Guide to Banking BPO and Financial Services Outsourcing

Banking and financial services outsourcing involves delegating services or tasks typically managed internally by financial institutions to third-party providers. These providers can be situated locally or offshore. Utilizing banking BPO (business process outsourcing) is a strategic approach that aids in supporting business expansion and streamlining account servicing functions.

In 2022, the worldwide market for finance and accounting business process outsourcing (BPO) was valued at USD 56.42 billion. It is projected to experience a significant compound annual growth rate (CAGR) of 9.1% from 2023 to 2030. This growth can be attributed to the rising need for dependable and cost-effective services, leveraging advanced technologies, along with the expansion of the BPO industry in emerging economies.

The COVID-19 pandemic caused significant economic and social disruptions, posing challenges for outsourcing functions. Nevertheless, the changes in business activities resulting from these disruptions are anticipated to drive the market forward in the future. Finance and accounting (F&A) business process outsourcing (BPO) firms have adapted their business models by restructuring their Business Continuity Plans (BCP) to incorporate a distributed workforce. The importance of continuous operations planning and disaster recovery has become evident to businesses, leading them to establish a more resilient business model capable of withstanding unprecedented disruptions like the COVID-19 pandemic.

Banking BPO Services

The impact of banking BPO and finance services offshoring extends to several business areas and can be seen throughout the lending lifecycle. Areas include information technology (IT), finance and accounting (FAO), discrete back office functions, and contract services. Industry research shows that finance organizations outsource both regulated and unregulated functions within outsourcing contracts that vary in scope and complexity.

Banks and lending institutions typically offshore transactional functions such as new customer acquisition, account servicing, consumer and commercial lending, and back office process management. Less commonly outsourced are higher-value functions like budgets, forecasts, regulatory returns, and capital management.

Customer Acquisition Services

Customer acquisition services include a set of functions and systems that generate and manage prospective customers, leads, and inquiries in the banking and finance sector. Customer acquisition management is considered a link between advertising and customer relationship management.

Customer acquisition management services provide an organized environment for managing large volumes of leads and inquiries at various stages of the customer lending lifecycle and across local or offshore sales departments. Third parties also provide closed-loop reporting that measures the effectiveness of promotional activities and allows clients to realize improvements.

Offshore providers utilize various marketing techniques to acquire new customers like customer loyalty programs and customer referrals. Customer acquisition management also covers services like telemarketing, credit evaluation, verification and approval, document and application processing, underwriting, and customer support.

Credit Evaluation and Verification

Offshore third party providers allow banks and financial institutions to minimize credit risks and frauds through verification services like risk profiling, telephone re-verification, payback capacity evaluation, and implementation of a credit decision-making model.

Document and Application Processing

Application processing in the banking industry is a time-intensive task that requires a critical and experienced eye. It starts with digitization of physical forms and supporting documents and transmitting the scans to a centralized location. Data is captured, completed, indexed and checked for errors before the validated file is sent back to the original location. Post-processing is then done at the core location.

Third parties provide document and application processing services as well as proprietary application processing software that simplify and improve existing processes. Software can be configured to specific workflows, quality needs and any type of application form.

Telemarketing and Promotions

Customer acquisition management also covers telemarketing and promotions to generate leads and respond to a prospect inquiry. Besides telephone, marketing efforts to heighten the prospect’s interest can be done through brochures, letters, e-mails, SMS, and chat.

Account Servicing Processes

Offshore providers offer account servicing processes and software to manage consumer and commercial accounts like debit cards, credit cards, and consumer/commercial loans. Offshore consumer banking services allow organizations to adapt to changing regulations and technology, launch new products quickly, and exceed customer expectations while keeping costs low.

By offshoring account servicing processes, banks and financial institutions also achieve full regulatory and policy compliance, reduction in payment turnaround time, reduction in average cost per transaction, and a four-fold increase in productivity.

Account servicing processes that can be offshored include consumer account management, merchant or commercial account management and capital market services.

Consumer Accounts

Effective management of consumer accounts helps foster customer loyalty. Third parties can handle transactional functions like customer service (online, telephone, mail), retail banking, originations, end-to-end consumer lending and mortgage services, account renewals, loans disbursement, and cards services, as well as core operations like wealth management. Third parties also offer fraud and anti-money laundering (AML) and risk analytics.

