The Research Of China Financial Service Outsourcing And Its Risk Management

Financial service outsourcing is a financial application service that uses an application service provider to operate another enterprise's financial business entirely or partly. Nowadays, financial service outsourcing has different types and thereby has heterogeneous characteristics such as offshore operations, huge capital volume, time-consuming and strategic importance.The reasons for the quick development of financial service outsourcing include the indirect motivations as of fast evolving information technology, continuous development of free markets and the other financial innovations, as well as the direct causes as of the low cost control, the competition for the limited resources, the focus on core business, the desire for risk control and sustainable development. Despite its rapid development, outsourcing is still highly risky. Therefore, this thesis also presents the possible risks during the outsourcing and the effective approaches to identify, evaluate and control those of financial service outsourcing.The thesis introduces the academic foundation, Transaction Costs Theory and Core Competence Theory. With the analysis of the current status and trend for financial service outsourcing and result of questionnaire survey, three categories of service types are recommended to be applicable in China outsourcing market. Based on the operation mechanism of risk factors, eight types of risks are listed: the decision making risks, human resources risks, financial risks, management risks, system risks, technical risks, market risks and service provide risks.Due to the complex outsourcing risks, both internal control and external supervision are required for the risk control during the outsourcing strategy's implementation, supervision and evaluation. The internal control includes the financial organizations'controlling over the entire outsourcing process, the supervision, motivation and evaluation over the outsourcing service provider and the examination and motivation over the other relevant personnel's of the outsourcing workflow. The external supervision includes the legislation introduced by the national governments and the supervision of the international organizations to monitor the business. The thesis uses one outsourcing case to clearly present the content in IT outsourcing for financial service, the possible risks during operation and the recommended methods to manage the outsourcing and risk control.