.4% (7.4%) 32.5% (33.3%) ing strategy. Other As Exhibit 3, opposite, top, shows, Payment 2.7% (3.4%) solutions more than one-third of the banks provider surveyed, overall, outsource some 19.1% (22.1%) BY ASSET SIZE OUTSOURCE IN-HOUSE COMBO functions traditionally performed by Under $100 million 66.7% 19.7% 13.6% bank staff, and among banks over $101-$200 million 55.7 21.7 22.6 $201 million-up 41.5 41 17.5 $1 billion, nearly half do so. And of Core banking provider those banks that have taken this 71% (65.1%) REGIONAL tack, almost 70% report adopting TREND OUTSOURCE IN-HOUSE COMBO Northeast 48.6% 25.7% 25.7% this strategy to some degree in the Southeast 48.8 33.3 17.9 last two years. As Exhibit 5’s barCentral 51 37.3 11.8 Midwest 52.9 40 7.1 chart shows, the adopters’ reasons Southwest 40.9 31.8 27.3 for this were tied between cost-cutWest 55.3 23.4 21.3 Percentages in parentheses reflect 2007 survey results. ting and obtaining expertise without having to hire it Exhibit 9 full-time. Of banks not currently out>What functions would your bank be willing sourcing, Exhibit 6 demonstrates that to share with an unaffiliated institution? one in four are considering the strategy. Top pick for banks Internal audit 32.6% What do community banks outover $500 million source? Of the top four choices, in Exhibit 4, far left, one is item proCompliance audit 31.7% in last cessing, a mechanical function. But the other three are “brain work”—intwo years Loan review 31.1% ternal audit, loan review, compliance audit. All essential, but requiring deep 30.8% Compliance and expensive expertise. As Exhibit 9, right, shows, these are also the types of functions that banks said they 30.6% Training would most likely be willing to share with other banks. It would appear the lessons of the past are being applied to the products of the future. As Exhibit 7, above, shows, nearly 28.7% IT management half the banks offering remote deposit capture, the subject of an extensive section of this report, outsource. Top pick for banks Courier service 23.5% under $500 million 69.3% started outsourcing Item processing Exhibit 8 22.4% >What steps has your bank taken to cut costs or improve efficiencies in the last two years? ATM servicing 21% Human 18.8% resources 14.6% 37.8% 25.5% 23.5% 20.9% 14% 11.1% Revised employee categories/job descriptions. Adopted internal document management system. Installed voice-over-internet-protocol phones. Performed efficiency studies for operational positions (e.g.,tellers) Removed functions, such as loan analysis, item processing from branches. Other, includes: cross-training, branch capture, check imaging Processing facility 12.3% 11.3% 11.1% Investment management Marketing ALCO reporting 7.6% Call center *Institutions were asked to choose a single main reason. *Banks could choose multiple answers. Competitiveness Survey 2008 ABA BANKING JOURNAL/MARC ABA BANKING JOURNAL/MARCH 2008 S5S5
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