4 Reasons That Make IT Managed Services A Competitive Advantage For Banks After 2020
Managed Services emerged in the 1990s with application service providers (ASPs) who paved the way for remote support for IT infrastructure. For modern corporations, the trade-offs of using external resources vs. internal capabilities have been a point of a perennial tussle in management strategy.
Sometimes decisions to outsource a set of IT services can be strategic and significantly enhance competitive differentiation. In 1992 American Express Outsourced its transaction processing unit. Amex had developed scale and experience and partnered with a third-party card processing unit. They had also anticipated the commoditization of the transaction processing business and decided to place a strategic bet to focus on the growth of the card-issuing business.
One of the primary reasons for outsourcing certain services is because internal controls impact time-to-market and divert management attention away from innovation. Although the in-house approach provides greater control, one cannot ignore the fact that it takes away from essential determinants of success.
IT Managed Services have evolved as the next step to strategic outsourcing. It is not just another way to cut costs but a means to potentially attain and maintain a distinct competitive advantage.
To delve deeper, it is important to understand the drivers pushing IT Managed Services:
- On premise limitations force banks to be reactive as they cannot take advantage of the latest patches and upgrades
- Providing a seamless customer experience across all channels is a big challenge when banks do not use the latest technology architectures
- IT Managed Services can achieve a low total cost of ownership with its proactive approach to maintenance and simplified architecture
Here is how banks can benefit from IT Managed Services:
- Proactively limit enterprise risk
- Strengthen compliance by using well-designed IT Managed Services
- Address deficiencies in internal talent
- Improve process quality
- Adopt technologies to keep up with market trends
IT Managed Services can help banks refocus on the growth, innovation and competitiveness of their core competencies.
Which Operations in Banking could Benefit from IT Managed Services?
1. Process Excellence: When banks fail to recognise gaps in process and internal deficiencies, it can cause severe financial and reputational damages to the enterprise. This can hurt long-term goals and sustainability. IT Managed Services can aid in process improvement and excellence, leading to a more agile and vigilant organisation.
2. Functional and Technical expertise : The functional and technical knowledge base is rapidly expanding in many areas and needs constant upgradation. IT Managed Services can help banks with the required knowledge base and skill set to adapt to the changing times.
3. Keep up with the high velocity of change: The high velocity of change makes it difficult for in-house staff to specialise in cutting-edge processes and domains. IT Managed Services takes care of this gap by deploying skill sets well-versed in the latest technologies and processes.
4. What to look for in an IT Managed Services Provider:
- A great Track record
- Quality staff with proven technical expertise
- Reputation with other industry participants
- Global Footprint
- Institutional Strength
- Application and Infrastructure support
IT Managed Services are applied and are responsible for a bank’s critical functioning, the above-mentioned functionalities are vital for the smooth functioning of a bank.
This brings us to the next and the most important question: how do IT Managed Services help banks focus on their core?
IT Managed Services can be instrumental in freeing up a bank’s resources, manpower, and infrastructure from responsibilities. This can help banks remain focused on their core functionalities.
Experts can provide 24/7 support and ensure smooth functioning of all the IT systems, and banks need not worry about infrastructure or network failure with proactive professionals deployed. Updates and maintenance can be handled from anywhere, with sufficient protection against outages. Once these areas are taken care of, there is time to focus on the core.
Hence it is vital to partner with a service provider who takes care of the following functionalities:
- Ensure business continuity with L1, L2, and L3 support
- Ensure consistent performance, speed, and efficiency
- Have better control over security
- Critical issues addressed by expert SMEs
- Significant cost savings
In Summary: the road ahead with IT Managed Services
The past couple of years have brought in a whirlwind of change, and banks are left juggling with a myriad of growth, operational, regulatory, and technological priorities. IT Managed Services have evolved as outcome-focused strategic partnerships which take control of business-critical functions that are integral to protecting a firm’s overall value and making them more competitive.
IT Managed Services come in with a host of rewards such as scalable process expertise and the bandwidth to reallocate their most critical resources to focus on priorities like core business growth, differentiation, value creation, and profitability.