Analysis On Banking BPO And The Countermeasures In China

Financial service outsourcing is a rising business in today's financial arena. In China, the market is in primary stage but there exists huge potential to further develop. As a significant part in financial service outsourcing, BPO (business process outsourcing) in banking industry has been progressing by leaps and bounds with the development of international division and industrial transfer. Recently in China, BPO in banking industry also flourished. More and more commercial banks have involved in BPO and the content of BPO has been further enlarged. This paper attempts to carry on some explorations on this question. The main contents in this article are as follows:Chapter 1 is the introduction part, which mainly introduces the writing background. Ever since 2003, financial service outsourcing has been growing with a high speed. This paper focuses on a particular segment: banking BPO. Banking BPO in China starts late but develops fast. In recent years, outsourcees in individual housing loans, personal consumption loans and third-party wealth management institutions have appeared one after the other. Many cities such as Beijing, Tianjin, Shanghai, Shenzhen, Guangzhou have established outsource bases and outsource centers to compete for the profit from ITO and BPO. This chapter also introduces the purpose and meaning of the study, and summarizes former research results in this field.Chapter 2 reviews the concept of financial BPO and theories based on which BPO comes into being. Here, financial BPO includes banking, insurance, fund, security and so on. This paper just dwells on banking. This chapter emphasizes new trends and characteristics in banking BPO: the relationship between banks and outsourcees turns into strategic cooperation; BPO is closely linked with IT technology; offshore outsourcing is increasingly more universal; Multinational bank constructs its own outsource centers. This section also discusses two key theories: theory of transaction cost, theory of value chain explored by Michel Porter.Chapter 3 explores which kind of service should be outsourced for a named commercial bank. Two methods are brought forward from theory to practice: bank restructure and two-factor model. As one indispensable part of bank restructure strategy, BPO has everything with bank restructure: First, the essence of BPO and bank restructure is convergent. Second, BPO and bank restructure share the same ultimate purpose. Both of them help banks to focus on core areas. Third, they are combined with each other and promoted by each other.In this section, the following conclusions are driven: Decision-making as well as R&D is the core business and forms the differentiation of a certain bank from others. So the commercial bank had better to keep this type of business inside. Functional and supportive business is usually the first line of business for a commercial bank to perform BPO because of its simplicity and high availability in outside markets. Background process is gradually standardized, and it can not create profit directly. So it is suitable to be outsourced. Foreground operation has frequent and amicable contact with customers, standardization is nearly impossible, so it is difficult to outsource this kind of business.Value chain theorem is applicable to a general bank. But as for an individual bank, two-factor model provides a more efficient and effective way to determine outsourcing business. The so-called"two-factor"stands for the functional importance and the bank's capability to run a specific piece of business. Through measurement of both factors, four quadrants are divided. Check the position of a certain piece of business and we can judge its type and arrange relevant strategy: to outsource, to keep inside the bank or to subcontract.Chapter 4 mainly reviews the development status of banks'BPO from two angles: home and abroad. On abroad, bank's BPO started very early and covered a comprehensive scope. Some banks even outsource the accounting system which is traditionally considered as key business. Around the world, US banks take precedence in BPO. India is the main call centre and R&D centre for offshore outsourcing.Inside China, the progress of banking BPO is a blend of merriness and misery. On one hand, foreign banks have in advance made detailed plans of BPO before their access to the country and have consistently adjusted BPO layout to their global strategy. Compared with foreign banks, Chinese domestic banks are outshone. The market is still immature; the scope is limited in IT-relevant business and credit card. Although in such domains as wealth management, market exploration, standardized loans, BPO is burgeoning, it is far from maturity and calls for more attention and supervision. Chapter 5 offers policy suggestion for commercial banks to cope with BPO.In micro level, firstly, commercial banks should wisely confirm outsourcing business, correctly calculate outsourcing scale and prudently select outsourcees; Secondly, sign effective contracts and reduce the possibility of dispute occurrence; Thirdly, make risk control plans and emergency scheme to prevent the risk of BPO; Lastly, make regular and irregular assessments of outsourcing service quality.In macro level, firstly, the government has the liability to create opportunity and shape an effective and competitive financial outsourcing market; Secondly, establishment of qualification authenticating system or qualification examination system for the outsourcees is a must; Thirdly, create favorable legal environment, perfect outsourcing supervision system and step up to publish Risk Management of commercial banks'BPO Guidelines; implement classified supervision when necessary.