Commercial Accounts

Offshore commercial account servicing can effectively reduce the total cost of ownership and operational risk while providing a unified solution for multiple banking products. The wide range of services offered by third parties includes payment processing, commercial loan processing, and trade finance services. Payment processing covers fund transfers, liquidity management, fraud analysis, pension and dividend payments, billing, and reporting. Commercial loan processing involves credit evaluation, underwriting, and collateral evaluation. Lastly, trade finance services include analytics, fraud management, origination, customer service, and reconciliation.

Capital Markets

Offshore account servicing for the capital markets industry improves business performance and standardizes processes at the lowest cost. Capital markets account servicing processes cover front, middle and back-office. Services include research and analytics across industries, valuations, model development, data analysis support, valuations, trade processing, clearing and settlement, data management and reconciliations.

Consumer and Commercial Lending Services

Third parties provide lending solutions for all phases of consumer and commercial lending, from loan origination to asset management. For consumer loans, outsourced services include sales, processing, underwriting and closure, research and analysis, foreclosure and pre-foreclosure, loss mitigation, debt protection services, bankruptcy, loan modification, data management, and risk management.

Offshore commercial lending services include automated processes, analytics and reporting, flexible capacity models, and end-to-end process management. Third parties also provide mortgage services that help banks preserve capital, increase business forecasting, and generate revenue from growth markets.

According to a research study on Financial Services BPO conducted by Everest Group, a global services advisory firm, the worldwide lending Business Process Outsourcing (BPO) market is currently valued at approximately US$21-23 billion. However, this represents only a modest 12 percent of its estimated market potential, which is valued at around US$190-194 billion.

Everest Group’s comprehensive study on Global Lending Business Process Outsourcing (BPO) covering Credit Cards, Consumer Loans, and Commercial Loans reveals that the United States holds the largest share, accounting for over 50 percent of the market. Following closely is the United Kingdom. Financial services firms in these regions utilize various models, such as third-party service providers, shared services/captives, or a combination of both, for the acquisition and account servicing of credit cards, consumer loans, and commercial loans.

Back Office Transaction Process Management

Third parties provide management of back office financial transactions for consumers and merchants and for banking products that range from credit cards to mortgages. Common services that can be offshored include fraud detection, anti-money laundering (ALM) services, regulatory compliance monitoring, custody services, portfolio analytics and reporting, asset/investment management, and IT management.

Custody Services

Custody services refer to safekeeping services that a financial institution provides individuals and merchants. On behalf of the customer and for a fee, the custodian collects dividends, interest and proceeds from the sales of securities and transfers the funds to the client’s account. This process reduces the risk of the client’s assets being stolen. Unlike banks, custodians cannot use securities for their own ends.

Third party providers can handle these functions for the organization providing custody services, allowing the company to reduce costs significantly, improve process efficiency, and streamline workflows through automation, standardization, and other best practices.

Fraud Risk Management and Anti Money Laundering (ALM)

Banks handle local and foreign accounts that are highly profitable but also high-risk. Fraud risk and AML officers perform customer due diligence (CDD) and ensure that accounts comply with regulations and pass government scrutiny. Back office processes like fraud risk review, AML monitoring, account verification, chargeback, recoveries, regulatory reporting, and risk analysis can be offshored to an experienced third party.

Third parties can help improve a financial institution’s risk management efforts through standardization, automation, and process improvements while cutting costs. With their domain expertise, offshore providers can also better track fraud losses and fraud trends across regions and help organizations optimize fund recovery efforts.

Portfolio Analytics

Portfolio analytics is the evaluation of the performance of a consumer or merchant’s investments and how it affects returns. Third parties offer consulting services and portfolio analytics software to manage portfolios. Typical analytics software may include charting and attribution tools, detailed reporting, weights and variables, and data that drive returns.

Banking BPO Services/Financial Services Offshoring: 2023 Trends

There are several trends shaping the Banking BPO and financial services industry:


The adoption of automation technologies is rapidly reshaping the landscape of Banking BPO and financial services. Robotic Process Automation (RPA), Artificial Intelligence (AI), and machine learning are being integrated into various processes to streamline operations, enhance efficiency, and reduce human errors. Automation enables faster transaction processing, improved data accuracy, and cost-effective handling of repetitive tasks, freeing up human resources for more strategic and customer-centric activities.

Cloud-Based Products

The migration to cloud-based solutions is revolutionizing how banking and financial services are delivered and managed. Cloud technology provides secure and scalable platforms that facilitate seamless access to data, applications, and services from anywhere, at any time. This shift allows financial institutions to respond more swiftly to changing market demands, provide personalized services, and optimize their IT infrastructure, leading to enhanced customer experiences and increased operational agility.

 Online Banking

The rise of online banking is reshaping how consumers interact with their financial institutions. With the convenience of 24/7 access, customers can conduct a wide range of banking activities through web and mobile applications. Online banking empowers customers to manage accounts, make transactions, pay bills, and even apply for financial products from the comfort of their homes. Financial institutions are investing in user-friendly interfaces, robust security measures, and personalized digital experiences to meet the evolving needs of tech-savvy consumers and attract a broader customer base.

Data Analytics and Insights

The increasing reliance on data analytics and insights is transforming how financial institutions make strategic decisions and engage with customers. Advanced data analytics tools and technologies enable banks to extract valuable insights from vast amounts of data, enabling them to offer personalized products, anticipate customer needs, identify fraud, and assess risks more accurately.

Cybersecurity and Privacy

With the growing digitalization of financial services, cybersecurity and data privacy have become paramount concerns. Financial institutions are prioritizing robust cybersecurity measures to protect sensitive customer information, prevent data breaches, and safeguard against cyber threats. Compliance with data protection regulations and the implementation of advanced security protocols are critical to earning and maintaining customer trust.

Mobile Banking and Digital Payments

Mobile banking and digital payment solutions are gaining significant momentum as consumers increasingly prefer convenient, contactless, and secure methods of conducting financial transactions. Financial service providers are investing in user-friendly mobile apps, digital wallets, and innovative payment technologies to cater to the evolving preferences of tech-savvy customers.

Personalization and Customer Experience

Delivering personalized experiences is becoming a key differentiator in the financial services industry. Banks are leveraging customer data and AI-powered algorithms to offer tailored financial solutions, personalized product recommendations, and customized communication to enhance overall customer satisfaction and loyalty.

Regulatory Compliance

Stringent regulatory requirements continue to impact the banking and financial services sector. To stay compliant with changing regulations and avoid penalties, financial institutions are investing in specialized compliance teams, technologies, and BPO services to ensure adherence to industry standards.

ESG (Environmental, Social, and Governance) Focus

A growing trend in the financial services industry is the increasing emphasis on Environmental, Social, and Governance (ESG) factors. Investors and customers are looking for financial institutions that prioritize sustainability, social responsibility, and ethical practices, leading to a shift in investment strategies and the integration of ESG considerations in financial decision-making.

As these trends continue to evolve, the Banking BPO and financial services industry will witness significant transformations, leading to greater efficiency, improved customer experiences, and a more competitive market landscape. Embracing these trends will be crucial for organizations seeking to stay ahead and thrive in the ever-changing financial services sector.

To learn more about outsourcing, you can read our Top 8 Qualities of an Outsourcing Company in the Philippines article. We invite you to follow us on social media and to visit our website to learn more about our services.

banner-finalAbout Us: Sourcefit is a widely recognized US-managed business process outsourcing company based in Manila, Philippines. We proudly serve over 100 clients with a workforce of more than 1,300 employees. Our global centers can serve multiple markets, and our staff is highly proficient in English, Spanish, French, and Portuguese. Whether you need a few or many employees, we can help you achieve your business goals and build high-quality offshore teams.

Latest Awards

Sourcefit’s commitment to excellence has been recognized through numerous industry awards and certifications.

We recently received the Fortress Cyber Security Award from the Business Intelligence Group. Sourcefit was also honored with the prestigious recognition of Best Outsourcing Solutions Provider in the Philippines during the 2023 Business Excellence Awards.

Other awards include: FT ranking of 500 high-growth Asia-Pacific, The Marketing Excellence Awards, Inquirer Growth Champion,  HR Asia Awards, among others.

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